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Economy, more than scary crashes, threatens Nascar

Source : BUSINESS_STANDARD
Last Updated: Sun, Mar 03, 2013 05:27 hrs
Jimmie Johnson

Horrific race car crashes -" like the one at Daytona last week that injured about 30 spectators -" are a black eye for the sport. But it's the US economy that is dragging down racetrack operators like International Speedway Corp.

International Speedway hosts about half of the annual Nascar Sprint Cup races at its dozen tracks across the country, meaning its fortunes are intricately linked to the sport's success.

After a boom in popularity a decade ago that prompted political candidates to appeal to a constituency dubbed "Nascar Dads," admissions revenue started to swoon along with the economy.



The latest crash, in which tires and other debris sailed over a safety fence and into the stands, will only add to the company's costs, as it faces legal settlements, repair work and expenses for investigating what happened and how to prevent a repeat.

But that bill will be modest compared to the loss of revenue from fans deserting the sport.

Attendance for that particular Saturday race routinely topped 100,000 people before the financial crisis, but in the last five years it has struggled to top 80,000, according to race data compiled by the website racing-reference.info. (The race was part of Nascar's "Nationwide Series," which is considered a stepping stone to the more prominent Sprint Cup).

The figure for this year's race hasn't been disclosed by Daytona International Speedway, which is part of ISC. That is in line with a new Nascar practice begun in February. The viewing stands that were showered with debris were far from full, film footage showed. "A lot of people don't feel comfortable spending all the gas money and their vacation time going to these races. It's very different. The popularity isn't what it used to be," said Morningstar analyst Jaime Katz.

Nascar's declining popularity has two unrelated causes that, unfortunately for the sport, hit simultaneously: a weakening economy that disproportionately affected its fan base, and a lack of compelling "storylines" as races became safer and driver personalities grew more restrained.

The economic decline in particular has hit the hardest -" with many better-paid manufacturing and construction jobs disappearing -" as fans were left without the disposable income to attend races.

"You don't just get on the subway, go to Yankee Stadium, watch a game and go home," said Kyle Petty, a host and analyst on TV's Speed Channel, who won a number of Nascar races in a 30-year career on the track.

"It's a commitment to come to a Nascar race," said Petty, whose father, Richard, is one of the sport's greatest legends, and whose son, Adam, was killed in 2000 in a practice crash ahead of a race. "They drive 200 miles or more, they get hotel rooms...It's a big deal and an expensive proposition."

A 2009 poll sponsored by ESPN found that 55 per cent of Nascar fans had a household income of under $50,000, a percentage slightly higher than the general population and the group hardest hit by the squeeze on discretionary spending.

"The recession seemed to have a much bigger impact on Nascar than it did on the other sports," said Victor Matheson, an associate professor of economics at the College of the Holy Cross in Massachusetts and an officer of the North American Association of Sports Economists.

By way of comparison, Matheson noted that Major League Baseball's attendance fell eight per cent from 2007 to 2010 and National Basketball Association attendance fell four per cent over the same period.

Admissions revenue at International Speedway -" not a precise proxy, but close given more or less steady ticket prices -" fell 37 percent over that time period.

Shares of International Speedway touched their highest levels since July 2011 last week, but are still down about one third from the summer of 2008, having failed to regain most of what they lost during the financial crisis. By comparison, major stock indices have pulled back their losses and are close to record highs.

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