Alex Meshkin

It is not possible to predict the road NASCAR will travel by the time we reach the final 2019 checkered flag, but it will be entertaining to speculate.

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.

2009 was a dreadful year for the print publications and it appears a mainstay in the NASCAR industry is also on the brink. It’s no secret that after the boom years of NASCAR earlier this decade, advertisers and sponsors have left the sport in droves – but until now the primary victims were racing teams. But on Monday, this time it was NASCAR Scene and its website, Scene Daily.

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.

Everyone is aware that a severe sponsor recession is hitting the NASCAR industry. But many are blaming the broader economic crisis as opposed to examining the dreadful trends eroding the NASCAR value proposition. NASCAR is facing a steady drop in television viewership, race attendance and overall fan interest, and the costs to operate a Sprint Cup team has almost tripled since 2002. Today, the top three teams – Hendrick Motorsports, Joe Gibbs Racing, and Roush Fenway Racing— are seeking complete season sponsorships between $22 million to $25 million. With the going rate per race anywhere from $500,000 to $750,000 – is there ANYONE who believes there is a ROI for sponsors at these prices? I don’t believe so.

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.

Questioning the future of Dodge’s continuing involvement in NASCAR is nothing new – back in September 2008, I wrote about the pending withdrawal of Dodge from NASCAR and unfortunately this appears to be the plan for 2010. (http://tinyurl.com/dlymm8)

Many, at first glance, didn’t feel that the Chrysler bankruptcy filing on Thursday would have any effect on the Sprint Cup teams backed by Dodge. And Chrysler was quick to issue a statement on Thursday reaffirming their commitment to NASCAR. It really should not come as a surprise that the new management from Fiat realizes the current iteration of the COT and the marketing platform offered by NASCAR is too expensive and doesn’t align with their new focus. Fiat/Chrysler’s new focus is on small fuel efficient cars and not on outdated large cars that inspired the NASCAR “Car of Tomorrow”.

Many sources strongly believed that Chrysler (Dodge) may pull its NASCAR funding in 2010. As many know, Dodge already slashed its motorsports budget by 30 percent this year. Then the question becomes this: What would happen to the teams that Dodge financially supports, if indeed they pull their support? That is the great unknown.

As I have professed for over two years, NASCAR is facing a crossroad; but yet, it continues down an ill-fated pathway of an outdated “Car of Tomorrow” instead of adopting a fresh approach that would leverage “green technologies” such as, biofuels and renewable energy, and a branding platform that is attractive to companies like Fiat. As I stated in July 2008,

You must wonder – why is NASCAR asleep at the wheel? Over the past decade, NASCAR has developed a phenomenal market platform for all types of companies – but without the financial and marketing support of the carmakers – NASCAR teams can’t afford to operate.
The time is now for NASCAR to embrace tomorrow’s future – alternative energy and fuel efficiency branding is required for the long-term viability of the sport as a marketing platform for the automotive manufacturers. (See: http://tinyurl.com/cwcjpj)

I am a strong believer that negative events create opportunities. NASCAR and the Big 3 (GM, Ford and Chrysler) at one time were going down a parallel road, but unfortunately as NASCAR started to become a rapidly growing mainstream sport in the early part of the decade and corporate sponsors rushed into the sport with their large marketing budgets looking to tap into this brand-loyal demographic, NASCAR lost sight of the value proposition and ROI required to keep the Big 3 involved in NASCAR. In the next couple of years, many will ask, why didn’t NASCAR do more to keep the Big 3 involved? The answer is quite simple, NASCAR and their Teams have a huge disconnect, and what’s good for NASCAR isn’t always what’s best for their Teams. Unlike all other major sports, like the NHL, NBA, MLB, and NFL; NASCAR team owners don’t have any say in the direction and decisions of the sport, nor do they participate in the financial upside during the good times. But what I do know is that they do bare the majority of the consequences during the difficult times. When Chrysler/Dodge leaves NASCAR, many teams will suffer and likely shutdown, but NASCAR Corporate will face very little short-term repercussions.

With the economic recession, dreadful environment for automakers and falling ratings of NASCAR racing, NASCAR has the opportunity to implement needed changes to put the sport in a position for growth and long term sustainability.

