What most fans don’t realize is an insider’s little known secret – nearly ALL NASCAR teams are financial failures. Even the most successful teams, such as Hendrick Motorsports or Penske Racing – are dreadful businesses – and would be unsustainable if not for their wealthy owners. Unlike nearly every other sport, where the most successful and popular teams are profitable and have long term shareholder value, the on-track success or even popularity of a NASCAR team has little impact on the financial results of the team. It is shocking to learn that the operating budget cannot even be met for a team that wins every single race, when the race winnings are barely 40% of the operating budget. How can teams survive – and even more so, how can this sport survive?

Some may argue an antiquated assessment – successful on-track performance will translate into more sponsorship dollars. However, in today environment the annual NASCAR team budget (each car) exceeds $20 million dollars.

With that being said, NASCAR has the potential to unlock opportunities to revive the financial outlook of the sport. But it must begin with reacquiring all the digital rights that have been irresponsibly divided and parsed between Turner Sports and Sprint. NASCAR needs to stop licensing and giving up rights for short term financial gains of the sanctioning body and recognize that the digital channel may be the last and best hope for teams to survive. This begins with a cohesive digital strategy that works across all broadcast partners – instead of isolating TNN (Turner) from Fox, ESPN, and NBC. If NASCAR.com is going to offer a live simulcast of races during TNN broadcasted races, which I support, NASCAR needs to find an acceptable business model to extend this platform to all broadcast partners. While this would be a good foundation, the real opportunity is to unlock real-time data from the on-board black boxes (telemetry) and team communications to a broader set of partners and participate with revenue sharing agreements to monetize these underutilized assets. (NASCAR Must Embrace New Media: Proposal Attached).

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.

On the flipside to NASCAR’s continued problems with retaining the support of the automakers, IndyCar Racing is poised for a significant rebound in sponsorship demand and automotive support in the coming years. There is widespread speculation that Volkswagen/Audi, and possibly Toyota, BMW and Mercedes-Benz may join the IndyCar series in 2012. This is the result of IndyCar’s long-term vision and planning to strategically position itself as a “green” marketing platform for the automakers. A few of years ago, a move to NASCAR may have been considered a “step up” – but one most wonder if that still holds true today. Two of the most prolific IndyCar racers in this past decade struggled (and I am being kind) in their attempt to cross over to NASCAR. Dario Franchitti, the 2007 Indy 500 and IndyCar Champion failed miserably in his 2008 NASCAR foray and Sam Hornish continues to struggle. I don’t mean to be disrespectful to Danica – but she couldn’t remotely keep pace with Sam Hornish or Dario Franchitti in IndyCar, so I don’t expect her to be any more successful than Dario or Sam in NASCAR (Note: Dario and Danica were teammates 2006-2007). The odds are clearly against her if she makes the move.

My sources indicate that NASCAR, led by Brian France is offering significant guarantees to lure Danica to NASCAR. So if her primary motivation is money – we should expect her to make a debut later this year in preparation for the 2010 NASCAR season. A more intriguing question remains – why is NASCAR focused on attracting one driver, when the entire sport, (namely race teams), are facing financial annihilation? This not only is short sighted, but outrageously blind to the real problems facing the sport.

Many believe Danica is NASCAR’s bandage to stop hemorrhaging sponsors, fans and other commercial interest. I remain skeptical. While I agree she would drive a short term bump in ratings- the fundamentals of NASCAR racing is spiraling out of control – and no amount of estrogen is going to stop the bleeding. NASCAR needs to focus on fixing the business model challenges for teams and improving the COT – so the on-track racing can return to what fans deserve and expect.

Treating NASCAR like an amusement park and adding a new “attraction” may seem like a good idea – but in the end, it will only disguise the fundamental challenges that may devastate the sport that many still love. And Danica, well, she may be just another bump in the road for NASCAR – and at the end of the day, regret

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.

The sports site online advertising market is mostly untapped by NASCAR and remains a huge opportunity for race teams to tap into and ensure their continued viability in these difficult economic times.

