This decade begins as NASCAR tail spins in the wrong direction it’s a sharp contrast to the beginning of the last decade when NASCAR viewership, attendance and corporate interest were all surging. Today, all of those trends are in reverse, and this decade will truly define whether NASCAR remains as a mainstream sport or becomes another fledgling motorsport series.

I believe the major stories and events that will affect NASCAR in the coming years will have little or nothing to do with on track racing. So let me begin with a few predictions before we take our first green flag of 2010.

The Car of Tomorrow (COT)

By any account other than driver safety, the COT has been a miserable failure, and many point to the introduction of the COT as a defining moment in the accelerated decrease in fan interest. Since making its debut, the COT has been one of the most controversial rule changes to be introduced in NASCAR. There is no question that NASCAR will eventually make changes to their ill advised COT design, but the question is how dramatic and rapid will changes be introduced. I believe this decision will define the sport in the coming decade, because unless on-track racing significantly improves, NASCAR is doomed to become a second-rate sport with limited commercial exposure.

The Fall of Brian France

Mayfield vs. NASCAR is a fight NASCAR wishes it never fought. First, let me provide a bit of background information. In 2008 NASCAR implemented a clandestine drug testing policy where they refused to provide competitors a list of banned substances. And in 2009, long time driver Jeremy Mayfield, was the first driver to face a suspension for use of a banned substance. The drug was later identified as Methamphetamine, or more commonly known as Meth. (See my blog post in the summer of 2009 for more information – NASCAR in Peril: Victory for Jeremy Mayfield in Drug Testing Legal Battle). What NASCAR didn’t anticipate was Mayfield fighting back and filing a lawsuit to reinstate his license to drive in NASCAR. Both sides have won important decisions, but the court fight continues. However, just recently this soap opera is becoming even juicier, the U.S. District Court has ruled in favor of Mayfield to require sensitive documents about Brian France’s third (or fourth but who’s counting) marriage to be unsealed. Many insiders believe evidence will come forward further tarnishing Brian France’s ability to continue to lead NASCAR into the next decade.

Sprint as the Title Sponsor of the Cup Series

The elephant in the room is the pending expiration of the sport’s lucrative sponsorship agreement with Sprint as title sponsor of the NASCAR Cup Series. Back in the summer of 2003, when Sprint (f/k/a NEXTEL) agreed to a 10 year agreement with NASCAR, no one expected the rapid decline of fan interest and corporate sponsorship within just a couple of years. Ironically, Sprint too has blood on their hands for the sponsorship troubles of racing teams, which contribute to the overall problems in the sport. Sprint pushed out and prevented several companies from sponsoring racing teams, including AT&T Wireless who was prepared to enter NASCAR in 2004 as a primary sponsor, but Sprint through their exclusivity agreement with NASCAR, prevented AT&T from entering the sport. And then, after AT&T Wireless merged with Cingular Wireless (who was grandfathered into sport through their existing sponsorship agreement with RCR), Sprint pushed AT&T Wireless out once again. This was basically the same story for Verizon Wireless and Alltel. But I digress, we are discussing the future, and following the expiration of the current agreement with Sprint there is little doubt NASCAR will be left without a title sponsor of the Cup Series. And with the falling value of the title sponsorship rights, I expect NASCAR to be forced to sell the rights for a deep discount. But like everything else in NASCAR, the teams will bear the brunt of the negative financial consequences.

New Television Contracts

Not unlike, the situation with Sprint as the title sponsor, agreements with the existing television partners expire in a couple of years. And, with the enhanced competition from the NFL, all signs point to a significantly lower value being attributed to the NASCAR contract. The reduction in the sport’s revenues will further hamper smaller NASCAR teams from competing and consequently continue the most alarming trends of decreased fan viewership, attendance and corporate sponsorship.

