TRR: What’s NASCAR’s Next Level?
The NASCAR Awards dinner showed the
strength of the Winston Cup series. Drivers down to Robby Gordon’s 44th place
in points came away with more than $1 million in prize money.
At the top of the list was Jeff Gordon,
the 2001 Winston Cup champion, who came away with a $6.6 million check. Coupled
with his earlier titles in 1995, 1997 and 1998, Gordon’s total career earnings
soared over $45.7 million, leaving behind former record-holder and Gordon mentor
Dale Earnhardt, who won seven championships. His career earnings were just over
$41 million.
Gordon’s 2001 total included money from
race purses, series sponsor R.J. Reynolds and contingency awards from a variety
of sponsors on his No. 24 Chevrolet. The Rainbow Warrior won six poles and six
races and finished in the top five in 18 of 36 races in the first year of
NASCAR’s $2.8 billion television contract with FOX and NBC.
“I’m proud to win the championship in the
year the sport broke through,” Gordon said. “I love what I do. I have a real
passion for the sport and I want to see it reach a new level.”
And there lies THE statement of this
briefest of off seasons. Was it a break through year for Winston Cup? What’s
the next level for NASCAR’s premier activity?
In a year when multi-billion dollar
television contracts were born and million dollar checks were written to drivers
who can barely finish races, we see successful teams that can’t get sponsored
and are shutting their doors. They’re laying off brilliant technicians,
engineers, crafts men and women and drivers who may never race again.
Andy Petree won two events this year with
Joe Nemechek and Bobby Hamilton and he can’t find a sponsor. Junie Dunleavey,
a legendary team owner in NASCAR, shut his doors last spring. Melling Racing laid
off its people a couple weeks ago and may not be back next year. Even Penske
Racing went through contraction dropping a team that won races with one driver,
changed, and nearly won with another.
These are solid teams in an era of record
revenues and they’re disappearing from the marquee – broke. Some
breakthrough! In a time of never-before-seen revenues from rights fees, record
television ratings, record attendance and gate receipts — all indicative of
explosive public interest – the size of the field is shrinking. That’s a
problem.
I’m not an economist but I played one on
television for four years. In that time I created an economic index of spectator
and participant sports revenues. The key element of the SPORTSBIZ Economic
Forecasting Model was discretionary income. If you don’t have it, you can’t
spend it! Without turning this into an economics buffet of numbers, let’s take
a little bite and understand these two things:
The Bureau of Labor Statistics says
employment growth will be flat for the next ten years and any growth will come
in low-income, service oriented jobs. BLS numbers for the last three years show
hourly wages up less than two percent while consumer prices are up eight percent
over the same period. It doesn’t take a genius to know that low-income jobs
and wages that don’t keep up with prices will mean less discretionary money to
spend on things like tickets to NASCAR races or the ancillary memorabilia that
is waiting in the trailers there.
When you compare the cost of NASCAR
tickets with the cost of all over forms of entertainment, you’ll understand
why television ratings are rising and will continue to rise. It’s cheaper to
watch the race on TV than to go there! That could be the billion-dollar bet FOX
and NBC made with NASCAR. The networks are gambling the size of the audience in
front of the television will grow faster than the audience in the grandstands.
That’s probably a safe bet because the
available seats in the stands are pretty limited, even with new tracks opening
annually. Like the NFL, NASCAR is sold out! I don’t know that for sure but I’d
bet that seat availability in Winston Cup on a circuit wide basis is probably
less, much less, than ten percent. NFL availability has been less than six
percent for years.
These, however, are the key statements in
this discussion: The NFL became a shining star in sports promotion annals when
it instituted revenue sharing among its owners. NASCAR will never be as
successful as the NFL as a sports promotion entity until it manages some form of
significant revenue sharing. Unless the record revenues can get to the people
who need it, those who actually put on the show, we’re talking about something
less than a promotion.
Jeff Gordon will be dramatically
disappointed if NFL-level promotion and market penetration is what he was
referring to when he said he wanted to see NASCAR "reach a new level."
NASCAR has experienced unqualified,
unprecedented growth in the past five years. But it’s curious that that growth
is limited to NASCAR itself and the top quarter of the field. Ask the major
league baseball franchises in Minneapolis, Miami and Montreal (among others) if
that kind of equation presents a problem.
So what is the next level for NASCAR? We’ll
look at that next week.
Courtesy of The
Racing Report