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Nascar searching for new ways to return to relevance after decade of decline

JOLIET, IL - JUNE 28: Fans look on as Cody Coughlin, driver of the #2 Jeg's.com Chevrolet, practices for the NASCAR Camping World Truck Series Overton's 225 at Chicagoland Speedway on June 28, 2018 in Joliet, Illinois. (Photo by Dylan Buell/Getty Images)

  • Organisers admit they ‘lost their way’ by alienating core fanbase
  • TV ratings and attendances down significantly, while many sponsors have left
  • Changes in schedule and sponsorship model among initiatives to revive series

Nascar is at a crossroads. Faced with declining attendances, lower television ratings and an exodus of corporate sponsors, the stock-car racing series’ organisers are desperately looking to arrest the alarming slide in its popularity and commercial fortunes. It is an enormous challenge with an uncertain outcome.

Recent statistics make for grim reading. In 2017, ticket revenue at Nascar’s three publicly-listed track operators – International Speedway Corp, Speedway Motorsports Inc. and Dover Motorsports – dropped for the 10th consecutive year to $215.1m (€190m). Since 2007, when their combined ticketing revenue reached a high of $467.4m, it has fallen 54 per cent.

Last year, the showpiece Monster Energy Nascar Cup Series averaged 3.3 million viewers across 33 races on NBC, Fox, NBCSN and FS1, down from 4.1 million viewers in 2017 and 4.5 million in 2016. Overall, TV ratings are down 45 per cent since 2005.

Sponsors, meanwhile, are jumping ship and those that remain are paying far less than they used to. In 2016, Monster Energy paid a reported $20m a year to become Nascar’s title sponsor, far less than predecessor Sprint, whose original 10-year deal was worth up to $75m annually.

Last year, home improvement chain Lowe’s shocked the sport by announcing it would no longer sponsor seven-time champion Jimmie Johnson and was leaving Nascar altogether. Meanwhile, Furniture Row Racing, the team of then reigning Cup Series champion Martin Truex Jr., announced it would cease operations at the end of the season after 5-hour Energy revealed it would not renew its sponsorship for 2019.

Other corporate giants who have withdrawn in recent years include Aaron’s, Best Buy, Dollar General, GoDaddy, Great Clips, Home Depot, Subway, Target and UPS.

Amid declining attendances, sportswear retailer Fanatics last year brought an early end to a 10-year deal to sell Nascar merchandise at race tracks. And in January 2019, Nascar laid off 50 employees in order to cut costs.

Much like Major League Baseball’s national attendance decline, there is no definitive problem and, in turn, no single fix. Among the varying reasons given for the downfall are: the recession of 2008-09, which badly hit the discretionary spending of its core fanbase; the retirement of big-name drivers Jeff Gordon, Tony Stewart, Carl Edwards, Dale Earnhardt Jr. and Danica Patrick over a three-year span; the alienation of traditional fans by constant tinkering with the format and Nascar’s expansion away from its Southern roots to new markets like Las Vegas; and a general struggle to attract the coveted 18-34 demographic.

There has been trouble at the top, too. Chief executive and chairman Brian France has been on indefinite leave since August 2018 after being arrested on charges of drunk driving and drug possession. His uncle, Jim France – the youngest son of Nascar’s founder Bill France Sr. – has taken over his responsibilities in the interim.

The France family – which has run Nascar for 71 years – has asked Goldman Sachs to explore a sale of its holdings and made a reported $1.9bn offer to buy ISC, which operates 13 active tracks, to facilitate this move.

Nascar chief executive and chairman Brian France has been on indefinite leave since August 2018 after being arrested on charges of drunk driving and drug possession (Credit: Getty Images)

Nascar’s media rights remain a bulwark against the decline elsewhere. Its broadcast deals with Fox and NBC, which are worth $8.2bn over 10 years, do not run out until 2024. But it is clear the clock is ticking as Nascar looks to turn its fortunes around.

