August 1, 2010
By Kim Roberson
Kim Roberson
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I find it very interesting that despite the fact NASCAR is the second largest sport in America (behind only the NFL), tracks are having a difficult time getting enough fans in the seats to keep their doors open.
This week, we were told that Gateway International Speedway, which hosted one of the more memorable Nationwide races of the year just two weeks ago, won’t be back for another season -- in 2011. They are closing their doors to NASCAR, and in the process, closing down one of the few top-series venues in the mid-west.
"Unfortunately, in deference to NASCAR, they do their scheduling this year for next year, and we made the decision to not to carry events (in 2011) for lack of profitability in those events," explained track general manager Terry Harmeson this week.
The track is one of just a small handful NOT owned by Bruton Smith’s Speedway Motorsports Incorporated (SMI) or the France family’s International Speedway Corporation (ISC); instead, it is owned by Dover Motorsports, which also owns Dover International Speedway and Nashville Superspeedway. Dover Motorsports states that the track has lost money in recent years, and has actually lost almost $8 million in overall value, dropping its current value to just over $2 million dollars.
Dover Motorsports CEO Denis McGlynn explained to investors that the economy is the main contributor to not only Gateway’s drop in status, but drops in attendance at their other two tracks as well. “We believe the key driver of current industry performance continues to be the state of the economy.”
This is the second track in as many years to close its doors to NASCAR due to finances. Last year it was the Milwaukee Mile that announced they couldn’t afford to pay NASCAR, and immediately shut down operations within weeks of hosting its last race.
In past years, finances have been blamed for the closure of North Wilkesboro and Rockingham (The Rock), two of NASCAR’s original tracks.
Fans claim it is just too expensive to go and watch NASCAR’s top three series, regardless of how good the track facilities are. It isn’t just the cost of tickets, which many tracks have tried to lower as the economy has worsened, but the cost of the gasoline to get there, and the highly inflated hotel rates that fans are asked to pay to stay overnight. A weekend of racing for a family of four can easily cost a month’s salary –- or more –- for some people.
Fans can say they won’t attend a race because it has gotten too expensive, but they also will have to be ready for the consequences when that track decides to close its doors because it can’t make money.
Remember how many fans claimed to be ‘outraged’ when they closed down the Rock, despite the fact that NASCAR had told them a year ahead of time that if they didn’t fill the stands, they would take the race away?
Fans didn’t show up, so they pulled the race. Fans cried foul, but the point being made is, you can’t have it both ways. If you want to keep the track because you like the racing there, you have to actually GO to the race, or else NASCAR will move the race to someplace where fans will show up and pay money to cover the costs.
I have heard all kinds of suggestions on how to make the costs less expensive overall for fans -- and for the tracks. One involves cutting the purses for the winners in half; however that isn’t really feasible due to the cost of running a race team. With more and more mega sponsors pulling out of the sport, that purse money becomes more and more necessary to fund a team.
Last weekend’s $9 million purse at Indianapolis might seem like a ton of money to you and me, but that amount in one lump sum wouldn’t pay a Cup teams bills for an entire season, even the so called “Start and Park” teams. (By the way, the 2010 Indy 500 purse was over $13.59 million dollars, down from last year’s purse of $14.315 million. The Indy 500 has been paying out more than $9M in winnings for over a decade.) In reality, Jamie McMurray and the No. 1 team actually only pocketed $438,877 for winning the race, an amount that might about cover the bills for the weekend. Three weeks ago, David Reutimann’s No. 00 team won only $321,531 for winning in Chicago. In all actuality, NASCAR ordered a 10% cut in purse money for 2010, so no matter who wins, they are taking home less money for that win than the guy who won the same race last year.
Another suggestion is having the teams spend less money on their race efforts. I have no idea how that would be managed, but teams have gotten themselves into this high price effort by striving to do everything better, from the output of the engine to the aerodynamic build of the body. The average team was estimated to have been spending close to $20M a decade ago. That was when you could find one sponsor with the money to pay a huge amount to put their logo on the hood exclusively for a season. Now, Jeff Gordon and Hendrick Motorsports can’t even get DuPont to pay for a full season -- a partnership that seemed destined to last until the day Gordon retired from the sport.
There is no way any team could be told to “go back to the ways it was done in the old days” -- building a race car with nothing more than ingenuity and a box of tools. There is also no way for NASCAR to mandate how much a team can spend and then be expected to provide an accountant for each team to oversee the spending put out every day.
Some have said that NASCAR needs to tell the drivers to take a cut in salary. We hear these huge numbers being thrown around on what drivers like Dale Earnhardt Jr. and Jeff Gordon make, with seven figures ahead of the period. However, fans need to realize that most of that money is from sponsors, not from the team itself. It was that “personal services contract” money that helped fund the Wrangler no. 3 car at Daytona last month.
Junior didn’t ask for any sponsorship money from Wrangler, but instead asked if he could use some of the money they annually pay him to be a spokesman to cover the cost of the car. In essence, Junior paid for the car out of his pocket so that Wrangler could afford to be the name on the car because that is the way Junior wanted it to be.
Believe it or not, reports are that some drivers DID take a pay cut last year, with driver salaries down an average of 6%. Part of that is due to the fact there isn’t as much money left over from the sponsors to be able to pay extra to the driver as well, and another part is the cut in purse money, providing less to finance the overall team.
The financial debate over cost vs. reward in NASCAR doesn’t appear to be going away anytime soon. However, the end result might be that we start seeing more tracks choosing to close their doors instead of waiting out the recession in the hopes that a change in the economy will eventually be profitable for them.
There is no easy fix for the problem with the exception of just not racing at all. However, that wouldn’t be good for the tracks, their surrounding communities who rely on the money brought in by the fans, the teams or us as fans -- because no one would win.
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