The solutions and answers for NASCAR are quite simple: race a car that is aligned with the automakers objectives, provide a fair distribution of revenues to competitors (teams), implement rigid cost controls; and, equally as important, please allow the drivers the freedom to race without the fear of penalties for relatively harmless actions. NASCAR, after all is said is done, should be entertainment.

The Associated Press (AP) has reported Brian France, CEO of NASCAR, has directed his management to work with teams in developing new business models that can help them withstand the current economic crisis. As we are all aware, NASCAR teams rely on corporate sponsorship to fund the majority of their operating budgets, which is substantially different than any other major sport. Whereas, NFL, NBA, NHL and MLB teams participate in higher levels of revenue sharing as a result of a franchise business model.

“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.

Sources are telling me that instead of focusing on reinventing themselves, NASCAR is anticipating a future without automotive sponsors. Is this an omission from NASCAR that they lack a value proposition? Regardless of the poor economy or slump in automotive sales – if NASCAR sponsorship has a positive ROI, automakers would not be consider jumping ship. The reality is simply the ROI for the automakers are far below most other mediums and NASCAR may finally be getting the message. But unfortunately, it may be too late for NASCAR to adjust and to keep the financial support of the Big 3 and Toyota, but surely it’s worth a more concerted effort to evolve their business model and objectives to try and retain the majority of their automotive partners.
NASCAR today must be more than just a marketing platform. It needs to become a technical platform and support R&D objectives for the automakers. Evaluating NASCAR in the most cynical viewpoint, one could argue that the archaic technology, i.e. the use of carburetors, instead of fuel injection, is continuing the public persona that the Big 3’s product portfolio is less than innovative. It’s time for NASCAR’s leadership to make the necessary changes in the best interests of their lifeblood – their teams and automakers.

I want to enforce my statements in my post on July 21st:

NASCAR has a real opportunity for leadership – and can provide automotive manufacturers a real marketing platform that demonstrates alternative energy as performance cars – that are viable, affordable and energy efficient – and return NASCAR to its roots as “stock car” racing at its best.

NASCAR is standing at the crossroads, where the wrong decision could be the final nail in the coffin. Their choice may be a future of IROC style racing or one of a balance of innovative technology with the proper cost controls in place to secure the long term stability of all stakeholders. Unfortunately, if NASCAR becomes the next IROC, I am afraid their future will most likely be rather bleak.

RE: NASCAR Says: Sport looks strong heading into 2009

Quoting the former Presidential Candidate and Senator Hillary Clinton, NASCAR statements on Friday truly requires a “willing suspension of disbelief” if they want us to think the “sport looks strong heading into 2009.”

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.

Frustrated over the lackluster excitement of the 2008 NASCAR Sprint Cup Series – I feel I am not alone. The racing was bland, personalities were muffled and there was not a compelling reason to watch most races. I tend to be a traditionalist in my view of the sport and the championship points system – but times have changed; and subsequently, their needs to be a dramatic adjustment to ignite fan interest.

We all agree that NASCAR has a lot of problems. Simply but, this may be an example of the “chicken or the egg” syndrome. The fundamental metric which must improve is fan viewership. While this is not the end all solution – it would significantly improve teams’ ability to attract more corporate sponsors. At the same time, increasing fan viewership alone will not fix the sponsorship depression and teams’ ability to finance their operations. NASCAR needs resurgence – and if fan viewership is a MUST to reverse the current trend to drive more sponsor interest – then HOW do they make it happen?

Unlike any other major American sport – NASCAR rewards consistency over victory. So basically, under the current points system – you could finish second in every race and pretty much be guaranteed the Championship in the Sprint Cup Series. I don’t know about you but I have never celebrated my favorite driver’s runner-up finish. The famous philosopher Ricky Bobby once said, “If you ain’t first, you’re last”. Or, as legendary driver Dale Earnhardt put it, “Second place is just the first loser”. It’s time for NASCAR to incentivize and reward winning! Fans celebrate winning drivers and sponsors reward winning teams – the Championship and monetary system needs to reward “winning” and not “staying out of trouble”.

I’m curious – is there anyone else out there wondering why a driver can win the Sprint Cup Championship without a single race victory? It doesn’t make sense to me! And furthermore 4 of the 12 that qualified for the 2008 Chase for the Cup didn’t even win in the regular season. Sorry guys, while I have the greatest respect for Jeff Gordon and Kevin Harvick – honestly, you didn’t win in the regular season (or the Chase for that matter) – so you shouldn’t have the opportunity to be the Sprint Cup Champion.

