Five Hurdles for NASCAR

The 2001 season was a monumental one for NASCAR, carrying baggage that will affect auto racing for decades. The past 12 months brought:

• An unprecedented billion-dollar television package for stock car racing

• A record number of eyes, including all the major media outlets, trained upon the sport

• The on-track death of a stock car racing icon

• The intense focus on issues inside the sport, issues that will continue to be scrutinized in seasons ahead and issues that present hurdles in coming years. How well NASCAR handles these hurdles and manages its changing world will determine the future strength of the sport. Some are clear-cut, bottom-line issues with decisions to be made in a boardroom. Other issues are less defined, more given to public perception and opinion, but issues, nonetheless, that directly affect the sport’s future.

1

Finding A Hero

When Dale Earnhardt died at the Daytona 500, NASCAR lost its superstar, its defining symbol. Earnhardt’s name, his image, his distinctive No. 3 and his black Chevrolet worked for NASCAR in the same manner that Michael Jordan’s jump shots, his shaved head and his flying, tongue-wagging dunks worked for the NBA. They gave the sport ready identification and marketable symbols. These symbols represented not just the man but the essence of the sport itself.

The vacuum created by Earnhardt’s death is as much his legacy as his 76 victories and seven Winston Cup championships. But as NASCAR moves forward, who’ll be the driver to carry the sport? And is it absolutely necessary for the continued vitality of the sport to find the next Earnhardt, or at least someone from the same mold?

Humpy Wheeler, president of Lowe’s Motor Speedway, maintains that NASCAR has traditionally had seven stars every season—five stars and two superstars—who carry the sport.

“It’s very important to have two superstars, because if you don’t have them it becomes vanilla,” Wheeler says. “Obviously, personalities drive the sport and always have. The marquee names are why people buy the tickets. While we’ve lost (Earnhardt) on the one hand, and he’ll never be replaced, there are some pretty exciting young drivers out there who are doing a lot of elbowing and pushing and shoving trying to get into that magic circle, which is pretty hard to get into.”

The list of prospects to fill the Earnhardt void includes drivers who have already reached star status and some who appear to be on the way. Jeff Gordon comes to mind, but his style and his fan base are vastly different from those of Earnhardt. Dale Earnhardt Jr. is a possibility, but he brings a young, hip audience through the turnstiles or to the television. Kevin Harvick, the driver who took over Earnhardt’s Chevrolet, is young and brash. Harvick’s aggressive, tap-’em-out-of-the-way driving style is more like Earnhardt’s style than even Earnhardt Jr.’s. And by the midpoint of the season, Harvick had two wins and a Top-10 spot in points—in his rookie Winston Cup season, no less.

“To do what he’s done as early as he’s done it, he didn’t read the book,” Wheeler says. “That’s not what you’re supposed to do. We’re going to see a lot more of him. He’s going to win a lot of races, and he’s going to win a lot of championships before it’s all over.”

Other young drivers—Tony Stewart, Casey Atwood and Ryan Newman, to name a few—may help fill the void, but ultimately the driver who comes closest may be the one who reaches Victory Lane most, regardless of other factors in and around the sport.

“The challenge is not so much up to the industry itself,” Wheeler says. “It’s up to those individual drivers to come forward. They get in there and do the things necessary to win races, which is a difficult thing to do against experienced people.”

2

Rising Costs

While the sport searches for a hero, many NASCAR teams search for companies willing to spend millions to sponsor their efforts.

Just five or six years ago, $4 million or so annually would subsidize a full run in the Winston Cup Series. Now it takes a minimum of $8 million to $10 million to become, or remain, a legitimate threat week after week. Top teams are reportedly getting between $12 million and $16.5 million annually.

Uncertain economic times have forced companies to scale back advertising and marketing budgets. That makes it even tougher to find companies willing to invest in a race team.

As many as nine Winston Cup teams were searching for 2002 sponsorship deals as the 2001 season entered its last quarter. Among them, Melling Racing, a Winston Cup competitor since 1982, which lost sponsorship from Conwood Sales Company and its Kodiak brand.

