Inside Track: Refueling the Business of NASCAR

Posted 24 June 2009 Once The fastest growing sport in America, NASCAR is now threatened by an imploding car business and shrinking sponsorship budgets that are the sport’s very lifeblood.CNBC’s Darren Rovell has the inside track on the sponsors, superstar drivers and fans that have made NASCAR a multi-billion dollar business.Visit the website for show timesDarren’s Sports Biz Blog

Every weekend from February to November fans show up to see their favorite drivers go bumper to bumper at 180 mph towards the checkered flag. NASCAR, the National Association for Stock Car Auto Racing, is unmatched in the world of sports, famous for filling some of the largest venues in the world - 200,000 fans at some speedways.  Legions of loyal fans descend weekly on tracks from Michigan to Texas, California and to Charlotte, NC.

Today, NASCAR is focused on making sure the garages are filled with drivers and teams.   A tough proposition because corporate dollars are drying up.  It costs half a million dollars to get a car to the race.   Sponsorships are key.  Sprint sponsors NASCAR’s top series now known as "The Sprint Cup."Tom Murphy, Sprint VP of Media and Sponsorships:  "This is a superior marketing asset and we judge it in the ways any marketer would, no differently when we buy TV advertising and airtime…newspaper or magazine advertisements.   This is a giant, giant ad machine."

In the current economic downturn, there are empty spaces around the tracks.Marcus Smith and his legendary father Bruton Smith run Speedway Motorsports Inc….one of the biggest operations in the sport.  They own eight tracks around the country including Lowes Motor Speedway in Charlotte, NC.   Marcus Smith is always looking for ways to keep the seats and infield packed with fans.Marcus Smith:   "We’re the biggest entertainment destination for Joe and Jill America.  I like to say that our fans are all about America.  They come here and they’re lookin’ for a good deal.  They’re part of the overall economy.  They feel it.  So, we’ve all got to be a low-cost provider."

Unlike any other sport, one family controls everything in NASCAR.  The France family started it in 1948 on the dunes of Daytona.   Today, the "first family of NASCAR" has maintained an iron grip on a sport where TV ratings, corporate sponsorships and the number of fans have seemingly defied gravity.NASCAR CEO Brian France: "It’s a tough time right now. I think most CEO’s would say that they’ve never seen more challenges on balance than they do right now…there’s not a blueprint for how to go through an economy like this and I’ve told our people and I've told our group that I certainly like our chances at coming out the other side better than most."

On NASCAR CEO Brian Frances’ mind is the health of the U.S. automotive industry…a business that is intricately connected with racing.   Two of the four companies whose cars are in the sport, GM and Chrysler, filed for bankruptcy and the government’s investment in the manufacturers calls into question whether NASCAR will remain a marketing priority.Chrysler plans to cut NASCAR marketing expenses by 30%.  GM – whose cards have won the last six Sprint Cup titles – will cut support for NASCAR’s lower level series teams.

Tony Stewart – the fiery, two-time Sprint Cup Champion who has driven in almost every competitive circuit in America – is also a businessman.  For years, he’s owned racetracks, open wheel teams, a remote control car outfit and even a public relations firm.  Stewart is competitive on and off the track.

In 2008, Tony Stewart took the ultimate risk when he forged an alliance with HAAS-CNC Racing Team --- now called Stewart-Hass team.   Stewart received a 50% stake in the company in exchange for giving immediate credibility to a team that fielded Sprint Cup teams for seven years without a single victory.Stewart:  "There are not very many team owners that are willing to give you half of their company…and let you run with the ball so to speak.  I think it’s the first time in a sport that anybody’s had an opportunity like that."In his first season as a Driver/Owner, Stewart won the 2009 All-Star Race.

Kyle Busch is the driver of No. 18 M&M’s car.  Sponsors often say the value of NASCAR is about unprecedented access to the superstar drivers like Busch. Busch:  "The biggest thing is you’re made available, they get opportunities to come see you or for you to go see them at the race track, away from the race track….all kind of stuff.  It’s a unique deal." M&M’s have been backing Sprint Cup drivers for more than a decade and the company’s prominence in the sport has skyrocketed.

Superstar driver Carl Edwards reflects on the growing popularity of NASCAR.Edwards:  "Racing was something you go do on Saturday night…there’d be 250 people in the grandstands on a good night.  My first cup race, I strapped into the 99 car at Michigan Int'l Speedway.  I looked up at the grandstands.  It’s just unreal.  You know, hundreds of thousands of people.  The scope and the size of this sport at the events is huge."

Oscar winning actor and director Kevin Costner is a NASCAR convert.   Costner and his band "Modern West" recently performed at a race.  Costner enjoys what he describes as the “pageantry” of the race – the RV’s, the friendships – as a way of life.Costner: "You can get the snobbery out of the way, these people are havin' fun.  Nobody needs to tell them how to have a good time.  They know how."

Fans come to live the sport – the larger than life drivers, the wrecks, the raw energy of the races. John Griswold is a life long NASCAR fan.  He spends his vacations at the races…camping out in the infield with his family days before the green flag drops.   But due to economic circumstances, some family members no longer make the trip.

Source: Julie and Russ Geary New Jersey residents, Julie and Russ Geary, have collected NASCAR items for over 12 years.  The items range from a NASCAR pez dispenser to a Dale Earnhardt die grinder/air ratchet for $700.  The Geary’s believe the current value of their collection is more than $100,000.  Their most cherished item is a painting of Dale Earnhardt Sr. (seen in the picture) given to them from a family member.  Every Sunday they gather with friends and family to eat dinner and watch the race.  Julie Geary explains, "It’s a way of life."

CNBC's Darren Rovell, himself a fan of NASCAR, was able to take a ride with NASCAR bad boy driver, Kyle Busch at the Pennzoil Burnout Challenge before the Sprint All-Star Race in Charlotte, N.C.   Busch skidded out and the car hit the wall.   Both walked away uninjured.  Prior to taking the ride, an anxious Rovell mentioned, "I just twittered my will."

How big will foreign automakers become in the world of NASCAR? Toyota is already chipping away at the American dominated NASCAR car market.NASCAR CEO Brian France: "I'm not going to name names, but we have companies that are interested in particular in developing the North American market as robust as they can."France has left the door open for other manufacturers to become part of the sport saying he'll look to new companies, new technologies and particularly to the growing green industry to help build the sport.

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