So here are the basics of my proposal to increase on-track excitement and create more fan interest:

• You must win a race during the regular season to be a part of the Chase for the Cup and the Chase should be limited to a maximum of 10 drivers.

• The Chase Contenders should have a completely different points system which makes the championship more competitive and puts an emphasis on race victories.

• Redistribute the championship fund year-end bonuses to individual race victories. For example, if you were to take $20M from the year-end points fund and add $550K to each race victory – that would increase the average race winnings for 1st place to about $1 million per race. This would encourage drivers to take risks and forgo their “points racing” mindset which is ruining the sport.

NASCAR’s failure to act and evolve – if continued down this slippery slope – will result in further sponsor deflections, which could cause an irreversible contraction in all aspects of the sport we all love.

Over the past several weeks, I have been inundated with inquiries about a variety of topics that I have discussed about the state of NASCAR and the sponsorship crisis. I feel compelled to address and clarify some of my previous statements and respond to a recurring theme of certain readers’ comments.
Many of the NASCAR faithful have repeatedly stated: “the sky is not falling NASCAR has a larger television audience today than in 2001”. While this may true – it has little to do with the enormous problems facing NASCAR today. The problem is one of economics that simply don’t add up.
As a former team owner, I can speak to the fact that there is an alarming disconnect between the highly profitable NASCAR Corporate; and the costs of operating a team and the corresponding costs to sponsor a team. It is NASCAR’s “disconnect” and perhaps even ignorance to the fact that NASCAR teams are facing a sponsorship depression that is the fundamental problem – and it is this blindness that will ultimately cripple NASCAR if they continue down this same pathway.
On Sunday, Brian France, Chief Executive Officer of NASCAR was asked; Are you certain you’ll have 43 car fields next year?

We’re pretty confident about that. I said before to many of you, you know, we’re also criticized for having too many cars.

I don’t know if he is taking lessons from the former Iraq Information Minister – Baghdad Bob.

But unless he is counting on Dave Marcus and Morgan Sheppard – having 43 competitive cars is extremely unlikely.
Just like the global financial crisis, the problems were not created overnight and may require the governing body to stimulate the NASCAR economy. But NASCAR needs far more sweeping changes than just the teams receiving a larger share of the television revenues. A variety of topics that must be addressed include; dramatic cost savings for the teams, incentives which drive fan interest – larger focus on winning -- less on consistency, and greater shares in revenues so teams can sell sponsorship packages for considerably less -- increasing the value proposition for corporate sponsors.
The basic message which seems to be lost in the entire dialogue over the sponsorship crisis – is not that companies haven’t wanted to become involved in NASCAR marketing – it is just cost prohibitive; too much risk and the ROI is difficult to measure. If we withdraw ourselves from the current economic crisis and rewind the clock to 2007; and if teams could have marketed Sprint Cup primary sponsorships for $10 million – do you think we would have the dramatic sponsor shortage of today? I don’t think so – the problem is primarily the price not the product.
Now I want to be clear – the product needs innovation and a fresh approach to bring die-hards back into the fold and make the sport more interesting to all sports’ enthusiasts. However, Brian France has only focused on the latter; and subsequently, by attempting to reach out to non-core fans he not only failed to grow the fan base, but he alienated many loyalists which has diluted the value proposition for many NASCAR sponsors.

