The “secret” is out: NASCAR is facing significant problems. Since 2007, when the downturn became more pronounced – NASCAR’s management has attributed their accelerated drop in race attendance, corporate sponsorship deflections, and decline in television viewership to the faltering economy. But clearly, any objective person should recognize the economy has only heightened the fundamental flaws of the NASCAR business model and strategy. As many know, I have written extensively about the problems within NASCAR – so I will not beat the dead horse. However, I do hope Brian France is reading my suggestions and perhaps will answer the call to establish a viable business model and new strategy. As a long time fan, I was extremely fortunate to realize my dream at the age of 23; when against all odds, I became a NASCAR team owner and lead Toyota’s Flagship team to its first NASCAR victory in 2004. It would be wonderful if every young talented and aspiring driver (and maybe owner) could have the same opportunity and thrill of fulfilling their dreams. Unfortunately, the NASCAR I grew up morphed over the years to alienate their grassroots. Today, unless you have wealthy parents there is little chance and more likely, no chance of reaching the dream of becoming a NASCAR driver.
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).
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