Reports of NASCAR's demise have been greatly exaggerated. Yes, the National Association for Stock Car Auto Racing, to give it its full title, is suffering a decline in sponsorship, attendance and financial stability. And yes, earlier this year, Richard Petty's venerable team was forced to merge to survive. Indeed, all the major motor racing series – NASCAR, IndyCar, Formula One and NHRA drag racing – are undergoing their own form of reinvention because of the slumping economy, just as other businesses and consumers are making big spending changes to weather the downturn.
Media reports have made for grim reading, with the Los Angeles Times the most pessimistic: "The recession has cut into race attendance, dried up sponsorship dollars, sparked mergers among race teams now incapable of existing alone, triggered hundreds of layoffs among the surviving teams, and left US carmakers – the backbone of American car racing – teetering on the edge of bankruptcy."
Well, not quite. "Obviously we are affected by the economy," says Brian France, NASCAR's third-generation chief executive and scion of legendary Bill France Jr. "The race fans are affected and the corporate sponsorship base is trying to re-set the business models and figure out the way forward in a recession."
Andrew Giangola, NASCAR's, chief spin doctor, says sponsorship renewals are running at a vigorous 90%. Not so bad, then. France admits his organisation has taken a hit but not the same punch that has stunned other industries. "We are pretty diverse in our different sponsorships and the companies that do business with us." He says he is also acutely mindful of the tapped out American consumer, reeling from a decade-long spending binge and struggling under record levels of debt. No wonder then NASCAR is looking hard a "price adjustments" for its fiercely loyal supporters.
There is good news. While some prominent sponsors – Texaco, Wrigley's and Napa – have abandoned the sport others are holding firm or expanding their NASCAR sponsorships. Aflac, the family-controlled insurance company, sponsored the car driven by Carl Edwards, who finished second in the NASCAR season standings, for just eight races last season. This year, the company has paid to sponsor his car for all 36 regular-season races. Aflac also introduced two new 15-second advertisements featuring Edwards and the Aflac duck during the flagship Daytona 500. Paul Amos, Aflac's chief operating officer, sees his company's association with NASCAR as an opportunity to "vault into a serious place of prominence".
True, insurance is not sexy but it is easy to see how car racing would add some sparkle to an otherwise dry industry. As for NASCAR's natural sponsors – automotive players – some are thinking of cutting back their involvement, others like ExxonMobil are sticking around. The oil giant has sponsored Roger Penske's cars for 18 seasons and has been the official oil of NASCAR for seven. Indeed, ExxonMobil entertained some 250 guests in its suites during the recent Daytona 500. "We're managing our costs in other ways than cutting communications budgets," says Jan Crowe, ExxonMobil's Americas marketing manager.
As for bums on seats, things could be worse. NASCAR attendance figures may be an amorphous thing, but estimates are that attendance was down roughly 10% last season, with the national economic problems only becoming readily apparent in the latter stages of the season.
France insists his company is weathering the downturn better than others. "Even now, we're more effective, we don't want to act differently on that," he says. "The biggest thing for us is the sponsorship stuff is market driven. We'll have to see where all that shakes out, but what we're focusing on is our fans and what they are going through in terms of their jobs or potentially losing their jobs and the anxiety they've had. We are re-pricing to be mindful of that so we will do all we can to help the fans get through and enjoy the sport that they love. That is really our number one issue."
Number two is arguably turning a profit. Like most privately-held concerns, NASCAR does not disclose earnings, but France claims his company is ahead of the pack. "It doesn't mean that we don't have significant issues and that we don't have significant challenges," he is quick to point out.
Brian France became chief executive of NASCAR in 2003 and, after the death of his father, Bill Jr, in 2007, inherited an 18.75% stake in the sanctioning body, worth an estimated $300 million. His sister Lesa France Kennedy owns another 18.75% and his uncle James France 36%. Uncle Jim is also chief executive of International Speedway, the sport's biggest owner and operator of racetracks, with a profit of $135 million last year on revenue of $777 million.
Although France has been CEO for nearly six years, he has been actively involved in NASCAR for more than 20. Having excelled in marketing and promotion, he began to apply his expertise to a business that had long made its name for the charms of remaining old-school. Bill Jr, who had succeeded his own father at the helm of the sport in 1972, had signed some TV contracts, along with a long-term title sponsorship with Winston, and larger sponsors began creeping in over time.
But national acceptance of the Southern-based sport, and respect for its long-standing power to market to the most committed audience in American professional sports, didn't emerge until the late 1990s. By then, Brian France had already helped lay the groundwork for the victories that would follow. He had, in his early 20s, begun signing major-market radio stations to broadcast races on the sport's Motor Racing Network. But he truly proved his mettle by working tirelessly for three years to engineer what became, in 2001, the sport's $2.4 billion television contract with Fox, NBC and Turner Sports.
NASCAR may be America's fastest growing sport, claiming a fan base of 75 million and a TV audience second only to the National Football League's. An army of about 100 Fortune 500 companies is involved in NASCAR, but its corporate sponsorship revenue is growing at a slower rate than in the past, according to the brokerage firm AG Edwards.
No matter. NASCAR executives are forever aiming higher. In 2000 they became the first major sport to open a Los Angeles corporate office, charged with becoming the most aggressive athletic player in cultivating the entertainment industry.
Six years later, that initiative has spawned a lucrative, if unlikely, partnership between Tinseltown and stock-car racing: Hollywood tapped NASCAR to sell its latest movies, TV projects and music; NASCAR, meanwhile, hitched onto Hollywood vehicles to extend the boundaries of its impassioned fan base. With Hollywood's help, NASCAR officials are integrating NASCAR drivers and story lines into every form of entertainment imaginable: from cartoons for the pre-kindergarten set to soap operas; from reality TV to made-for-TV dramas; from MTV videos to live race-day concerts; and major studio releases such as Pixar Studio's Cars.
What's next? "Right now, I think we're very much focused on the economic circumstances that we find ourselves in and making sure that our business model, which has some flexibility, can be readjusted and re-priced for this kind of economy," says France. "We are working a lot on that. We have to keep going on behalf of the industry and so there aren't any new initiatives that we will be announcing because we are focusing on our core business."
No recent initiative by the Frances has been more significant than the introduction of the standardised Car of Tomorrow, which is meant to enliven races by making it easier to overtake. It made its debut in 2007 at Bristol Motor Speedway in Tennessee, receiving sometimes sharp criticism from drivers. HA Wheeler, long-time race promoter and president of Lowe's Motor Speedway, said the Car of Tomorrow would produce close racing, which would produce rivalries and drama that could bring the fans back. "With this car, I can see that sparks will fly once again."
Sparks flew, initially among racing purists miffed at NASCAR's tinkering with racing traditions. "Like anything, if it is new it is going to be widely criticised until people can sort out if it is a really good concept," says France. The bigger idea is that with less belt-tightening poorer teams stand a better chance of competing head on with richer teams.
"Most of the teams that were critical now have seen the benefits that we had promised coming true, and they're very necessary now in light of this tough economy because part of it – a third of it – was getting the cost down. You need less car. You need less engineering support for the cars and everything else, so the car is very successful," insists France. "We are an entrepreneurial family and if it can add some value in something we participate in then we will do that."