On Sunday Morning, Bruton Smith conducted an interview with ESPN. After questioned about the challenging times that is facing NASCAR; Smith reaffirmed his desire to acquire NASCAR and said, “And it’s getting closer”, referring to the possibility of the France Family looking to sell NASCAR. Is Smith just stirring the pot? Or perhaps, is the France Family finally considering ending their strangle-hold on the sport?
Hypothetically, let us assume Smith’s statements are backed by an element of fact and that the France Family is looking to sell NASCAR. It is my opinion that a change in ownership from the France Family to Smith would not bring about the change needed to put NASCAR back on the track for growth. As discussed in my most recent blog entry, The Failing NASCAR Economy: A Time for Action! - NASCAR must act to bring forth changes to support its lifeblood – the race teams. A Smith regime would only continue the same old policies of providing the race tracks a disproportionate share of the television revenues as compared to the racing teams. These policies need to change – NASCAR Sprint Cup Teams must receive a greater portion of the television revenues earned by the sport – because without Teams there is no NASCAR. Yes, tracks are valuable, but as Formula 1 has proven, track owners and promoters are willing to host events without large subsidies from the governing body.
The best avenue to save our sport and put it back on track, allowing it to grow into the next decade, is for an entrepreneurial executive; who understands the sport, new media and the market trends to lead a leveraged buyout – partially funded by a team franchise model – where 43 Sprint Cup Teams would receive a minority ownership and participate in profit sharing to ensure the stability of the premiere NASCAR series – the Sprint Cup.
The impending fluctuations expected in the number of competitors in the second most watched sport in country – the Sprint Cup Series, is completely unacceptable. A new ownership structure must include policies and an agreement to secure the future of the Sprint Cup Series by enabling Team Owners to purchase Franchises and receive votes in the future of the sport that they have all built. This new structure would eliminate the sanctioning body from competing with teams for sponsors and create a more healthy sport to ensure its long term future.
2008 has been the year of “change” – Americans want “change”, NASCAR Fans want “change”, NASCAR Teams want “change”. If the France Family provides the opportunity for “change” in the leadership of NASCAR – let us all hope that it is the “right change” that comes to Daytona Beach.

The global credit crisis may be slowing the M&A markets of Corporate America, however, mergers and acquisitions remain all the buzz in NASCAR. Back in July, I wrote Team Consolidation on the Horizon and it appears more likely than ever that Michael Waltrip Racing (MWR) led by Robert Kauffman will acquire Chip Ganassi Racing.
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.

Two brands and two industries synonymous with NASCAR – Coors Light (Coors Brewing) and Texaco Havoline (Chevron) have in subsequent years cut ties with Chip Ganassi Racing and ultimately vacated NASCAR team sponsorship. The association and sponsorship of these two industries – Beer and Gasoline/Oil companies with NASCAR have by far the greatest value proposition; and yet they are leaving NASCAR? What is going on here? Even for someone like me who has been writing about the difficult NASCAR sponsorship market is surprised and concerned with Texaco pulling the plug on its storied NASCAR sponsorship program.

What is the root cause of these two prominent and long-term sponsors leaving NASCAR? The answer is simple: there are too many compelling alternatives which have a greater ROI and offer far less risk. Let’s be honest, primary sponsors are asked to commit up to $25 Million to purchase “so called advertising” without any meaningful guaranties of consumer advertising impressions. Sounds rather ominous, right?

Of course, sponsoring Dale Earnhardt Jr. and any of the other top performing drivers offers a unique value proposition: residue value through their brand loyal fans, merchandise and alike. But the vast majority of sponsors are receiving a diminishing ROI by virtue of the rising costs of NASCAR sponsorship and decreased television viewership and race attendance. Since 2004, the cost of becoming a primary sponsor of a top performing Sprint Cup team has soared by over 60% while television ratings have dropped by about 10%. The dichotomy of rising sponsorship costs and decreased television exposure is a disturbing trend which is primarily affecting the worst performing teams but could soon start to challenge the most elite NASCAR teams. The change in corporate sponsors’ attitudes towards NASCAR sponsorship shouldn’t surprise anyone.

However, NASCAR and its Teams have either refused or do not understand how to evolve in the digital age where advertisers can purchase measureable and interactive advertising with far less risk and much greater ROI. Unlike, most “traditional” businesses that reinvent themselves and innovate; NASCAR has failed to bring forth any meaningful innovations that can directly increase sponsors’ exposure and ROI.

Chip Ganassi Racing has had and continues to be one of the best performing open-wheel racing teams; and clearly delivers on and off the track performance for Target in the IndyCar Series. But unfortunately, Chip Ganassi’s foray into NASCAR has been a bitter disappointment. In 2006, Chip Ganassi secured Juan Pablo Montoya to pilot the #42 Texaco Dodge in the Sprint Cup series and hoped the media attention of the former IndyCar and Indy 500 Champion would ignite the performance and success of his NASCAR team. But excluding a few promising races (mostly on road courses) Montoya’s NASCAR career has underperformed. It appears Chip Ganassi Racing may be another victim of the sponsorship race; and soon join NASCAR’s elite defunct team list.

