Now that NASCAR's Brian France has laid out his game plan, sister Lesa France Kennedy assesses the financial state of her part of the sport
ISC's Lesa France Kennedy and brother Brian, the NASCAR CEO (Photo: Getty Images for NASCAR)
By Mike Mulhern
mikemulhern.net
NASCAR's Brian France last week laid out an aggressive and upbeat marketing game plan for the 2010 stock car racing season, under the manta 'Let 'em race, boys.'
And it may not take much for some of NASCAR's wild-and-crazies to get down and dirty and downright bad.
Of course that may be all it takes for Jimmie Johnson to get yet another edge in a bid for yet another championship. If all NASCAR's bad boys -- like Kurt Busch and Tony Stewart and Denny Hamlin -- take each other out enough times, good-guy Jimmie could have easy sailing.
But Johnson better make sure he qualifies well in front of the rowdies.
That's one side of the equation for the upcoming NASCAR season.
The other half, well, that's in your hip pocket....where you carry the freight.
Lesa France Kennedy, who runs the family's International Speedway Corp. (ISC, NASDAQ: ISCA), accentuates the positive, saying "We are seeing encouraging signs of renewed spending from our corporate partners. We are optimistic that corporate budgets that were tight last year are loosening now for spending in motorsports."
This week, as the ISC listed the financial results from the fourth quarter of last season, she talked about the year ahead.
First, the good news:
-- Construction work on the casino at Kansas Speedway is expected to begin later this year, with a planned opening in early 2012, with 100,000 square feet of gaming floors, including 86 table games and 2300 slots. The first phase should cost $385 million.
Now, the bad:
-- Souvenir sales are so bad the company, Motorsports Authentics, that holds rights to all NASCAR souvenirs, is essentially bankrupt. MA, jointly owned by the ISC and Bruton Smith's Speedway Motorsports, still owes teams money and in the latest SEC filing ISC concedes it isn't getting far in those "renegotiations." So ISC told its stockholders that the "fair value" of the souvenir company "should be reduced to zero...(and) MA could ultimately pursue bankruptcy."
Just what that means for drivers and teams is unclear. Will teams, which were essentially pressured several years ago to give up rights to their souvenirs, want those rights back? Will someone come in to buy up those rights and create a new souvenir company? Since most hot souvenir items are under the aegis of just a handful of team owners (Rick Hendrick, Jack Roush, Richard Childress, Chip Ganassi and Joe Gibbs, among them), it is possible those owners may band together in dealing with the Speedway Corp and Speedway Motorsports. Of course key in any deal would be access to each track's 'midway.' After all, it's much easier to sell souvenirs to fans who are actually on the speedway property than somewhere else in town.
In the SEC filing Daytona Speedway's parent company reported a slight decrease in fourth quarter revenues, of $202 million, compared to $205 the same period in 2008. That was despite the move of the California 500 from September (2008) to October last season.
Overall for the year (ending Nov. 30th), ISC's total revenues were $693 million, down from $787 in 2008. The ISC reported it anticipates revenue this season between $660 million and $680 million.
The ISC pointed to "continued adverse economic trends which increasingly contributed to the decrease in attendance related as well as corporate partner revenues for certain of the Company's events...."
The ISC concedes "advance ticket sales are still trending down...and corporate partnership sales, while encouraging, are also expected to decrease."
Hence the announcement that NASCAR is cutting both its track sanctioning fees and its purse and point fund money.
The ISC predicts this season attendance will "decrease in the mid-to-high single digits," and it says it expects revenue from sponsorship, hospitality and advertising to decline about five percent.
However it points out that its TV revenue (under the newest contract, signed two years ago), will actually increase about 2.5 percent.
And ISC is still moving forward on construction projects: among them a new Daytona headquarters building; a new leaderboard at Richmond, plus better parking; better grandstand seating at Michigan and Talladega; track safety changes at Watkins Glen.
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Another big part of the ISC-NASCAR equation, of course, is NASCAR president Mike Helton, who also reports to Lesa France Kennedy (Photo: Getty Images for NASCAR)
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Good luck with what is
Good luck with what is obviously a failing business model. The overexposure is patently obvious, and they have eliminated many of the reasons people were interested, such as brand loyalty.
How long will the manufacturers stay involved? Two of whom we taxpayers own. The third, the only one making money, won only two races last year. So is the addage "win on Sunday, sell on Monday" dead or what?
Obviously even Nascar sees the future. They arent building the casino just for race fans now are they?
But hey, thats only my opinion I could be wrong!
I agree on overexposure....I
I agree on overexposure....I think that's a large part of the TV ratings issues...but then NASCAR has two markets to serve, the live crowd at the track, and the TV audience, and those two markets may be quite different demographics....
win on sunday, sell on monday? well, to be blunt, Detroit gets more than its money's worth out of NASCAR. Each car maker spends about $100 million a year on NASCAR, and for a 10-month-plus marketing campaign, complete with dozens of stars and numerous piggy-back copromotions, in most of the major U.S. markets, and with extreme continuity....Detroit really ought to be spending two or three times as much on NASCAR....
And on the Kansas City issue -- it's really amazing the amount of commercial development at that track now, i mean downright amazing. if you haven't been to kansas speedway yet, you need to go check it out. okay, it's another cookie cutter on sunday afternoons, but the rest of the package is pretty impressive, from the town itself to the track-side development. and the casino just adds.
