Reports Of NASCAR's Death Have Been Greatly Exaggerated

Much has been written recently about how NASCAR's explosive growth has been thrown into reverse faster than a Camry with a stuck throttle (see Sean Gregory's article in this week's Time).

We have a number of clients who are major NASCAR sponsors investing over $20 million annually, so we have been asked for our perspective on some of the issues several times over the past year or so. If you ask me, there's way too much gloom and doom around, not to mention a little bit of schadenfreude from those in other sports. Let's look at some of the claims and try to put an objective lens on them.

  • Attendance was down by 10% last year. Frankly, I'm shocked it was not worse than that given the depths of the recession. People need to buy groceries -- they do not need to go to a NASCAR race -- so the fact that 90% continued to go is quite a testament to fan loyalty. By the way, baseball attendance was off, too, and some NFL teams had blackouts for the first time due to not selling out the stadium. We aren't sounding the death knell for those sports.
  • Average viewership is down by 25% since 2005. Hard to argue with that fact although, if the average rating was five, then it is still almost four, which more or less every sport other than the NFL would sell its mother for. NASCAR's been keenly aware of the problem -- the move to fairly consistent start times of 1 p.m. EST this year is a direct response, as is the decision to let drivers "have at it" on the track and create more excitement (and flying lessons for Brad Keselowski).

To me, the biggest factor in the drop has been Jimmie Johnson's four straight titles. As we saw in Formula 1 ratings when Michael Schumacher won multiple titles, fans get bored if the same guy wins all the time. Johnson's personality doesn't matter -- he could have Tina Fey's wit in Danica Patrick's body and we'd still be bored by now.

Another problem is that paint schemes change so frequently that it's hard for the casual fan to pick his or her guy out. For years, Tony Stewart fans looked for the orange #20 car in every race. Now it could be the Old Spice, Office Depot or Burger King car, depending on the race.

The other factor people often overlook is the growth in popularity of college football (which is a real competitor to NASCAR in its Southern heartland) and the NFL -- both of whose seasons interfere with the end of the NASCAR season.

My feeling is that NASCAR ratings will stabilize where they are now and will start to improve a little when Johnson's dominance starts to slip as it eventually must ... mustn't it?

  • Sponsorship is down. This is, indeed, trouble. If you looked around the paddock in 2001, you saw the same sponsors every week on the same cars. Now, there only are a handful of sponsors that have the mega-bucks to sponsor every race at over $20 million for a top driver, and several drivers have lost their rides.

NASCAR's problem is that it priced sponsorship like real estate. When the market was hot, prices climbed out of connection with reality, doubling in 10 years. My belief is that the sport will ultimately have to adopt some Formula 1-style revenue sharing, once the small teams begin to tumble due to lack of sponsorship. The fact remains, however, that our clients in NASCAR are still seeing excellent ROI. NASCAR delivers better ROI than any sponsorship except the USOC because its fans are far more loyal to sponsors' products.

NASCAR has its issues, but it is very far from being terminal.

1 comment about "Reports Of NASCAR's Death Have Been Greatly Exaggerated ".
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  1. Jeff Thompson from Ten80 Education, May 13, 2010 at 10:31 a.m.

    There's a field of study called statistics, and within that there's a very useful concept called trendlines, and they're not necessarily linear. The economy effect on people in seats at the races is very well described by a study of Dr Craig Depken (economics department of UNCC); the larger issue of sponsorships and fall-off of the TV audience suggests that NASCAR has a huge problem. These declines are getting worse each year since 2006 and the rate of decline is increasing each year, as in jumping off a cliff, your descent rate (downward velocity) keeps increasing. NASCAR, on its current path, is in very serious trouble. Yes, they still make money, and they still have a large audience, but at the current annual trend neither will be true for much longer.

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