NASCAR auto racing teams finances, Economic crisis affecting auto racing

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NASCAR Trying To Make Racing More Affordable

November 14, 2008 by  
Filed under Features

NASCAR CEO Brian France recently discussed the dilemma facing most budding auto racing teams – finances. It’s a dilemma that is currently affecting the entire industry and NASCAR seems set on finding ways to cut costs and making racing more accessible so that the sport stays afloat in this time of economic hardships.

Brian France recently commented: “It’s very difficult. It’s on our whole industry. And there are always some unfunded teams. Now, that’s not anything new. One of my goals and one of our goals is to have a system where you don’t need $26 million to put a competitive team forward. So that is one of the things NASCAR has a lot of influence on and we’re working all the time to figure that out.” So far the organization has been kept afloat by sponsorship deals that had already been put in place long before the global economic meltdown began. NASCAR is also incredibly lucrative as a spectator sport, with television contracts raking in some $600 million each year. Pre-arranged contracts should enable the organization to stay afloat until around 2014. So then, where’s the problem?

NASCAR is struggling to keep afloat at team level. Sponsors have dropped off, leaving teams struggling to get what they need to make it through the next racing season, let alone the next couple of years. The teams that are still managing to make the cut are currently discussing possible mergers. This involves noteworthy teams such as Dale Earnhardt Inc. and Petty Enterprises. Mergers mean less cars on the track, which means less excitement, less chance of a long-shot and less crowd pull. Driver Denny Hamlin summed up the situation nicely. He said: “Ultimately the sponsors are going to look to the teams that perform well. If it kind of gets where the smaller teams can’t do it, it’s going to be tough for them to go out there and race with the guys that have four cars each and every week.”

The current economic crises also crosses into the manufacturing sector, with longtime NASCAR supports such as General Motors, Ford and Chrysler now facing a never-before-seen financial crises. This means that even if these manufacturing companies continue to support NASCAR – as they most likely will – their support will be greatly reduced, adding to the financial plight of the NASCAR organization. A lot of teams will probably be laying off some of their employees at the end of this year’s racing season, leaving a lot of people with uncertain futures. One of NASCAR’s only ways of trying to counter all this, is to make racing cheaper and more affordable so that less money is needed to run a team. One possibility currently being looked into is reducing or eliminating test runs before races. All eyes are now waiting to see exactly what strategies NASCAR implements to try and slow down this very worrying trend.

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