The Retirement of Today’s Superstars

It’s no secret that Jeff Gordon has been suffering from significant back pain stemming from an on track accident. So the question begs, when will one of the greatest and most popular drivers hang up his racing helmet? Could the dominance of Jimmie Johnson accelerate Jeff Gordon’s retirement? And more so, Jeff Gordon isn’t the only NASCAR star that could retire in the next decade from full-time racing. Is it possible, if Dale Earnhardt Jr.’s performance doesn’t dramatically improve that he might head towards an early retirement? These questions will surely plague NASCAR in the forthcoming decade and could have far reaching effects on the entire sport. Even though in the past several years neither Gordon nor Earnhardt have been top performers on the track, they still remain the top two fan and sponsor favorites. And during a time when NASCAR is desperately trying to stop the hemorrhage of fan and corporate interest, the retirement of one or both iconic names could be devastating.

My negativity is an attempt to bring forth positive change to NASCAR. It is horrifying to watch a sport I have watched most of my life be destroyed. But without question, NASCAR, under the leadership of Bill France Sr. and Bill France Jr. made many wise decisions which helped to elevate the sport to the peaks in 2004. Unfortunately, the management decisions of NASCAR in the last half of the past decade have grossly undermined the sport. Even though the previous generations of the France Family were successful shepherds of NASCAR, under the faltering management of Brian France – NASCAR has failed its competitors, fans and sponsors. If the France Family truly loves NASCAR – then they must consider selling NASCAR to a new ownership group, who is prepared to rebuild the sport before all remains is a storied past.

According to Daly Planet, it’s rumored the title that launched in 1982 lost almost its entire staff on Monday. It is run by the American City Business Journals, which is based in Charlotte. ACBJ is owned by Advance Publications, which publishes magazines such as The Sporting News, Vanity Fair, and GQ.

One thing is clear, print media and NASCAR is a lethal combination in today’s economic times. Let’s just hope that management at NASCAR begins to listen to their fans and competitors and bring about the right change to invigorate the sport’s fan base and advertisers.

Another alarming business trend, is that now, most sponsors want single-year deals. These days, a six-race package for $3 million qualifies as a “big deal” in Sprint Cup circles. The marquee free agent among sponsors is Ask.com, which spent about $4 million on its team deal with Hall of Fame Racing for the 2009 season and likely won’t spend more than that on the next deal, if indeed, the search engine decides to stay in the sport. Big name sponsors Allstate, DeWalt, Jack Daniel’s and Jim Beam will leave after this year, choosing to save that money or spend it elsewhere.

And of course, we are all aware of the market forces pushing the automakers to reduce their financial exposure to NASCAR – so I will ask the same simple question I have been asking for two years.

Why isn’t NASCAR doing anything to help the teams to ensure the long term viability of the sport?

I think the answer is pretty simple – they don’t feel they need too. And instead, want to continue pocketing the vast majority of the sports’ lucrative television contracts. And why, you may ask, has NASCAR (France Family) been able to dominate teams? I believe it is because NASCAR teams haven’t united into an association or partnership demanding the right changes to the sport. Just look across the pond to Formula 1 – while they face their own unique challenges, they do have a much more fair and logical business model. The teams are part of an association (Formula One Teams Association – FOTA), that collectively negotiates on financial matters and the adoption of rules affecting competition in their sport.

Whereas, when you look at NASCAR, you have a dictatorship run by Brian France, who I believe most will agree has single handedly undone many of the incredible accomplishments of his late father and grandfather. But as a former NASCAR team owner, I know the teams feel powerless. But it the truth be known, NASCAR is nothing without the teams. Now is the time for the teams to stand up and make a stand – the team owners are the only hope to save NASCAR. Teams must unite on common principles:

• Increased competiveness: major changes are required to the Car of Tomorrow to ignite fan interest
• Reduced operating expenses: less personnel at the track and NASCAR needs to follow the lead of Formula 1 and require race engines to be used at more than one event
• Modern technology: embrace fuel injection and alternative fuels/energy sources to make NASCAR an R&D platform for the automakers.
• Greater Revenue Sharing: Demand an equal share of the television revenues split between NASCAR, Race Tracks and Teams.

These 4 basic principles could reduce annual corporate sponsorship prices from $20 million down to $10 million – a marketing budget that could be justified to corporate executives. Plus, these changes would reignite the automakers interest in investing in the sport and most importantly, bring back the on-track excitement that race fans expect.

If teams do not take a united stand, but rather chose instead to continue to run around in circles spinning their wheels – they are facing certain annihilation.

