If everybody's talking, what are the drivers saying?
Sunday, Aug. 01, 2010
Everybodys talking, or so it seems, about NASCARs problems and the economy.
The two are clearly linked, but reciting that simple fact greatly oversimplifies it. If a business model is broken, the economy can be and frequently is a convenient excuse. Even if its 50 percent, or 75 percent true, its still an excuse.
Fixing whats broken appears to be a lot harder for NASCAR, its race teams and track owners. Just as hard, apparently, as it is for any number of other businesses struggling to re-energize their customers and clients and reclaim their fan base.
NASCARs leading team owners are now talking amongst themselves. NASCAR has held a series of town hall meetings. Both forums have been all about brainstorming, trying to find solutions to the continuing declines in revenue.
There have been tweaks and tweets, and more are promised. But there's been no turnaround, and we're seeing a little push-back on some of the tweeting.
The difference now is that the owners are holding their discussions semi-publicly, without NASCARs direct participation. This may or may not be your fathers Oldsmobile, but it danged sure aint Brian Frances fathers or grandfathers NASCAR.
Track attendance and TV ratings are down sharply, as are merchandise sales and race purses. Some sponsors are simply walking away from the sport, as NASCARs leaders prefer to label their brand of stock car racing.
Factory support from General Motors, Ford, Chrysler and, more recently, Toyota now represents a fraction of what it meant in NASCARs formative years and through stock car racing's period of explosive growth.
So you cant blame leading team owners for circling the wagons, even as they praise NASCARs leaders for being such pro-active partners in the search for answers.
Under the headline on Forbes.com Time To Get NASCAR Racing Again, Jon Pritchett, a partner in CLUB 9 SPORTS, is direct if harsh in assessing the difficulties.
This is not just a result of the weak economic conditions of today. This started many years ago.
Because the business model is based on corporate sponsors footing the bill for operating costs, the biggest sponsors are aligning with the best drivers and the haves (big race teams) are clearly pulling way ahead of the have-nots.
Owners don't have the proper diversity of revenue streams and the economic interests of the league and owners are not aligned.
Indeed. Forbes estimates the average value of the top-10 NASCAR Sprint Cup teams at $143 million. While there are 43 cars in each Cup race field, there are about 50 teams. Some of them , well away from that average worth, appear to be merely dabbling, starting races, then parking before wrecking their cars or running up costly tire bills.
The well-established leader of the pack, according to Forbes estimates published at the beginning of each recent season, is Hendrick Motorsports, valued at some $350 million. Thats 47 percent up on the second-place outfit, Roush Fenway Racing.
Both organizations have won championships, but Hendrick is well ahead there, too.
Sponsors on the four Hendrick teams at NASCARs top level, Sprint Cup, kicked in about $115 million last year, allowing the organization to outspend and outrun most its competitors while posting operating profit of $20 million, according to the Forbes reporting.
Its drivers were atop the annual earnings chart as well, led by Dale Earnhardt Jr.s $30 million and Jeff Gordons $27 million. The numbers Forbes cites are based on race earnings, endorsements, share of merchandise sales and salaries.
But even those two stars Earnhardt is NASCARs most popular driver and Gordon, like teammate Jimmie Johnson, a four-time champion took pay cuts. Earnhardt was out front on the way down, too, with his earnings declining by $5 million. Gordons dropped by $3 million.
Few drivers can claim those kind of numbers. Thats largely because few can match the licensed merchandise sales of an Earnhardt or performance of a Gordon.
"Salaries for some drivers that have won only a race or two are way beyond where they should be," Zak Brown of the motorsports marketing company Just Marketing International told Forbes.
Thats pretty much what we are hearing from Felix Sabates, a co-owner with Chip Ganassi at Earnhardt Ganassi Racing.
"The escalating costs will stop at some point because sponsors will stop paying the money," Sabates said after last weeks gathering of NASCAR team owners.
"The guys who are going to make sacrifices are going to be the drivers. Drivers deserve to be paid as much as they can get, but they also need to be sure they have cars to drive."
"Our whole meeting was based on budgets, the colorful Sabates said, how we can cut back without hurting the quality of the sport.
"We do have some influence on the money part of it."
No way that any of the NASCAR team owners or their representatives who met last week at Hendrick Motorsports would have drivers compensation on any agenda. "In the old days, two owners meeting was called collusion," Sabates deadpanned when talking about the gathering.
But these arent the old days and this aint Big Bill France's or Bill France Jr.s NASCAR.
Since everyones talking anyway, from NASCAR to the Hendrick campus to Forbes and back, maybe its time for drivers to get all chatty, too.
Just so its not on Twitter.