Unlike, the NASCAR Silly Season of 2008, Formula 1 hasn’t seen any real drama or excitement with driver swaps and changes as the paddock prepares for the 2009 season. But is that about to change?

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.

Earlier this week, ESPN expanded its motorsports digital content business through the acquisition of Racing-Live.com. Racing-Live.com covers Formula 1 (F1-Live.com), Moto GP; Superbike (Moto-Live.com), Rally (Rally-Live.com), off road Rallies (Raid-Live.com), Endurance Sports-Cars and Kart racing.

This announcement follows the acquisition of Jayski, a NASCAR gossip site in 2007. Racing-Live.com strengthens ESPN’s global business and provides a digital avenue to monetize Formula 1 racing through the site’s three million unique users per month.

I’m delighted that ESPN now offers sports fans world-class online coverage of football, rugby, cricket and motor racing, said Lynne Frank, Managing Director of ESPN, Europe, Middle East and Africa. Racing-Live.com is a leader in its category and has built a solid base from which to further develop our digital motor sports offering. We are particularly pleased that Racing-Live.com joins ESPN in the middle of another fantastic Formula 1 season.

It is going to be interesting to observe how ESPN integrates Racing-Live into its portfolio of digital media businesses; given Racing-Live isn’t the first digital media acquisition made by ESPN. Since the acquisition of Jayski in 2007, very little has changed and even its website has remained almost identical since its inception in 1996. The business model of Jayski is very different than traditional media sites and focuses primarily on unofficial team generated content – basically translated; employees’ of race teams share gossip, rumors, opinions and often lies about their employers and/or competitors. This model has created a very sticky site and thus was a procuring reason for ESPN acquiring Jayski.

Some may wonder if the Jayski model would be successful in Formula 1. I seriously doubt it and this is why: NASCAR is a unique culture with the rumor mill driven primarily by the close physical proximity of all the race teams. Speaking from personal experience; if I had lunch with a driver from another team – it would instantly be posted to Jayski …”hearing XYZ driver may be headed to Bang Racing.” While there is an element of truth to the “gossip”- it is usually twisted with an element of fiction.

Because the culture of NASCAR Sprint Cup is clearly trending more towards Formula 1 than vice-a-versa; and with the super teams becoming more self-sufficient and less reliant on vendors to support the sponsorship development process; it is likely that Jayski’s sources will be minimized at best and rumors and the like will become less prevalent.

With that said; don’t expect to see ESPN exporting the Jayski business model over the pond; but maybe expect to see Racing-Live expanding into mainstream American motorsports.

Today marks the 4th anniversary of Toyota’s first NASCAR Victory during the Line-x 200 at Michigan International Speedway -- (July 31, 2004). It was the 13th race for Toyota and my race team (Bang Racing). That historic day in NASCAR; also became a day I will not soon forget. Toyota and I made NASCAR history; setting records and I became more than just the youngest team owner in history -- but now a victorious team owner at just 24 years of age.

It had been a turbulent few weeks leading up to this incredible day. Perhaps; in some ways, this made the win ever sweeter. I had recently made significant personnel changes to improve our racing operations and team chemistry; wanting to provide a better chance to score our first victory. Our two race teams entered Michigan International Speedway with a renewed confidence and attitude following the departure of Larry McReynolds from Bang Racing and we expected to demonstrate our team’s unity and potential at the Line-X 200, a race event sponsored by Line-X Spray-On Bedliners, one of our team’s primary sponsors.

We didn’t disappoint our sponsors or racing fans that day; our trucks combined to dominate the entire event finishing 1st and 3rd and bringing Toyota a victory in the backyard of the Big 3 American Carmakers. Much was noted in the press about this precocious internet whiz kid who came out of nowhere to lead Toyota’s flagship racing team and become the youngest NASCAR team owner; and then, breaking numerous NASCAR records and going on to make history as the most successful first year race team. It was a tremendous achievement for our new team; and an honor to herald the banner for Toyota in their inaugural year in NASCAR. But equally rewarding was having a childhood dream become a reality.

This dramatic victory has paved the way for today’s on-track performance of Toyota’s flagship NASCAR teams. But Bang Racing will always remain in the NASCAR and Toyota motorsports history books -- as the team which brought Toyota their first victory in NASCAR. Without a doubt, this victorious day was etched in the hearts of many and will not be soon forgotten.