“The problem is the economy is a little sour, and we’ve lost so many sponsors who were in the game and aren’t coming back,” says team owner Mark Melling. “That’s what makes it tough. It’s easier to get people who already have had it in the budget to spend it again, but people who have to carve $8 million or $7 million or more for a new program into their budget when everybody’s cutting back, that’s making it really tough.”

NASCAR itself has experienced the same sponsor troubles. It has operated its nationwide Weekly Racing Series without a sponsor for two seasons. If NASCAR—with all of its sales and marketing resources—has conducted a futile search for sponsorship for two years, it stands to reason that teams within the sport are struggling to find backing as well.

In September Andy Petree Racing, which fields two Winston Cup cars, announced a new two-year deal with Schneider Electric, parent company of Square D, one of the team’s sponsors. However, with Oakwood Homes not coming back next season due to a downturn in the mobile home industry, Petree was still searching for a sponsor for his other car as the season drew to a close.

“It’s very difficult, I’ll be honest with you,” Petree says. “We’ve got a very good campaign going, and we’ve talked to a lot of quality companies ... But right now it’s tough. We have gotten some ‘nos’ from people and it’s because they’re unsure of the direction of the economy and where their particular sector or company is going. It’s not been an easy thing. It’s just like everybody else is going through, not just in racing.”

Reducing the cost of competition is the obvious solution to sponsorship woes, but Petree says NASCAR has neglected that issue.

“The number one thing to do is start looking at it,” Petree says. “Just pay attention. Focus on it. Winston Cup racing is the only major racing series in the world—including Formula One—that doesn’t limit the amount of tires you can use in a weekend.”

NASCAR took at least a small step in the right direction as the 2001 season drew to a close. Beginning next season, teams will be limited to one engine for racing and qualifying, as NASCAR eliminated engines used specifically for qualifying.

With the sport on a growth cycle and enjoying the fruits of a booming economy, the need to address other cost issues has probably not been at the forefront. That, Petree says, will change.

“We were in good times,” he says. “Now I think the sport is going to have to pay for that.”

3

Busch Series/Truck Series

No part of NASCAR needs a boost as much as its two developmental series, Busch Grand National and Craftsman Truck. Fields were less than full last season, costs were higher, and both series’ prestige and stature within the marketplace took a hit.

The Busch Series, in particular, has drawn criticism for a change in engine rules put into effect during 2001, a change designed to make Busch engines more like those in Winston Cup. According to estimates within the industry, the change tagged as much as $750,000 onto each team’s engine bill for the season.

James Finch, a successful team owner in the Busch Series, estimates his costs for running the series more than doubled in 2001. These days, Finch says, it takes a minimum of $3.5 million to run a full Busch Series schedule—a figure that would have supported a full Winston Cup effort just a few years ago.

Purses, meanwhile, haven’t risen accordingly. That’s a common complaint among racers at all levels of the sport, but with the growth cycle the sport has enjoyed in recent years, more growth in purses would seem forthcoming.

“We’re killing the sponsors asking for so much money, especially on the Busch Grand National level,” says Finch, who owns the No. 1 Yellow Freight System team. “It’s time for NASCAR to put some money in the purse. I think there’s money there for that. I mean, you go to a Saturday-night dirt race that’s paying $50,000 to win. Then I win (a Busch Series race with driver Jimmy Spencer) at Richmond, Virginia, the other night and get $18,000. My tire bill was $12,000.”

Some teams folded under the economic weight, while others scaled back, creating short fields at several events in 2001.

The Craftsman Truck Series, on the other hand, has a better grip on expenses, limiting teams to four sets of tires per event, requiring teams to start the race on tires they use during qualifying and permitting teams to change just two tires, rather than four, under caution. Plus, travel expenses are limited by holding most events over the course of one or two days. Sponsorships for the full Truck Series schedule run slightly more than half of what the Busch Series requires for a full run, putting a Truck Series sponsorship in the $2 million to $3 million range.