A year of declines has concluded with FOX drawing its lowest average rating for NASCAR since the net began airing races in ’01.

Excluding the rain delayed Coca Cola 600, 12 NASCAR races averaged a 5.1/11 rating and 8.5 million viewers on FOX during the 2009 season, down 11% in ratings and 9% in viewers from a 5.7/12 and 9.3 million last year, and the lowest rated season ever for NASCAR on FOX.

Last Sunday’s Autism Speaks 400 drew a 4.0/10 final rating on FOX, down 11% from a 4.5/11 for the same race last year.

Every single, solitary NASCAR Sprint Cup telecast on FOX — all twelve races, the Budweiser Shootout and Daytona 500 Qualifying — saw declining ratings this season. 10 of the 12 races saw double-digit declines, including the last nine.

Despite the declines, NASCAR on FOX easily topped its competition. The 5.1 rating for NASCAR races on FOX is 65% higher than the 3.1 average for the ’09 NBA Playoffs (not including the ongoing NBA Finals) and 16% higher than the 4.4 for last year’s MLB Playoffs (including the World Series).

Additionally, the 8.5 million viewers is 42% higher than the 6.0 million for last year’s college football bowl games (including the BCS), and is only slightly off from the 8.9 million viewers for last year’s NCAA Tournament (including the Final Four).

Ratings for NASCAR on FOX in 2009.

Asterisk (*) indicates race was moved to another day because of rain.

“We’re trying to do more with less. That’s the difficult part of this economy,” France said following his state-of-the-sport address to media at NASCAR’s Research and Development Center. Just back in December, NASCAR issued a statement stating that NASCAR heading into 2009 was “strong”.

This outlook is a rather quick reversal, but perhaps the gravity of the current economic climate and mass sponsor deflections is making an impact.

Doing more with less? Working with teams to develop new business models? I apologize, but in my humble opinion, it’s a little too late for a half-baked plan. But even worse and what is frustrating is NASCAR’s continued unwillingness to restructure the distribution of television revenues to rightly supplement teams’ operating budgets.

What NASCAR needs is a business model which more closely replicates Formula 1 or a franchise structure like every other major sport. As a fervent advocate for team rights, I have repeatedly voiced the need to develop a franchise model that would enable teams to weather macroeconomic difficulties; and subsequently, become less cyclical and more stable during recessions and economic turmoil. The time for leadership, sacrifice and decisive action on behalf of the France Family is NOW. But to the contrary, the Brian France plan is nothing more than reinforcing their past strategies of working with teams to help locate and secure sponsors. While his intentions may be honorable; they are nevertheless naïve when considering there is a global economic recession; and specifically, when the NASCAR industry is in a depression of historic proportions. At this moment, I don’t believe there is a single corporation that is considering spending $15-$30 million required to fund a primary sponsorship program for a NASCAR Sprint Cup team. So I am rather befuddled with Brian France’s simplistic strategy to save the sport, which unfortunately in its current form will contribute to the sport’s certain collapse.

Is it possible that the past success of NASCAR is blinding Brian France from seeing the light? Reflecting back to 60 years ago to the earlier days of NASCAR, Bill France Sr. (Brian France’s grandfather) executed a flawless business plan to convince the then stock car racers and event promoters to become part of his newly formed organization and sanctioning body (NASCAR), whereby he gained complete control over stock car racing. The foundation of NASCAR’s “business model” problems ironically stem from the grand success of Bill Sr. and his unilateral control of a racing empire, including control over the majority of racing venues (International Speedway Corp) and the stock car sanctioning body. Over the past half-century, teams competing in NASCAR relied almost exclusively on corporate sponsors to fund their operations – enabling the France Family to retain a majority of the sports revenues and amass a large network of racing venues, and establishing NASCAR Holdings, an incredibly profitable wholly owned private company.

Those times have dramatically changed and for too long, NASCAR teams have tolerated the exploitation and willingly bore the total burden to exclusively fund their operations through advertising and sponsorship. The rapid increases in costs of racing and teams’ operating expenses of the past 5 years, combined with the minimal increase in sponsorship value – have brought the teams’ very existence into question.

