I believe it’s time for NASCAR to hire a Chief Digital Officer to lead the development and implementation of a marketing strategy and business model to engage fans across digital platforms. And equally as important, work in concert with broadcast partners, corporate sponsors, teams, drivers and digital media entrepreneurs to maximize the potential of the digital medium.

For the sake of all stakeholders, let’s hope Brian France is listening and takes intelligent action that is currently available to quickly reverse the downward trends before ratings, attendance and corporate sponsorships are permanently in reverse.

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).

While many believe that Spotify and/or Mog are going to transform the music industry and somehow replace the revenue from the fast eroding music purchaser, I am doubtful this approach will save the industry.  Furthermore, this dialogue camouflages the true problems with digital sales. In the physical world, Ownership and Access are clear cut user experiences each with their own value proposition. In the Digital Age content is easily available through illegal file sharing, and digital ownership experiences are limited and governed in a way that challenges the integrity of the intended experience. Therefore, if media executives are committed to electronic sell-through or download to own content, they must re-examine how they define digital ownership and encourage meaningful innovations.

Again, looking at the music industry, Lala introduced a novel access based business model – but failed to gain traction because of other more compelling (free) access models in the marketplace. Without question “free” access is highly desirable for consumers, but content owners and entrepreneurs have yet found a profitable monetization strategy. In December, when Apple acquired Lala, most industry insiders recognized Apple’s desire to transform iTunes from a pure download to own experience to a cloud-enabled ownership model. The complexities of music licensing however, may prevent this vision coming to fruition.

In the music industry, there are competing opinions of what is meant by “Digital Ownership”.  Michael Robertson, an outspoken critic of the licensing practices of the industry, founder of MP3.com and current CEO of MP3tunes.com, has spoken frequently that consumers should have the right to stream their personal owned music from personal lockers or cloud services without the service provider being responsible paying additional royalties to labels. But labels on the other hand, contest this position and argue that cloud based streaming constitutes a different licensing right than electronic sell through and thus triggers additional royalties.

No matter which side of the argument your business interests may place you, the greater argument where I believe most would agree is that increasing the rights associated with “Digital Ownership” will make digital content more attractive to consumers, thereby making them more likely to become purchasers.

Those who believe that consumers want Access and don’t care about Ownership may be right. But then again, it may be those who believe that consumers want to own content, who are correct. Regardless, both sides would likely agree that Digital Ownership needs flexible usage models that include anywhere, anytime access – and responsible sharing or trading, otherwise, it is just not an attractive enough proposition to purchase digital content. Without innovation around Digital Ownership, the media industry may not have a choice – leaving them without an electronic sell through option to monetize digital content.

Just as technology has created unprecedented opportunities for Access models, the same holds true for commerce models that deliver on the promise of Digital Ownership. To date, there isn’t a single digital music, movie, television, book or gaming service that has delivered a Digital Ownership experience that exceeds the physical media experience.  Until entrepreneurs and content owners effectively deliver on the promise of the Digital Age – none of us will fully embrace digital content ownership.

(Disclaimer: I am the CEO of huvi, a digital media service that is under development that promises to revolutionize what it means to own digital content.)

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

“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.

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.

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.

My unique perspectives are a result of “one of kind” experiences which are vastly different than any other thought leader in the NASCAR industry: a web 1.0 entrepreneur, NASCAR Team Owner (Bang Racing), and today, an executive in the current social and digital media industry. While there are unlimited opportunities for NASCAR to leverage digital media technologies and corresponding social/digital business models; I have a specific proposal for NASCAR and specifically Paul Brooks, President of NASCAR Media Group.

I know from my personal experiences in working with Paul Brooks at NASCAR, he is one of the most forward thinking executives at NASCAR and I hope he embraces the following proposal. For those unfamiliar with NASCAR’s approach to partnerships and licensing; NASCAR has historically required substantial licensing fees to pursue any type of business relationship, which in all fairness has generated significant profits in the past decade. However, moving forward in the dynamic digital economy and facing the challenges to continue to grow their audience and fan base, NASCAR must now look to tap into emerging technologies and unlock entrepreneurial ingenuity to develop innovative business models to increase fan exposure and create new revenue sources.

The first initiative I believe NASCAR should pursue is to open up access to the racing data acquired through the on-board computer/black box. Just to be clear, I am not suggesting that NASCAR should allow live telemetry for the racing teams, but I am proposing an online database which could be accessed for technology entrepreneurs, game developers, media, and entrepreneurs and racing teams. By enabling open access to the racing data that could be parsed and leveraged, businesses and entrepreneurs could bring forth innovation to drive new revenue sources and digital media exposure for NASCAR and its teams.

Technically speaking – NASCAR needs to publish a set of Application Programming Interfaces (APIs) which could be available for commercial and non-commercial use that could create the opportunity to unlock the creativity of technology and digital media entrepreneurs and leverage the private equity markets to develop business models to reignite the excitement and consumer interest in NASCAR.

Even though my current business focus has little to do with NASCAR or motorsports, I strongly believe that NASCAR must embrace new media business models and techniques. Paul, if you are interested to speak regarding these ideas -you know how to reach me.

Best, Alex Meshkin.

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.