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NASCAR money machine sputtering
Jan 16, 2008
Heading into 2008, NASCAR money machine sputteringBy Tom Kreager and G. Chambers Williams III, The Tennessean
NASCAR, once touted as the nation's fastest-growing spectator sport, has stalled in terms of TV ratings, and some say the fan appeal of the high-speed stock-car circuit is sputtering amid more empty seats at some tracks.
The sport still draws tens of thousands of fans to prime events, crowds that easily beat University of Tennessee football for top races. And it rakes in billions of dollars a year in TV revenue, merchandise sales and corporate sponsorships as companies such as Dollar General, State Farm insurance, Sprint and Tylenol, plunk down cash to get their logos painted on cars or sponsor races.
But season-long TV ratings for the Sunday cup races, the most important in the sport, dropped 18% in 2007 from their record-high year of 2005, according to the Fox network, which shares the 10-month-long season of NASCAR broadcasts with ABC/ESPN and TNT.
"It is in a lull, and clearly the sexiness of the sport from a marketer's standpoint is not as great as it has been," said Brian Evans, director of client relations for Atlanta-based Verve Sponsorship Group, which matches corporate sponsors with racing teams.
Those close to NASCAR acknowledge the problems, but say it wouldn't be an easy fix.
"I think it might be in a little more than a lull," said Darrell Waltrip, a three-time Winston Cup champion and current NASCAR analyst for Fox television.
"Declining TV ratings in any sport is not a good sign. It's not a good sign for the sport, or the sponsor of the team. That is something, if I were in charge of NASCAR, I'd be saying, 'What do we got to do to stop this and fix this.'"
Advertisers take stock
Indications of a slowdown in growth have forced NASCAR, its racing teams and associated sports marketing firms to take a harder look at the business side as sponsors weigh the wisdom of spending millions to fund racing teams on the eve of next month's signature NASCAR race, the Daytona 500.
A 30-second TV commercial for Daytona sells for $550,000 to $575,000, about one-fifth the cost of a spot during the pro football's Super Bowl.
"Today, companies are trying to be more scientific about it," Evans said of ad budgets. "It used to be they would just go sponsor a race car."
The concern for advertisers, he said, is that they're paying a price for a TV spot based on a projection of how many people will see that spot. The networks "can't sell advertising if you are guaranteeing a certain rating and you are not achieving that," Waltrip said.
Fox Network, whose current deal calls for it to carry the first 10 Sprint (formerly Nextel) Cup races of the season, says it's happy with its part of the schedule.
"Our ratings dipped from a 6.0 in 2005 to 5.6 in 2006, but we were back up to 5.9 last year," said Dan Bell, a Fox spokesman. The ratings indicate the percentage of U.S. households tuned in to the races.
That's not the case for the rest of the season, though. In the last 16 races of the 2007 season, carried by ABC/ESPN, ratings dropped to 3.9% from 4.7% in 2006 and 5.2% in 2005.
"I think (declining ratings) are the No. 1 concern for NASCAR and TV. I think it's something that won't fix itself," Waltrip said.
NASCAR ranks No. 2
NASCAR executives defend the sport, saying the races remain the second-highest-rated regular-season sport on television.
"While ratings have softened, remember that in our fragmented media world, they are down for most sports," said Andrew Giangola, director of business communications for NASCAR.
"I can say the business is very strong. NASCAR racecars are rolling billboards. The sponsor company's logos are on the field of play every second of the action. That's unique in sports."
Sponsors of 43 cars include Jack Daniel's, Bass Pro Shops, Miller Lite, Valvoline, Home Depot, UPS and Budweiser among several dozen companies. Some cars have split sponsorships with two or three companies sharing what can be $20 million or more in fees. DuPont, Nicorette and Pepsi share sponsorship of one car in the 2008 Sprint Cup, for instance.
NASCAR and the TV networks say lower late-season ratings are due to increased competition from other sporting events in the fall, especially NFL football.
However, one local race fan says the death of racing icon Dale Earnhardt in 2001 has hurt more.
"I don't watch it near as much as when Dale (Sr.) was alive," said 39-year-old Darron Moore. "When he was alive, I wouldn't miss it. I still follow Dale (Earnhardt) Jr. But I don't sit around on Monday not being able to wait until Sunday. It's not the same."
Some sponsors say they're not worried.
"I started to hear rumblings of this last year when ratings went down from 2005 to 2006, then again in 2007," said Mike Accavitti, director of Dodge brand global marketing. "From our perspective as an auto manufacturer, it's still the second-biggest-watched sport in the country.
"For us to have these people passionately following Dodge vehicles on the track is really a great opportunity to market our products," Accavitti said.
"It's kind of unfair to compare it to football, because you have all of those franchise cities involved, where 50,000 to 70,000 attend every game. NASCAR is one single event each week. A lot of people go to these events, and there are tens of millions watching them on TV."
Growth had to slow
NASCAR's ratings slip was no surprise to Mike Bartelli, the Charlotte-based president of the motor sports division of Millsport, a marketing firm that represents such NASCAR sponsors as Sunoco, Tylenol, XM satellite radio, State Farm and Elizabeth Arden.
"TV ratings and attendance have been down," he said. "Everyone in the sport recognizes that the explosive growth we saw in the first half of this decade has leveled off. But I've never believed that such explosive growth was sustainable."
Tracks don't release attendance, but estimates from NASCAR news reports started to show weak spots as early as fall 2006. Fewer than half the Cup races were sellouts that year, and that included two at the 92,000-seat grandstand of California Speedway east of Los Angeles, NASCAR's largest media market.
The Allstate 400 at the Brickyard that year drew a crowd estimated by The Indianapolis Star at 240,000 — about 20,000 shy of capacity at Indianapolis Motor Speedway. It was the smallest turnout in 13 seasons at the track that ranks in prestige on the Cup circuit behind only Daytona International Speedway.
Bartelli says he tells clients not to worry. "I tell them, 'Don't lose sight of the enormous fan base who have been with us and are staying with us.'"
"NASCAR is not in a steep decline. TV ratings are still enormous, second only to the NFL among sports events. It's still a great place for a company targeting the NASCAR demographic to spend its money," he said.