Alex Meshkin and Bang Racing Make History -- Toyota’s First Win in NASCAR

Rumors are swirling that Jamie McMurray, currently the driver of Roush Fenway Racing’s #26 Crown Royal/Irwin Tools Ford, will be the driver of Richard Childress Racing’s 4th team, to be sponsored by Cheerios/General Mills.
Could this be a sign that Roush Fenway Racing is unable to secure a replacement sponsor for the American Automotive Association (AAA); and perhaps plans to accelerate its mandatory downsizing one year earlier?
On the other hand, it’s no secret that both Jamie McMurray and Jack Roush are extremely disappointed by their performances and both would welcome a change. However, with the enhanced marketing competition from Stewart Haas Racing, it’s unlikely that Roush Fenway will find a suitable replacement for the AAA and will be forced to move David Regan into the Crown Royal/Irwin Tools Ford.
As NASCAR Silly Season comes to a peak at the end of August, expect more announcements on the future plans of Ryan Newman, Martin Truex Jr., Casey Mears and Jamie McMurray.

When I reflect back to 2004, the NASCAR Craftsman Truck Series was on top of the world. This resulted in part from unprecedented levels of financial commitments from the Big 3 American automotive manufacturers and the grand entrance of Toyota into NASCAR. Because GM, Ford and Dodge made every effort to fend off Toyota Motorsports’ success during their inaugural year in NASCAR, balanced competition was created – and resulted in one of the most competitive racing series in the world. Furthermore, the Truck Series received a tremendous amount of public interest, record viewership, attendance and possibly the most important factor of all – awareness in the mainstream media.
As many of you know, I owned Bang Racing and led Toyota Motorsports’ racing team to a victorious year achieving record results for a newcomer to the series and sport. We won our first race in our 13th attempt – and consequently fueled our continuous mainstream media exposure. I was the first NASCAR Team Owner ever to appear live of the Fox News Channel and received international attention which created a cycle of vital media interest to fuel sponsorship demand and ROI for all of the Truck Series teams.
However, the Truck Series is a different animal today. Over the course of the last few years a lack of interest and dwindling financial support from the Big 3 – has morphed the series into nothing more than Toyota versus the independents. This one-sided competition is apparent in the absence from corporate sponsors and the lack of interest from the mainstream media.
Last year, Craftsman announced their leaving the series as the title sponsor. This is clear indication of the limitations the Truck Series has as a marketing platform. In contrast, back in 2003, as the owner of Bang Racing, I had both Craftsman and Snap-On Tools competing against each other to become the Official Tools of Bang Racing and a Major Associate sponsor of my team. And now -both have vastly reduced their involvement in the Truck Series altogether.
I speak from personal experience. Looking back to 2004, the marketing appeal of the Truck Series for corporate sponsors was rather limited. Today without the financial assistance of the Big 3 and practically little hope for its return; combined and with the rising costs of fuel and decreased consumers’ demand for light trucks and SUVs – NASCAR can’t hang the hopes of the Series on the unlikely event of another Japanese automotive manufacturer saving the Truck Series from its untimely demise. NASCAR must make significant changes to the scheduling, promotion and positioning of the Truck Series if they intend to secure the long-term viability of the Series.

The day is fast approaching when the automotive manufacturers are going to reign in their motorsports budgets to reflect the current state of the automotive industry. The fundamental issue with NASCAR as a branding tool for the car companies is that it fails to demonstrate the future product portfolio and demands for “green” vehicles.
Even though financial uncertainty for the Big 3 car companies is really nothing new – surging fuel prices have disproportionally affected the U.S. carmakers vs. their foreign counterparts. This is because of their reliance on profits from the sale of light-trucks and SUVs. In May, GM saw a 37% decline in light truck and SUV sales; and subsequently its share of the overall U.S. market dropped below 20%, a new low for the automotive giant that in 1980 had 45% of the U.S. market.
Over the past couple of years, as the trends of high fuel prices and the decrease in light truck and SUV sales became a reality – NASCAR adopted rules and policies to further alienate the automotive manufacturers from the sport. Instead of embracing alternative energy branding or a “green” platform – the recent implementation Car of Tomorrow (COT) – is nothing more than an antiquated “led sled” and continues a branding platform that labels the U.S. carmakers as gas guzzlers.
Some may ask, but isn’t racing and “green” technology or fuel efficiency an immediate dichotomy? The simple answer is NO – at least it doesn’t need to be.
I am the last person to believe that Ethanol fuel is the answer to our energy crisis or believe it will be the long-term solution for consumers and carmakers alike. However; one must recognize the success of Honda and their racing program in the Indy Racing League (IRL) – the IndyCar Series.
Back in 2006, the Indy Racing League (IRL) and IndyCar Series adopted the use of Ethanol fuel instead of traditional gasoline to provide Honda (their sole engine provider and automotive manufacturer) a marketing platform to appeal to the growing consumer demographic interested in alternative energy sources and “green” technology. When you compare recent sales results of Honda versus GM, Ford, Chrysler and Toyota – you must see the correlation between their brand positioning and the motorsports platform of the IndyCar Series. As of May 2008, Honda is now selling more cars than Chrysler.

