NASCAR’s move towards Revenue Innovation

Image courtesy of the Associated Press
Image courtesy of the Associated Press

NASCAR is a proud American sport.  Growing up on the dirt tracks of American soil onto the pavement of today.  Indy car and Formula One racing are also very popular, particularly on the international stage.  NASCAR, like many other sports leagues, are always (as they should be) looking to modernize, innovate, and diversify their revenue streams. 

NASCAR has seen it television ratings lower since the high-end of the early 2000’s.  The popularity of the sport was seemingly growing with new and very popular drivers like Jeff Gordon and Dale Earnhardt Jr., whose father Dale Earnhardt tragically passed away in 2001.  The stock car circuit also had the trail of popularity from Tom Cruise and Nicole Kidman acting in Days of Thunder (1990, Paramount), as driver Cole Trickle, and Dr. Claire Lewicki, the neurosurgeon.  By the 2000’s on the heels of a new television deal, namely with NBC and Fox, and the modernization of adding cell phone giant Nextel/Sprint as the title sponsor for the highest “Cup” series level, moving away from Winston (cigarettes), it allowed the sport to be more broadly distributed and welcoming to a larger and younger group of fans.  Interesting enough, Fox and NBC are on a new television deal with NASCAR that runs from 2017-2024. 

NASCAR, unlike the big four or five team sports in North America (NFL, NBA, MLB, NHL, and MLS), has a league office, race tracks (previously) owned by separate companies (International Speedway Corporation (ISC) and Speedway Motorsports, LLC (SMI)), with individual teams that sponsor drivers who compete for points to win the Cup Series.  None of the major sports are structured similarly, not even golf or tennis, the other major individual athlete sports.  Of note, ISC was purchased by NASCAR in 2019 and converted to a private company because the league structure not being able to control its own tracks became more difficult with time.  As this author has written about previously, the key to success in sports revolves around a great venue, lease, market, and personnel.  NASCAR controlling its tracks was a move to control its costs, destiny, and revenue.

With ISC and SMI both private companies now, there is less focus on shareholder profit and public investment, operating more like the traditional team sports.  NASCAR adding a dirt track for the 2021 schedule was the cherry on top, but there remains a question of why the sport places its biggest race, the Daytona 500, at the beginning of the season.  Imagine the NFL playing the Super Bowl in September or October against the MLB postseason.  Maybe with the track situation in control, NASCAR will also have more control of its schedule going forward.  It could also be that history has shown growth where the biggest race is placed first. 

NASCAR’s growing interest by ownership groups led by basketball star and NBA team owner Michael Jordan, is one of the eight principles (Ownership Group with More than One Team, Fan Ownership, Multilingual Social Channels, Incubator Program, Women’s Team, Owned OTT Platform, Mixed Use Development, and Paid Fan Membership Group) to franchise success highlighted by Sports Innovation Lab that led to the list of the Top 25 franchises in the world.  As mentioned above, NASCAR is finally getting into mixed use development with track schedule changes and more control over its essential real estate.  NASCAR just launched its over-the-top (OTT) platform with NBC Sports.  Where NASCAR needs to grow is in attracting women viewers, while increasing engagement with fans through multilingual social channels, fan-ownership, and a fully-developed minor league system.  Maybe instituting a draft from that minor league system to sponsors/teams who select and pay drivers. 

As highlighted by Sportico, revenue diversification, a technology focus, and organizational agility are important principles for financial sustainability.  For NASCAR, getting into e-sports and e-racing, and even Formula E-style electric cars, creating an OTT with NBC Sports, sports betting partnerships, new tracks and schedule, have and could lead to additional revenue diversification through technology.  NASCAR also gained significant organizational agility by purchasing the company that once controlled its race tracks.  A broader control of the development of young drivers would be the next logical step with less focus on money and more on talent. 

NASCAR has the opportunity to become the most technologically-advanced sport in the world because man and machine are literally one and rely on each other to compete and win.  As Robert Duvall playing Cole Trickle’s crew chief Harry Hogge in Days of Thunder quipped, “Hey, there’s nothin’ stock about a stock car.”  NASCAR clearly has a tactical eye for innovation as it was the first major sport to return to semi-normalcy in mid-March 2020 on the track and in the virtual world through iRacing and eNASCAR.  NASCAR’s recent moves leads one to believe that it could be returning to past popularity among all (and hopefully more) fans. 

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