Nascar president Steve Phelps recently admitted that organisers “probably lost our way” by ignoring the needs of hardcore fans. “We have to change this perception that’s out there, ‘Hey, Nascar’s best days are behind it’,” Phelps told the Daytona Beach News-Journal. “We’re not going to make everyone happy. We can’t. With that said, at its core we need to make sure we’re taking care of our longtime fans. That’s critical for us.

“Our philosophy – which was wrong – was ‘hey, don’t worry about it, the hardcore fan is going to be there regardless, so let’s change our brand and try to do things differently that might make it feel more modern.’ We were chasing a different fan that was outside of this core base. What we need to do today is make sure we’re giving those core fans what they want.”

Glory days in the rearview mirror

Nascar – officially the National Association for Stock Car Auto Racing – reached its peak in popularity in the mid-to-late 1990s and early 2000s, fuelled by the intense rivalry between Gordon and Dale Earnhardt Sr.

Earnhardt’s death – in a final-lap collision in the Daytona 500 on February 18, 2001 – badly rocked the sport but did not irrevocably harm its growing national popularity and move into the mainstream.

In 2005, Nascar was named ‘America’s Fastest Growing Sport’ by Fortune magazine. A year later, the Daytona 500 – regarded as the most important and prestigious race on the Nascar calendar – had its highest-ever TV audience with 19.4 million viewers.

Between 1997 and 2007, Brian France expanded Nascar into big-city markets such as Chicago, Dallas-Fort Worth, Los Angeles and Miami, but the search for new fans didn’t pan out as intended. The Auto Club Speedway in Fontana, California [outside Los Angeles] lost one of its two races in 2011 amid sagging attendances, while in 2014 its grandstand capacity was reduced from 92,000 to 68,000.

More significantly, this initiative began to alienate Nascar’s core audience, predominately working-class families based in the South and Mid-West. “The sport has tried very hard and diligently to grow itself. For about 50 years it was a very regionalised sport, being based in the South-East. The decision to grow and race in new markets was the right one but along the way the sport has not been able to convert new fans,” Ramsey Poston, Nascar’s former managing director of communications, tells SportBusiness.

“During this expansion, the sport somewhat got away from its roots and shied away from its Southern heritage. Jack Daniel’s is an iconic American whiskey from Tennessee, and it has the same goals as Nascar – it wants to expand its brand. When Jack Daniel’s sells its brand in New York, Chicago or Los Angeles it doesn’t pretend not to be not from the South: it is unmistakably from Tennessee. So people all across the country and the world drink Jack Daniel’s because of its brand.

“I think in some way Nascar got away from its brand. Nascar was created by outlaws from the South and that’s an important part of the brand that should be brought back to get people’s attention again and get excited about the sport.”

It is an opinion shared by Humpy Wheeler, former president and general manager of Charlotte Motor Speedway. “Racing was a home-grown sport born in the South, looked upon by the everyday person as their sport, and quite frankly we let it get too fancy,” Wheeler says. “We took the twang out of the banjo and that really hurt us. We got a bunch of people in management who didn’t realize you need to leave a bit of country in what we were doing.”

The economic downturn of 2008-09 represented a turning point in Nascar’s commercial fortunes: the recession hit fans hard and many were left without the disposable income – to pay for hotel rooms, petrol and food costs – to attend races. According to 2009 Nielsen figures, 35 per cent of Nascar fans earned less than $40,000 a year, compared with 21 per cent for the NHL and 26 per cent for the NFL.

Nascar stopped its policy of tracks providing estimated attendances after the 2012 season, when it became clear that crowds were significantly shrinking. According to Nascar estimates, attendances declined from a high of 4,670,400 (129,733 per race) in 2005 to 3,518,000 (97,722) seven years later.

As a result, track owners significantly cut their capacities – tearing down thousands of seats at venues such as Charlotte, Dover, Daytona, Michigan, Talladega and Richmond – in order to minimise the number of empty grandstands.

In an attempt to turn things around and win fans back, Brian France began to tinker with the rules, regulations and formats. This included: stage racing, in which each race is broken down into three points-scoring segments; and The Chase for the Championship post-season, which has undergone numerous tweaks after being introduced in 2004.