Last week, GM racing director Mark Kent said that every level of motorsports that GM supports-from the giant stock-car racing series NASCAR to the grassroots Sports Car Club of America-is being evaluated. “Racing is not exempt (from cuts),” Kent said last week. Troy Clarke, president of GM North America, added: Motorsports “have not gone without scrutiny. I’m not going to get into specifics about NASCAR. But there will be modifications-changes in our marketing footprint-in this area.”
You must wonder – why is NASCAR asleep at the wheel? Over the past decade, NASCAR has developed a phenomenal market platform for all types of companies – but without the financial and marketing support of the carmakers – NASCAR teams can’t afford to operate.
The time is now for NASCAR to embrace tomorrow’s future – alternative energy and fuel efficiency branding is required for the long-term viability of the sport as a marketing platform for the automotive manufacturers.

Robert Kauffman is the billionaire hedge fund manager from Fortress Investment Group who last year purchased and secured control of Michael Waltrip Racing (MWR) looks now to be leading a movement of NASCAR Sprint Cup Team Owners to survive through consolidation. Personal friendships may even play a significant part in the boardroom discussions. The likely first deal will be the merger of Chip Ganassi Racing and MWR. Both teams currently field 3 Sprint Cup teams and the merged entity would likely be a 3-4 team Sprint Cup organization – a net loss of 2-3 full time teams.
Oh yes, and here is the friendship part of this deal – Chip Ganassi has had a long standing relationship with Lee White, the newly appointed President of Toyota Racing Development (TRD) – and with the financial uncertainty of Chrysler (Dodge), this would provide Chip Ganassi the ability to leave Dodge and become part of the Toyota Motorsports umbrella. Secondly, the “Waltrip” brand no longer has the luster that once existed and it’s unlikely that any new prospective primary sponsor would consider aligning itself with the MWR organization. However, MWR does have a coveted deal with Toyota and with the merged resources of the two organizations; a talented driver like Juan Pablo Montoya should perform far better in 2009 than any of the organizations’ current teams and drivers.
In early 2007, I recall many NASCAR insiders suggesting that the 43 car field needed to be expanded to accommodate all the “new” teams and the “growing” enterprises which make up the Sprint Cup Series. Boy, haven’t the times quickly changed? In 2009, 43 competitive cars in the field will only be a sweet memory.

NASCAR officials have notified team owners in the Nationwide Series that they will delay the introduction of the Car of Tomorrow (COT) in the Nationwide Series by at least one year. According to Ramsey Poston, Managing Director of Communications at NASCAR, the reason for the change is because “testing and development” is still needed before the car is approved for competition.
While that does sound very nice and tidy, the real reason is far more ominous – and the decision was based upon the economic impact on the independent teams in the Nationwide Series. The introduction of the COT would require teams to replace their entire fleet of race cars and it would be financially inconceivable and ultimately would devastate the Nationwide Series in 2009.
Back in May, I wrote an article Car of Tomorrow (COT) – Friend or Foe for the Nationwide Series; where I foretold of the impending disaster of the COT for the Nationwide Series and quoted Dale Earnhardt Jr. about his race team’s future plans and the viability of the Nationwide Series with the COT:

And they’re going to bring a COT in and we won’t be able to race in the Nationwide Series with the COT probably. That’ll just be too expensive to switch all that over. …And the COT program is going to be too expensive for me to justify creating a whole new program with COT stuff, so I’d just as soon go into the Cup Series or get out of the Nationwide Series altogether.

An official announcement is expected from NASCAR in two weeks.