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Bad economy may turn out to be good news for NASCAR
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It’s been no secret that the struggles in the American economy are being reflected in the sport of NASCAR.
Employees from NASCAR teams are beginning to join the ranks of other Americans in the unemployment lines. Hendrick Motorsports, arguably NASCAR’s top organization, has already made cuts and may make more in early 2009. And the day of an announcement that Dale Earnhardt Incorporated and Chip Ganassi Racing would merge was made, at least 110 employees at DEI were given pink slips.
Two days before the DEI-Ganassi merger was made public, Furniture Row Racing announced that they would only run a part-time schedule in 2009 sending most employees and even their driver, Joe Nemechek, packing.
The signs that NASCAR was beginning to feel the effects of the economic struggles actually started earlier this year. All season there have been empty seats at racetracks and teams unable to sign full-time sponsors, most notably Ganassi which was forced to shut down a team for lack of funding.
The layoffs and downsizing of the teams show no signs of ending soon.
As Jimmie Johnson was celebrating his third consecutive championship at Homestead there were some reports that after the season finale at least 1,000 employees scattered around NASCAR would be laid off.
International Speedway Corporation, the company that controls 13 NASCAR tracks, even confirmed that they have laid off 50 employees around the country.
Unlike the job losses seen in the mainstream job market, though, don’t expect major announcements from NASCAR organizations about layoffs.
And the outlook for teams acquiring and keeping sponsors, the lifeblood of the sport, is looking bleak as well. Several teams saw sponsors leave for other teams: Caterpillar from Bill Davis Racing to Richard Childress Racing, General Mills from Petty Enterprises also to Childress, UPS from Michael Waltrip Racing to Roush-Fenway, the US Army from DEI to the newly formed Stewart-Haas Racing.
In fact right now about one third of the teams that would like to compete next year are without sponsorships.
Then just prior to the final race of the season NASCAR made the unprecedented move to ban testing in 2009, a move they insist will save teams up to $1 million a year. A move designed perhaps to help already struggling teams try and stay afloat.
But while some may see only doom and gloom on NASCAR’s horizon, there may actually be a sliver lining.
Many leading economists are forecasting an economy that will ‘self-correct’. Businesses will fail, but there is a good chance they would have failed anyway. And in the end there will be fewer in number, but those businesses that remain will be stronger and more competitive.
And as the economy self corrects, so will NASCAR. Smaller teams, those who were never really competitive anyway, are falling by the wayside and the larger teams are learning to do more with less. When the dust settles the teams that do remain could be more evenly matched and the parity that NASCAR strives for will be even closer then ever before.
Over the last decade the money in the sport has become like a river that’s now overflowed its banks. These floodwaters however only benefited a few teams and transformed NASCAR into an entirely different sport than it was even a short time ago. It’s also become more corporate, more dependent on image than substance. Not only does a driver have to have talent, they have to have marketability, a face and personality that can sell products and keep corporate executives smiling.
But that could all change.
Hendrick Motorsports, Joe Gibbs, Robert Yates Racing, Richard Childress Racing and Roush Fenway Racing are organizations that have several things in common. They are all multi-car teams. And it’s these five teams that have combined to win the Series championship for the last 16 years.
The last time a single-car operation won a NASCAR Cup Series title was in 1992 when owner/driver Alan Kulwicki took home the championship. The last time a single-car team won a single race was five years ago, 2003, when Ricky Craven won at Darlington.
Some will argue that despite the bad economy the bigger teams can still throw money around, skirt the testing ban by paying non-sanctioned tracks to test, rent wind tunnel time; but even the large teams have seen their cash streams dry up or have the flow slowed. All the major carmakers are pulling back their factory support, and sponsors are tightening their own belts in an effort to simply remain competitive in the marketplace.
All this self-correcting may actually help NASCAR step back to the days when a single-car team could actually be competitive enough to have a legitimate chance to win races. No longer can the large teams afford the engineers and specialists who are paid six figure salaries to try and find every bit of speed. Those were the first to go. And this will benefit the smaller teams who could never afford to pay an engineer of specialist, or who were forced to take money from another area to pay for the luxury anyway.
What may emerge from these dark economic days will be a leaner, and most likely a more competitive NASCAR. Less about corporate images, and more about the men and women who race and use good old fashioned common sense and skill to make racecars go fast.
The empty seats at tracks are also frightening to many, but shouldn’t be. Short of paying fans to come to races, NASCAR can do nothing to fill empty seats. They can, however, take advantage of the situation. It has to be remembered that NASCAR tracks aren’t the only sporting venues to see empty seats. While it may be less to attend an NFL game or NBA game, there are still thousands of those fans that are keeping their money in their wallets and staying home.
And those who are staying home are turning to their favorite sport on television. NASCAR and its broadcast partners are in a good position to take advantage of this by not only continuing to do everything they can to serve the current fans but attracting new ones as well.
During The Great Depression people still wanted to be entertained and this accounts in part for the growth of movie theaters during the 1920’s. People needed an outlet -- a way to escape all the bad news around them. And while we are far from being in a depression, more people then ever are looking for ways to be entertained for little or no cost. As long as NASCAR and their broadcast partners are able to serve the current fanbase while making the sport attractive to the sports fan who may have only glanced at a race before, NASCAR may end up actually adding to its fanbase despite empty seats in the grandstands at tracks.
Dark clouds may be on the horizon for the near future, but there is actually a silver lining. And what may emerge when the economic storm clears is a closer-matched, more-watched, bigger and better NASCAR.
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