One must wonder, how long can the France Family continue their racing monopoly? Historically, race teams have avoided conflict with the France Family; and the only entities to challenge the France Family’s monopoly have been race track owners, such as Burton Smith and Speedway Motorsports. Even through the France Family has weathered many possible anti-trust challenges with settling most disputes outside the judicial system; I believe the current financial crisis and advertising recession is about to test the resolve of the France Family and their prehistoric business model.

In a stark contrast to the past decade, NASCAR is falsely promoting an image of growth and strength by stating that 15 new organizations have applied for licensing to compete in the Sprint Cup Series. What they fail to mention and what many novices are unaware – almost all of those “new” teams are merely opportunistic racers attempting to profit by a method called: “start and park”, which allows them to collect sizable race winnings (in comparison to their expenses) with a team and car specifically built to just run one or two laps, enabling them to collect profits – all without adding ANY value to the sport. What a sad day it is for the diehard NASCAR fan.

As many of you know, I was the founder of Bang Racing which was NASCAR’s most successful first year team in history. At the young age of 23, I built and operated this highly successful team and we made history finishing 2nd in our first race (Daytona) and winning our 13th race (Michigan International Speedway), which was the first win for Toyota in NASCAR history. While all this is now historical facts found in the archives of NASCAR history, what is typically not understood is that even as a very competitive team, our business model was fundamentally flawed because generating a profit was nearly impossible. Simply put; the cost of running a NASCAR team far exceeds its sponsorship/advertising revenue potential and without significant “business model” changes by the France Family, teams are doomed for failure.

NASCAR must be the only sport where the most profitable teams are the biggest losers’ and where finishing dead-last or not even attempting to win makes more money than being a top competitor. Something is dreadfully wrong when the most competitive teams with great on track performance cannot survive because the costs of running their teams far exceed their revenue potential. The problem is clear: without teams receiving a larger share of the sports’ multi-billion dollar television contracts – there will be no strategy that can make viable a long-term solution for the sport – that is the simple reality.

However, being the “optimist”, I hope Brian France and will realize quickly that his family has the unilateral ability to deliver the change in business model the teams and sport require to survive.

Nothing could be further from the truth and it pains me to see the sport I love destroyed by in-action and failure to comprehend the gravity of the economic times. The Big 3 automakers are on the cusp of bankruptcy, unless President Bush provides an immediate multi-billion dollar bridge loan from the Troubled Assets Relief Program (TARP). Without the Big 3 – the NASCAR economy will rapidly contract and a large percentage of teams will be added to list of defunct organizations. And with that – NASCAR thinks the sport is “strong” – but in reality – teams are dissolving faster than Kyle Busch racked up victories in the beginning of 2009; and without competitive teams – NASCAR is heading for a death spiral.

Without sweeping changes to the fundamental way NASCAR operates – the long term future is bleak. In comparison to Formula 1, following the announcement of Honda to close their F1 Racing operations, the FIA, the sanctioning body of Formula 1 racing, immediately acted with the support of their constructors (teams) to implement meaningful cost cutting measures for the 2009 and 2010 seasons. Formula 1 Cost Reduction Plan

This type of leadership and decisive action may curb future team closures and ensure the viability of the sport. Contrasting the bold leadership of FIA and F1 to NASCAR’s failure to address their challenges is cause for great concern. NASCAR’s value proposition for automakers and corporate sponsors is decreasing rapidly and they must act not only to increase their value proposition; but act to immediately cut costs and increase teams’ participation in the television revenues.

Without describing my complete cost reduction plans, the key areas that MUST immediately be changed by NASCAR are the following:

• Length of the race weekends – two day shows instead of three days at the track
• Reduction of race team members allowed at the track
• Elimination of credentials and “hard card” for necessary race team personnel
• Limitation of number of sets of tires available for use per race weekend
• Elimination of track testing at non-sanctioned race tracks
• Limitations of wind tunnel testing for aerodynamic development

As always, I offer my opinion to strengthen the sport and help ensure its long term viability.

Let’s examine the recent history and evolution of NASCAR: during the global economic expansion following the tragic events of 2001 – 9/11 & the death of Dale Earnhardt Sr., NASCAR experienced unprecedented interest from corporate sponsors; and growth was fueled by new television contracts with Fox and NBC. Because of NASCAR’s unique business model, which is vastly different than other sports, the industry flourished from 2003 until recently, gathering new teams, with investors and manufacturers flocking to the industry.

