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.

Most will agree that the current economic recession will have a significant financial impact on NASCAR teams and the sport as a whole – but does it really need to be this way? In 2009, there will be significantly less Sprint Cup teams competing on a weekly basis – and yet, in economic downturns other sports such as the NFL or NBA do not have reductions in teams. Why is this so?  The answer is rather simple – other sports operate as a democracy with all teams participating in the economic benefits of the television contracts; while NASCAR on the other hand, is structured much closer to a dictatorship – with the profits being retained by NASCAR Corporate which is owned solely by the France Family.

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 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.

The first domino has fallen in the shakeup with the Big 3 automotive manufacturers’ involvement in NASCAR. The exit announcement by Dodge is the latest blow to the NASCAR Craftsman Truck Series which has yet to find a title sponsor to replace Craftsman in 2009 and beyond. In 2009, Dodge will not provide any financial support to any teams in the series. Dodge Motorsports senior manager Mike Delahanty said,

“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.

Looks like Joey Logano will be the ultimate beneficiary of Tony Stewart leaving Joe Gibbs Racing (JGR). All signs are indicating that Joey Logano will receive the nod from Joe Gibbs to replace Tony Stewart in the #20 Home Depot Toyota Camry for the 2009 season.

The Joe Gibbs Racing plans call for the 18-year old to make his NASCAR Sprint Cup debut at Richmond International Raceway on September 6th, with additional races to be announced within the next 2-3 weeks.

Logano has had an impressive racing career over the past several years as he moved from ASA to the NASCAR ladder system. But one most wonder if he is moving to Sprint Cup too soon? Unlike most of the young talents in their inaugural season in Sprint Cup, in 2009 a direct comparison will likely be made between Logano and Kyle Busch. Kyle is the top performing driver of 2008 and will now be Logano’s teammate, both having identical equipment. With that said, this could make an interesting brew and could be a difficult test for young Logano as he attempts to demonstrate his talents. If he disappoints – it could have devastating implications to the youngster and may ultimately detract from his progression; consequently harming his long term prospects.