“There were generations who made Nascar a lifestyle and made it a choice to plan their vacation and off-time to attend events. In the downturn in 2008-09 the people who were hurt the worst were the socio-economic demographic that Nascar attracted,” says Mark Coughlin, a former motor sports marketing executive.

“When those incomes were threatened and the downturn came, these people had to make hard choices which were not spend their money and time on race weekends. And then at the same time they didn’t like what was happening with rule changes.

“A lot of traditionalists were turned off by The Chase and then coupling that with stage racing. While it creates excitement, I think the hardcore saw it as artificial and manufactured excitement rather than straight-up competition. I don’t think this was the edge-of-the-seat thing that fans were calling for.”

Compounding Nascar’s woes, a star-power vacuum was created following the retirements of many of its leading drivers in close succession and a failure to successfully market its new stars. “A lot of sports have ups and downs [and] with racing it’s a simple matter of stardom,” adds Wheeler. “What we need desperately right now is a Muhammad Ali, a Joe Namath, someone who can come in and get those people in the grandstands rocking. Unfortunately, we don’t have that person today. We may have them but they haven’t blossomed yet.”

The retirements of Danica Patrick (left) and Dale Earnhardt Jr., among other drivers, hit Nascar hard and left a star power vacuum (Credit: Getty Images)

Plans to turn the corner

Nascar cannot make any structural alterations to its marathon 36-race, February-to-November schedule until 2021 at the earliest, when several pre-existing contracts with track owners expire. But it appears that wholesale changes are on the way, including double-headers, midweek races, a tightened schedule, shorter races, and even a potential shared event schedule with IndyCar.

“I think there will be some meaningful changes our fans will like,” Phelps told the Arizona Republic in March. “What it looks like in 2021 and beyond, everything’s on the table. Do I think we potentially could end our season earlier? I do. Is it to avoid the NFL? The NFL is a big player and they drive (TV) ratings and our ratings are typically a little lower during that time. There are a lot of crossover fans between Nascar and the NFL. Could we look at a pull-up? It’s something that we would entertain.”

Many Nascar experts believe that less is more, not least because of changing media-consumption habits. “We need to cut the length down of the races. The public today, in particular the young public, is not into long-distance anything. We’ve got to get into the new century,” Wheeler says.

Potential cuts to the races and the schedule are likely to affect commercial opportunities, however. “When you start cutting laps out of a race you cut out potential advertising revenue. That is the pause people give but I do think less could be more,” says Poston.

“It seems to me that if they were able to lose 10 races and get to 26 races you might to be able to get more bang for your buck that way. There are ways of trimming the sport in a few ways that would make sense such as running fewer races and not competing with the NFL.”

Until then, several Nascar tracks are trying to get creative in order to improve the fan experience and keep people returning. Michigan International Speedway, for example, recently announced it would entertain race fans with: a human cannonball, duelling pianos, face painting, a magician, an aerial act, a trampoline show, a lumberjack show, bingo, a cornhole tournament and strolling street performers.

Improving the fan experience is long overdue, says Ashlee Huffman, general manager of branding agency CSM Sport & Entertainment. “I think one of the challenges Nascar has is that all entertainment venues are about the fan experience. That is key. You see all these venues making updates and all these stadiums being built with the newest technology and focusing on the fan experience,” Huffman says.

“Where Nascar is at a disadvantage is a lot of its facilities are older and while they’ve done a good job on making improvements on those that need updates, it is huge investment to integrate those different technology points and fan experience opportunities. They could put more focus on what fans want to get that better experience.”

On the sponsorship front, Nascar plans to entirely revamp its strategy from 2020. Out will go the title-sponsorship model – Monster Energy signed a one-year extension until the end of 2019 – with the premier circuit likely to be called simply the Nascar Cup Series. In its place would be a multi-partner, multi-tier approach.

Nascar is looking for around five top-tier partners but this will be dependent on agreeing the central sale of assets – such as individual race title sponsorships – currently sold separately (by the tracks themselves, in this case).