As a point of reference, NASCAR is the ONLY major US sport without a franchise model including profit sharing agreements. NASCAR Teams operate in a free market where teams must survive without much financial assistance from NASCAR Corporate; and where new teams can easily compete if they have the financial backing. I was a personal beneficiary of this policy – and at 23 years of age secured an agreement to led Toyota Motorsports into the NASCAR Craftsman Truck Series and went on to build  their competitive platform for their NASCAR operation.

I am very fortunate to have realized my lifelong dream of owning and operating a top tier NASCAR team; and even more rewarding to have brought Toyota Motor Sales their first two NASCAR victories.

However, this so-called free market is a complete farce! The teams must secure over 90% of their operating budgets from corporate sponsors – a/k/a advertisers. What is more infuriating, and what is not common knowledge, is that NASCAR and its sister company ISC retain the vast majority of the sport’s healthy television contract revenues, and even compete against the teams  for corporate sponsors -  the  lifeblood of the race teams.  As many know, AT&T was forced to leave Richard Childress Racing (RCR) as a primary sponsor because NASCAR Corporate signed an agreement with Nextel (now Sprint) with an exclusivity provision precluding other wireless and telecommunication companies from sponsoring any racing team. So with teams on the verge of a depression – and with automotive manufactures and corporate sponsors reducing their involvement – NASCAR is busy lining their pockets at the expense of the teams.

The most fundamental precept is that without teams – there is no NASCAR; but somehow teams have failed to act on this most basic concept to leverage their position within the sport. Maybe in the past the very wealthy owners such as Rick Hendrick, Jack Roush and Roger Penske were complacent and satisfied with receiving a nominal share in the television revenues; but in today’s economic climate and the ultra competitive advertising marketplace – teams who want to keep standing on their feet, need to act now and demand a fairer share in revenues – not for personal profit; but simply to survive.

The management of NASCAR has a real opportunity to bring forth a “rescue plan” to save teams from closing their doors and fracturing the appeal of NASCAR; which could have irreversible effects on future television contracts and ultimately the profits of the France Family. The beauty of the NASCAR “dictatorship” is that they don’t need to hold a vote or seek the opinions of others; instead, they can just swiftly act to provide an increase in the teams’ alterative revenues, which would enable teams to offer sponsors a lower cost of entry to advertise in NASCAR.

You can’t expect any company to spend $20M to sponsor a NASCAR Team – the ROI isn’t remotely competitive. NASCAR needs to think long term and be willing to sacrifice some of their short term earnings for long term stability and growth in the NASCAR economy.

Additionally, speculation is running rampant – Gillette Evernham Motorsports (GEM) will acquire Bill Davis Racing (BDR). With BDR having yet to secure a replacement for Caterpillar for the #22 Toyota Camry, the value proposition of the proposed acquisition appears to be strictly around the coveted partnership with Toyota Motorsports and BDR’s ownership in Triad Racing Development. So it appears that if both transactions are completed; and Gillette changes from Dodge to Toyota – Dodge Motorsports will be left with just Penske Racing and Richard Petty Racing. Furthermore, I suspect at the root of Gillette’s motivation to acquire BDR is the reality that Dodge is looking to leave NASCAR all together. As my readers know, earlier this month Dodge announced their plans to leave the NASCAR Truck Series and with the founding Dodge Sprint Cup Team (Evernham) possibly joining the Toyota camp through the BDR acquisition – I think this will be most definitive indication that Dodge is saying “bye bye” to NASCAR.

It’s rather apparent, that in 2009 the pit lane of the NASCAR Sprint Cup series will be dominated and owned by just a few organizations. One must wonder – will NASCAR reverse their policy to limit teams to just 4 cars? – Because in 2010, Roush Fenway Racing will be required to “sell” one of their teams which is expected to be transferred to Yates Racing. However, NASCAR may reverse or postpone plans to prevent any additional sponsorship deflections.

With primary sponsors becoming increasingly elusive and operating costs continuing to soar, the benefits of team consolidation may be the only way for the NASCAR teams to have a fighting chance of survival. The fact is clear: The economies of scale and integrated marketing advantages are vital to remaining competitive on the track and attractive to the few remaining potential sponsors.