So the tracks are cutting the
So the tracks are cutting the purses. Just another way for Nascar to put it to the racers. The France family who are billionares and own most of the tracks so they make double money at most races. Because the tracks get what is it 60% of the TV money and Nascar 20% of the TV money plus the ticket money and ISC also owns the concession stands and the racers need to take a pay cut. While the Francecar series set the rules and cost the teams big money in rule changes. And speaking of money I have an insurance question I heard one time on TV that the racers need to have primary insurance because nascar's is the secondary. If this is true that is terrible that billionares can't even cover the racers Example Bobby Allison.
The tracks are cutting the
The tracks are cutting the purses because they can't afford them anymore. Purses escalated because of costs to race. "(NASCAR) set the rules and cost the teams big money in rule changes." This is part of a salient myth in the sport - that teams are "forced" to spend a lot of money to cope with rule changes. The reality is most rule changes don't cost anything - when NASCAR would mandate spoiler increases, all that had to be done was slap on another spoiler; teams would spend money not because they had to but because they wanted to. Teams do it to themselves.
I'm not really sure the
I'm not really sure the 'purse money' issue is even a viable way to deal with economics in this sport today. Either everybody races for the purse, or put all the purse money on 'plans' (which is pretty much how it goes anyway).
And the spoiler issue -- my solution is -- and has been for years -- simple: padlock all the windtunnels...and let teams test at the real tracks with real tires.
YES to more track testing -
YES to more track testing - and let other tire brands supply for teams for testing and races.
It's always been about
It's always been about ISC/NASCAR/The Frances.
So when Kansas gets another race date, and they will. Who will suffer ISC or SMI?
Will they lead by example? Snatch a race date from Fontana for Kansas. In doing so, they'll be saying to SMI. "See, we gave up a race for Kansas. If y'all wanna give Kentucky a race, lose a race too"
"So when Kansas gets another
"So when Kansas gets another race date, and they will, who will suffer?" Martinsville - the track is obsolete for Winston Cup. And when Kentucky gets a date, who will suffer? Atlanta - the track is in a demographic that has proven to be even worse than Fontana's. Fontana will keep two dates because the big pro sports leagues still think southern California is important to them, never mind that only the Lakers and to a lesser extent the Dodgers actually do anything as far as drawing well - the myth of an NFL team in LA still exists despite no evidence the region wants one, and the myth of southern Cal as a racing hotbed wasn't disabused by the failures of Ontario and Riverside.
Martinsville? Myself, I'd
Martinsville? Myself, I'd like to see NASCAR put on a six-or-eight week summer shootout series, on Wednesday nights, with Martinsville, Rockingham, maybe even North Wilkesboro if someone would get some bulldozers up there and fix things. One-day in-and-out shows. Hey, maybe Nashville, Iowa.....
Remember when NASCAR used to put on three big shows each weekend, each a one-day thing, with teams hauling the same car to the next track?
I agree that Atlanta's demographics are a bit screwy...that's a weird town, really. and the track is so far south it's halfway to the florida line it seems sometimes. but, honestly, how kentucky fits into a marketing game plan confuses me...unless it's some powerplay backup if Indianapolis' owners do something odd -- like they've been doing lately. Has anybody thought what might happen if Indy's owners dropped the brickyard 400 and just focused again on the 500? The whole Indy story is curious, especially with Tony George now completely out of the whole game, after shutting down his IRL team. Me, I think George has been getting a bad rap lately on the IRL thing. Think those people ought to sell the IRL to NASCAR to run, and sell the Speedway to either the Frances or the Smiths, or both.
I agree that Martinsville,
I agree that Martinsville, Rockingham, North Wilkesboro etc. would be perfect for NASCAR's smaller touring classes like Busch/Nationwide and the Trucks - people forget one of the original big goals for the Trucks was to make the series a stand-alone series that would take over tracks like the short tracks so NASCAR could free up those dates to move the Cup cars to bigger markets while the smaller markets would have a viable series around which to revolve. NASCAR's game plan, though, got thrown out by the lust for short-term gains in attendances by bundling them to Cup weekends.
Atlanta has been a weak sports demographic for I don't know how long - I remember the Falcons lying on their injury report in 2005 before the Patriots went down there because if they said Michael Vick(and why is this guy still in football?) was out for the game then their ticket sales (game-day walk-ups are how they sell out their games) would have dropped like a rock. The Thrashers don't sell (bring them to Quebec and reform the Nordiques), and from what I understand the Hawks and even the Braves aren't as big a pair of sellers as they might be in other cities. When it was Atanta Int'l Raceway the place sold pretty well, but that was with much lower seating capacity.
Indy is indeed puzzling, and Tony George got a bad rap as soon as the IRL was formed, yet the reality that the CART model was eroding and Indycar racing was not on the solid foundation it thought it was never seemed to dawn on people criticizing George - even after CART went bankrupt, got bailed out by Kalkoven's group, then died again. I'd prefer IMS be sold to ISC, as big tracks are that group's specialty; SMI can handle the intermediates.
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He may have a great game plan
He may have a great game plan but starting a huge investment like a new building or stadium is not such a great bet wit the recession , but still the best way to start this is with a Chinese construction group, they are much cheaper and have great technology from construction equipment rental companies .