If so, Nascar will be able to offer several more expansive partnerships that include broadcast integration, track title rights and camera-visible signage, the use of Nascar logos on products, a digital and social-media presence on Nascar channels and at-track activations.

With additional inventory offering companies more consistent exposure over the series, Nascar hopes to earn far more from the top-tier than the $20m annual sum it currently earns from Monster Energy. A tier-one package – for new sponsors at least – is expected to cost $20m annually, including $15m worth of assets across the league and tracks, plus a minimum $5m media spend.

Coca-Cola, one of the most visible partners in the sport, is considered a prime candidate to land one of the top-tier spots, along with heavy spenders Monster, Sunoco and Mobil 1. Under the plan there would be up to five tiers, with lower-tier partners getting less valuable assets.

“In the past it has been really hard to aggregate the rights you need across the landscape to put your best activation plan forward,” says Jimmy Bruns, the senior vice-president of client services at GMR Marketing, who has 14 years of Nascar marketing experience. “Nascar [changing the model] will simplify the process to help new sponsors to come into the sport in a more simplified way and to really leverage their entrance.”

Monster Energy is leaving its role as Nascar title sponsor at the end of 2019. A new tiered-sponsorship model is poised to be introduced next year (Credit: Getty Images)

In its attempts to engage current fans – and gain new interest – Nascar has tentatively embraced the new sports betting landscape in the US. It has allowed teams to take sponsorships from sports betting companies and has partnered with Sportradar Integrity Services to develop a comprehensive gambling policy intended to protect the sport from cheating scandals.

Dover International Speedway – which has an alliance with the adjacent Dover Downs Hotel and Casino – became the first track to host on-site betting last October, following the legalization of sports betting in Delaware. Track owner SMI and EquiLottery Games, meanwhile, announced plans in February for Car Clash, a three-number lottery draw game based on race results.

Nascar’s fanbase is among the oldest of any American sports property, with an average TV audience age of 58 in 2017, up from 49 in 2006. It is partly for this reason that the series has embraced esports in an attempt to attract younger fans to supplement its older core.

In December, Nascar partnered with Race Team Alliance and Nascar Heat 3 publisher 704Games to launch the eNascar Heat Pro League, which features 14 teams, with two competitors each, owned and operated by prominent Nascar race teams.

There is some skepticism over the effect this initiative will have. “Every traditional sport is trying to tick the box with esports. It will bring in a very small trickle of fans,” says Coughlin, who is also the chief revenue officer at Envy Gaming, which runs Overwatch League team Dallas Fuel.

“If you look on Twitch and look on what games are there, all of the traditional games were less than one per cent of viewing hours. And EA has spent millions on trying to make Fifa and Madden work, but they haven’t gotten anywhere. I think you have to check that box and make an offering, but it is not going to cure your ills. I don’t think a driving game is going to attract a kid in your sport.”

As part of its content and marketing strategy, Nascar is also investing more in emerging formats such as augmented reality and 360-degree video, which gives viewers a look inside the race cars of various drivers during races. Nascar also aims to increase its production of content for social media platforms from 18,000 pieces last year to more than 25,000 this year.

With the media-rights contracts running out in 2024, Nascar’s owners and teams need to turn things around before then to ensure its commercial prosperity in the longer term. “The TV renewal will be very important to the health of the sport moving forward. When you look at the broadcasters, I doubt they think they are getting the return on the investment that they wanted so they may take a new look at how the sport is broadcast in the future,” says Poston.

In February, Jim France reaffirmed his family’s commitment to Nascar. But with reports that Boston Red Sox owner John Henry is exploring buying a minority stake in the series, Nascar’s future is likely to be largely shaped by whether or not the France family decides to sell some or all of its stake. Their silence on the matter has only served to fuel uncertainty and speculation.

Despite all these problems, there remains a quiet belief in Nascar circles that the issues are not terminal. “Are the crowds anything like they were in the 1990s and early 2000s? No. Is the top-of-mind awareness where it was back then? No,” says Coughlin. “But I think many are hopeful [it will be possible] to stop or slow the bleeding.”

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