Nov 17, 2008

2009 Pivotal Year for NASCAR

“Anybody can make money when the economy is going up,” my grandfather used to say. “The real test of how smart you are is if you can make money when the economy is going down.” 

Next year, NASCAR executives and the owners of the teams that make up the sport will finally see how smart they really are, because as we’ve reported here previously, the downturn in the economy is definitely going to test them. In fact, after the Phoenix race, NASCAR chairman Brian France took the very rare step of holding a press conference specifically to address the sport’s financial future. While he didn’t seek a government bailout -- which might make him unique among executives these days -- he did note that his organization will be even more aggressive about cutting costs in light of an economy that has already pushed attendance down. Expectations are that 2009 will be even harder on the typical race fan, meaning attendance drops are likely throughout the schedule.

But that’s not the highest hurdle NASCAR is facing. The elephant in the room is the potential demise of three of the four manufacturers involved in NASCAR racing -- General Motors Corp., Ford Motor Co. and Chrysler LLC. Executives of all three companies recently visited congressional leaders, hat in hand, seeking billions of dollars in taxpayer money to help them compete in the car market versus foreign manufacturers like their fellow NASCAR competitor Toyota. The say they are burning through billions of cash at such a rate that they might run out of operating capital come spring. Right now it is unclear if Congress will approve this unprecedented expenditure of the taxpayers’ funds, but even if the package gets final approval, it will still have ramifications for NASCAR. While France claims that the auto manufacturers see NASCAR as an important part of their overall marketing efforts, the hundreds of millions currently channeled into the sport are very likely to diminish substantially.

As France told the press, “NASCAR as an industry is not immune. We have to work very hard to be good partners and work through these challenging times.”

Speaking of partnerships, several well-regarded NASCAR teams, including Chip Ganassi Racing and Petty Enterprises, are currently believed to be looking for sponsorships or partnerships that will help them maintain their viability in the sport for the 2009 season. Teams that are down the pecking order in terms of resources might well find it simply impossible for them to field a car next year, since sponsorship money in the tight economy is very hard to come by. It will be interesting to see how many cars line up in the starting grid at Daytona next February.