Is there any hope for NASCAR’s future? Yes, but not without some major changes and “redistribution of wealth”. NASCAR’s unfair revenue model and overall lack of innovation are the primary contributing causes to the sponsorship crisis for race teams. NASCAR needs to immediately revise the distribution of TV revenues to fairly compensate the race teams – or face the reality that the life expectancy of many NASCAR race teams are limited at best and more teams will continue to close their doors.

“We’ll have no factory-funded teams.”

Delahanty told ESPN.com,

“When times are tough, there are certain things that are lower on the priority list than others.”

This leaves us to ponder: Are the other series next? For years, rumors have circulated that Dodge would pull out of NASCAR- is it finally happening?

Earlier this decade Dodge was a powerhouse in the NASCAR Truck Series, winning 46 of 99 races from 2001-2004 and championships with drivers Bobby Hamilton in 2004 and Ted Musgrave in 2005. This year, Dodge scaled back its involvement and provided manufacturer support only to Bobby Hamilton Racing-Virginia. However, Dodge informed the team that its factory support would end this season. Delahanty said the manufacturer’s involvement with the Sprint Cup and Nationwide Series is unaffected.

Now you might ask: why hasn’t NASCAR attempted to “fix” the Truck Series value proposition to raise its “priority” with Dodge and the other manufacturers – the answer is part of the problem for NASCAR – with unprecedented sponsorship deflections in the Sprint Cup Series, the Truck Series is a low priority for NASCAR.

As the former owner of Bang Racing, Toyota’s first NASCAR Team to compete in the Truck Series and the leading competitor of Dodge Motorsports, it is a sad day for the entire NASCAR community. As I have predicted, it is only a matter of time before all of the Big 3 reduce their involvement in NASCAR. The writing is clearly on the wall – the inverse proposition of marketing costs versus benefits is an alarming trend and appears to be continually ignored by the NASCAR leadership.

Instead of squarely addressing the concerns of corporate sponsors and automotive manufacturers’ – NASCAR seeks new automotive partners to rejuvenate the floundering Truck Series. In 1999, Dodge Motorsports announced their plans to enter the Truck Series and, at the time, were widely credited with saving the series. In 2003 the Truck Series was still floundering andfloundering and the Big 3 began scaling back yet again, but Toyota Motorsports and Bang Racing soon entered the the Truck Series and delivered an unprecedented amount of media attention which fueled substantial increases in technical, financial and marketing spending from the Big 3 manufacturers in the Truck Series. But now times are tough; and with the uncertainty and questionable sustainability of the Truck Series, combined with plummeting light-truck sales; the odds of NASCAR finding new automotive manufacturer partners is rather slim. Sadly, it appears NASCAR will attempt to solely treat their symptoms and leave the underlying problems unresolved.

As many F1 enthusiasts know, Fernando Alonso is calculating and plotting his next career move in order to place him back with a championship caliber racing team. Most motorsports’ analysts have assumed Alonso would stay at Renault for another year and then head to Scuderia Ferrari in 2010. But this may not happen – at least that is the opinion of Hans-Joachim Stuck; a famous Grand Prix driver in the 70’s who now heads up Volkswagen’s racing division. Stuck, who prior to his VW appointment was long associated with BMW, believes the German brand should strive for a long-term contract with Alonso to partner Robert Kubica.

As an avid Formula 1 follower, an Alonso-BMW deal may be the final element BMW requires to compete with the upper echelon Formula 1 organizations such as McLaren Mercedes and Scuderia Ferrari. But one must wonder will Alonso join another team which hasn’t yet proven their ability to challenge for a drivers’ championship. But then again, from BMW’s vantage point you certainly can’t argue with Hans-Joachim Stuck: “If you can secure an Alonso for the long term, then you must,” Stuck insisted. If BMW wants to increase their chances of convincing Alonso to commit – in the coming grand prix they better recapture the on-track performance they displayed earlier this season.

On a personal note, as a long-term fan of Fernando Alonso and a dedicated BMW driver; the combination of the two would bring a whole new excitement to the Formula 1 grid in 2009.