The IndyCar community was upset when the news came through that Bridgestone Firestone were not going to renew their contract once the contract ended in 2011. IndyCar has been supplied with tires from Firestone since 1996. Negotiations to reach an agreement that both parties were satisfied with took place over a period of a week and a new contract has been finalized that will see Firestone continue to be the tire supplier for IndyCar until 2013.
The thought of bringing in a new tire supplier while trying to launch new cars into the IndyCar racing circuit was a daunting task that was too much to bear for most team owners. They therefore got together as a unit and ask IndyCar to renegotiate with Bridgestone Firestone to see if an agreement could not be reached. Fortunately Firestone was open to discussion and a contract to suit both parties was drawn up.
The new contract will still see Firestone withdraw as a financial sponsor from the IndyCar circuit when the contract expires, and there will be an increase in the price of tires. Al Speyer, the Executive Director of Racing for Bridgestone Firestone, commented: “This was not a negotiation tactic; last Friday, we were done, and I was devastated. But when Randy Bernard called back this week to say the team owners wanted to work something out, we went back to a proposal that had been pre-approved in a way. That made it easier. All we had to do was fine-tune it.”
CEO if IndyCar, Randy Bernard said: “At the end of last week, we had reached the deadline where both organizations had to make a decision regarding the future to prepare our individual operations for the long term. This is one of those decisions that it is imperative that you have the team owners 100 percent behind you. Early this week we called a meeting to walk the team owners through the process and hear their input. I’m happy to say we walk as one with Firestone.”
Firestone agreeing to remain the tire supplier until 2013 will give IndyCar the needed time to look for a suitable replacement and to ensure that the transition will take place smoothly. Even though Firestone is withdrawing from IndyCar, Al Speyer is an avid IndyCar supporter and will remain a fan of the sport.
Auto racing is considered to be among the fastest growing sports, with over 78 million loyal supporters and raking in about $3 million in licensed product sales on an annual basis. Clearly NASCAR translates into very big business. With this in mind, in 2004, Professors Jon Ackley and Michael W. Pitts introduced an honors course for the study of “The Business of NASCAR” that runs every fall semester at the Virginia Commonwealth University.
Approximately 20 students attend the course each year to benefit from the expertise of these two professors, as well as to gain insight from guest speakers who lecture on a range of subjects and issues related to the fast moving world of auto racing. Students will analyze the operation of the business and can look forward to being addressed by a race track public relations director, a newspaper reporter and advertising account executives for NASCAR. They will also be given an in-depth tour of the Richmond International Raceway.
The course includes gaining an understanding of how contracts are negotiated and signed up, as well as how salaries are generated for the support teams of the drivers. An auto racing team may have 40 cars and a support team of 200 or more employees, including the highly trained crew chiefs, engineers and mechanics who are essential to the success of the team.
According to financial analysts, NASCAR fans are extremely brand loyal, which highlights the value of sponsorship. Although sponsorship is a costly exercise for companies, it is considered to be worth the expense because of the extensive exposure that NASCAR events have, with broadcasting to at least 160 countries. It is this kind of exposure that attracts foreign sponsors such as Toyota as well as drawing foreign drivers who normally race Formula 1 and the Indianapolis 500.
Another factor that influences the financial aspects of NASCAR is the fact that it is privately owned and not unionized and has no pension plan. These are all issues that must be taken into consideration by anyone seeking employment in this multi million dollar sport.
With the popularity of this sport showing no signs of slowing down, the study course on the Business of NASCAR at the Virginia Commonwealth University is likely to continue giving valuable insight to students who want to carve out a career in the fast-paced world of auto racing.