NASCAR is in Turmoil – A Consumer First Focus

Nascar in turmoil

As many in the racing world know, especially in the US, the state of NASCAR is in turmoil.

As many in the racing world know, especially in the US, the state of NASCAR is in turmoil. That is significant to the overall health of motorsports in the United States because NASCAR is bigger in both fan base and revenue than all of the other “major” racing series in the US put together. The fact that NASCAR is included in any discussion as one of the top four professional sports leagues in America, the others being (NFL, MLB, and NBA) reveals the size and scope of the racing series. 

As with any large competitive organization, there is always disharmony somewhere. In racing, it’s most often between drivers and less frequently between teams. But recently we have witnessed a breakdown in the trust between the race teams and NASCAR itself. You don’t need to look any further than racing icon Tony Stewart publicly saying, “I’m so mad at NASCAR right now” and (if possible) “I wouldn’t be in another NASCAR race the rest of the year. Wouldn’t waste my time.”

Why the anger? There seems to be two reasons and they are equally as important, but way out of balance.

Driver Safety is an issue for NASCAR

The first is driver safety. The drivers have bitterly complained to NASCAR since the start of the 2022 season about the safety of the NexGen car and its inability to provide adequate protection in racing incidents.

Profit Inequity is Becoming the Issue for NASCAR

The second reason, one that is not as important as driver safety, but has quickly become “the story” is the inequity in profit sharing between the teams and NASCAR. Motorsports industry professionals know that the NASCAR brand has been in decline over the past 10 years.

There are several factors that are contributing to this decline including a dwindling fan base both in spectators and tv audiences. Declining sponsorship involvement. And the fact that the season is two months too long. This has all led to the biggest teams recently stating that racing in NASCAR has become a financial hardship and their further involvement is in serious question.

As with most professional sports league business models, there is a precarious balance between the management that controls the league and the athletes who are in essence the product. It is a classic “chicken and egg’ scenario where management will always say they are the money and structure which supports the league and the athletes who claim that there wouldn’t be any revenue without them. Both are correct. With NASCAR which is experiencing distrust, anger, and dissatisfaction, that balance will be tested like never before as discussions begin around profit sharing of the upcoming 2024 TV contract with NASCAR and how the revenue pie will be split. 

But who is really paying the bill? The consumer

More than any other sport, Motorsports relies on the consumer to provide the revenue that keeps the wheels turning. In fact, every dollar that comes into the sport (aside from the independently wealthy) comes from the consumer.

You may be wondering how can that be. In NASCAR, sponsors provide 60%-75% of race team revenue, television and other syndications provide the bulk of the league revenue, and only a small portion comes from ticket sales.

The difference in motorsports (on all levels) as it relates to revenue is that a massive collective of individual sponsors and other entities contribute to the overall financing of the sport. This collection of individual contributors are putting their marketing dollars into NASCAR for one reason: to entice the consumer to spend their dollars on their particular brand. Ultimately, motorsports sponsorship whether its B2B or B2C is about consumer activation. What is the ROI for each contributor who is investing in motorsports?

It’s with this consumer-first focus that the professionals who comprise NASCAR should be concentrating.

Yes, dividing the revenue in an equitable way that can create a profit for the league and make worthy race teams whole is essential. But if NASCAR and any other race league wants growth and longevity, they must look at the paying consumer as their most important sponsor.