What the Truck Series lacks, however, is a clear-cut identity. As the stepchild of Winston Cup and Busch, the series has never quite carved a niche for itself in motorsports. Is it a companion series to be run with the other two at larger venues? Or is it a stand-alone series suited more for short tracks like South Boston and Mesa Marin? Crowds have been sporadic, good at some venues, embarrassingly low at others.

As the 2001 season drew to a close, the future of the Truck Series was even murkier due to an uncertain television situation. By early October, ESPN, which televised the 2001 events, had not made its intentions clear for televising the 2002 schedule.

4

Safety/Public Relations

If NASCAR had the opportunity to learn anything from the Dale Earnhardt tragedy, it is this: A new NASCAR—one complete with an unprecedented TV package, new public scrutiny and increased stature within the sporting world—requires a new method of dealing with major issues and conducting public relations.

Earnhardt’s death and the subsequent nationwide outpouring of grief drew attention from all major news outlets, both print and broadcast. Business will now be conducted from under a microscope, whether the NASCAR hierarchy likes it that way or not.

Wheeler says that, “Overall I think they’ve had some very, very difficult things to handle this year, and I think they’ve learned a lot. I think they’re getting a maturity about them that’s going to serve us well going forward.”

To its credit, the sanctioning body took steps soon after the Earnhardt crash to upgrade its public relations department, moving Darlington Raceway’s Jim Hunter to Daytona Beach as vice president for corporate communications, and making other additions to the communications department.

“As NASCAR grew in recent years, there was somewhat of a disconnect between NASCAR and traditional motorsports media,” says Hunter, a motorsports veteran. “We needed to re-establish that connection. The motorsports media has been one of the primary reasons for NASCAR’s continued growth throughout the years. We were looking to bring on board people who have a passion for our industry, the same kind of passion it has always taken to move the sport forward. And we believe we’ve found them.”

With NASCAR heading into a new season on the heels of a season unlike any other in its 50-plus years, perhaps no issue burns in the motorsports consciousness as much as safety.

NASCAR, historically, has taken a hands-off approach toward safety, largely leaving safety issues up to the drivers. NASCAR did an about-face in mid-October of last season, however, when it was announced that drivers in its top three divisions would immediately be required to wear some type of head and neck restraint system, either a HANS device or Hutchens device. Several companies are working toward improvement in seats, and at least one effort (supported by Wheeler) has focused on an energy-absorbing bumper. Also, work continues in other areas related to safety, including the implementation of in-car crash data recorders during the 2002 season and the development, in conjunction with the Indy Racing League, of new barrier technology for racetracks.

Beginning with the 2002 season, NASCAR will have a medical liaison traveling with the Winston Cup Series. This person will coordinate with local medical personnel at each track to offer better on-site medical care for drivers. These key issues—safety and public relations—were intertwined last season, melded by a single incident that rocked the sport and vaulted NASCAR headfirst into the court of public opinion.

5

Maintaining Growth

Lost somewhere between the gloom of the Earnhardt tragedy and the giddiness of surprisingly strong TV ratings is the challenge of how NASCAR keeps the sport growing. Among major sports, only the NFL lies ahead in terms of TV strength. If NASCAR is to seriously challenge the NFL, the trick will be to balance what’s offered for the hardcore fan, the one who helped the sport get where it’s at, with what’s offered for the new, Earnhardt Jr., Jeff Gordon, youth market, the segment NASCAR has courted heavily in recent seasons.

And will NASCAR be quick enough to respond to growth opportunities that might pop up, the expected ones as well as the unexpected? This is, after all, an organization notorious for moving exceedingly slow when faced with tough decisions or the need to react quickly.

Future growth, according to Hunter, is one of the foremost issues facing NASCAR. He says the sanctioning body must develop a short-term and long-term business plan that includes drivers, teams, tracks and sponsors.

A group of young, talented drivers positioned to rise in the sport may offer just what NASCAR needs in terms of growth, regardless of boardroom decisions made or not made by the sanctioning body.

“There’s nothing that turns the race fans on, as far as ticket sales, stronger than a new winner,” Wheeler says. “This has gone on forever. People just really get a kick out of that new winner.”