While the most dedicated NASCAR fans are not your typical early adopters of online services; there still remains a tremendous opportunity to harness the power of the loyal demographic who embraces the internet as a regular source of news and entertainment. According to Quantcast, NASCAR.com generates approximately 3.7 M monthly unique users and peaks at over 6.5 M during the beginning of the season. So while the audience may be limited in numbers, the unmatched advertiser loyalty provides a desirable market opportunity to distribute content directly to fans through digital channels for racing teams such as Hendrick Motorsports, Roush Fenway and Joe Gibbs Racing. Unlike the franchised sports teams of the NFL, NBA, NHL and MLB; NASCAR Teams have complete autonomy of their online presence and content. This provides a significant value proposition where teams can leverage their content through a variety of online business models to create interaction with fans and ultimately new sources of advertising revenue. This would likely result in considerable exposure for their existing sponsors; and consequently create a new advertising inventory that would be measurable and provide a clear Return on Investment (ROI).

As a former NASCAR Team Owner, Sports Marketer and Digital Media Entrepreneur; I have succeeded in bringing new sponsors such as eBay and Toyota into NASCAR, and leveraged online advertising to unlock revenue sources from digital channels that created a history making NASCAR racing team. The potential has never been greater and the most successful teams have the largest market opportunity to generate significant value that can be monetized in the digital economy.

When specifically analyzing NASCAR as a marketing platform it’s undisputed that it provides unparallel consumer brand loyalty for sponsors; however “die-hard” fans, which are the most brand loyal – are unfortunately also a dying breed. As our country continues to face high inflation and a challenging economy for the middle-class, which is the loyal mainstay of the NASCAR demographic; it will become a less attractive marketing medium to corporate marketers.

Across the country, many businesses are attempting to adapt to this challenging economic market. Over the past number of months, the newspaper industry has announced wide scale layoffs as they attempt to transition their business to more online operations. The latest causality is The Atlanta Journal-Constitution that announced cuts to its work force by approximately 8 percent or 189 jobs. NASCAR is not alone; and needs to take heed and understand that it is no different than t the challenged models of the newspaper and Old Media industries – which also offer a branding and awareness platform with no real method to measure customer acquisition for its advertisers. Old Media is in a state of peril; and NASCAR and its teams must not make the fatal mistake of assuming they are immune to the fragile economy. Now is the time for them to reinvent themselves or they will face a similar dreadful business fate for their sponsorship prospects.

As a lifelong fan, former team owner and new media entrepreneur – I see numerous avenues to upgrade NASCAR from its current “1.0” platform to a “2.0” marketing approach; and leverage digital media technologies and social marketing techniques to provide unparallel fan interaction and advertiser ROI.

Back in 2003, in conjunction with the launch of my team Bang Racing with Toyota Motorsports, I developed a marketing platform and corresponding online venture to engage consumers and enable advertisers to target fans with online promotions and incentives. We successfully deployed a “points” based auction powered by eBay (a Bang Racing sponsor) and delivered unmatched ROI to our sponsors.

Today there exists technologies, which if employed could provide NASCAR and teams with a solution. Available web 2.0 architecture and social marketing techniques would enable NASCAR, teams and sponsors to leverage existing technology and increase their exposure, interaction and ultimately the sponsors’ ROI.

The most basic web 2.0 technologies, which have transformed online marketing, journalism and even politics, are “blogs”. They are free and easy to use but yet, not a single driver, team or even NASCAR has implemented one. This most basic concept is far beyond the understanding of most NASCAR insiders and demonstrates the antiquated approach to marketing.

NASCAR racing is entertainment and content; and while NASCAR Corporate controls the “content” at the racetrack; and teams are unable to successfully monetize their at-track presence – racing teams do have the ability to monetize their “content” away from the track – if they employ these new technologies. “RaceWorld”, which was a failed attempt by Michael Waltrip to engage fans in a physical structure, further demonstrates a lack of current business and technology savvy of NASCAR teams. Today, teams must embrace and engage fans through technology and the internet rather than expensive and traditional channels. A great case study is the success of online video – which is dominated by user-generated content – not by television networks or studios – this is the genius of the success of YouTube.

NASCAR teams, such as Hendrick Motorsports, Roush Fenway Racing and Joe Gibbs Racing could offset the devastating effects of projected manufacturer financial support losses and a difficult sponsorship market by simply distributing content through a variety of successful online businesses, which would increase advertisers’/sponsor’ impressions; while providing new revenue sources.

Through the use of live online streaming, micro-blogging, social networking and other web 2.0 concepts – NASCAR Corporate, racing teams and motorsports sponsors have the ability to receive an ROI capable of sustaining the growing costs of the sport. What are they waiting for – the race is on – and time is running out!

It’s ironic – the same rules that help you one season can come back to bite you the next. Case in point, the guaranteed starting position, which is afforded to the teams in the Top 35 in points, has been one of the motivating factors for the switch by Caterpillar to RCR (RCR #31 team is 2nd in the point’s standings). If you recall – this unfortunate rule was instituted by NASCAR only after the BDR Caterpillar team failed to qualify for a race in 2004 under the old rules. Regardless, you must congratulate RCR on their off-track success as they strengthen their organization to be better positioned to effectively compete with the super teams of Hendrick Motorsports and Joe Gibbs Racing.

Since 2002, the last year BDR won a race, they have rapidly unraveled and are clearly on the road of becoming defunct. In 2008 we see RCR redefining success with having 3 teams in the top 12; while two other organizations are teetering on the verge of extinction.

(full disclosure: In 2005, my team (Bang! Racing) was adding a Sprint Cup team and the Top 35 rule resulted in the loss of new sponsors)

Congratulations to Dale Earnhardt Jr., the Earnhardt Family and Hendrick Motorsports.

“I used to say no way, no way. But it’s almost as expensive to run in the Nationwide Series. 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.”

Dale Jr.’s statements raise an alarming concern on the viability of the Nationwide Series. Let’s be honest – if the Nationwide Series business model doesn’t work for JR/Hendrick Motorsports – why then, would anyone think it would work for someone else? I have a hard time envisioning any other team being able to justify the capital expenditure required to compete in the NASCAR Nationwide Series with the COT. The pending arrival of the COT to the Nationwide Series couldn’t be at a worst economic time. Even teams such as Richard Childress Racing (RCR) are struggling to find new sponsors; and in retrospect, recently announced that the former Championship #21 team would be reducing its schedule in 2008 for the Nationwide Series due to a lack of sponsorship.

It’s undisputed that the COT provides enhanced safety for the drivers – which are undeniably priceless. However, compensation for improved safety should be at the forefront of NASCAR’s economic model and NASCAR should provide assistance for the teams’ through financial allowances to ensure that drivers and crew members are safe; while at the same time, enabling team owners’ to survive. It’s unfortunate that team owners must bear 100% of the financial burden of safety while NASCAR corporate continues to retain the vast majority of revenues and profits – continuing to drain many of the teams’ livelihoods – and perhaps even to the sport’s future longevity.

If I was still an owner of my NASCAR team (Bang! Racing), I would organize the Nationwide Series Team Owners to take a stand and demand financial assistance from NASCAR to adopt the COT in 2009. If Dale Jr. can’t afford to- who in the world can?

Every year, there is always one driver who defines all of Silly Season and in 2008 – that man is Tony Stewart. But to be realistic – you must believe that most, if not all sponsors considering a change (or any potential new sponsors – are there any?) will wait until Stewart makes up his mind before finalizing their 2009 plans.

It is well known that Stewart wants back into the Chevy camp where he has won two NASCAR Sprint Cup Championships and over 30 races. So that leaves Stewart with only two legitimate options – Hendrick Motorsports or Richard Childress Racing (RCR). Yes, RCR has won more races than Hendrick in 2008 but I would be shocked to see Stewart join RCR and race the Cheerios car. But on the other hand, Hendrick already has four drivers – didn’t they say they had “no room at the inn” last year before signing Dale Jr.? Could Casey Mears be moved to a satellite team like Hass CNC? Let’s just imagine – Dale Jr., Jeff Gordon, Jimmie Johnson and Tony Stewart all as teammates?

Only time will tell where Tony Stewart lands in 2009 – but the drivers better be ready to grab a seat because once Stewart decides on his plans – it will be pretty easy to be left without a seat once the music stops in the high stakes game of NASCAR Silly Season 2008.