Sports

Daytona 500, NASCAR season, NASCAR struggling
Darryl Graham/AP
Fans look on as it rains prior to the start of the NASCAR Daytona 500 auto race at Daytona
International Speedway in Daytona Beach, Fla., Sunday, Feb. 15, 2009. (AP)

NASCAR Season Opens With Economic Uncertainty

February 15, 2009 11:59 AM
by findingDulcinea Staff
As the Dayton 500 kicks off NASCAR’s season, the struggling economy is taking its toll on the once-booming sport while other sports seem healthy despite the downturn.

MLB, NBA Seem to Be Thriving as NASCAR Sputters

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As NASCAR’s season opens with the Daytona 500 today, the sport “still faces perhaps the toughest year since its formation in 1948,” writes Mike Brudenell of the Detroit Free Press. The automakers sponsoring many teams are struggling, and it’s not clear how many of the teams will survive the season.

But not every sport is suffering. Baseball’s spring training has just begun and, despite prominent steroid scandals, baseball so far hasn’t had the same money problems NASCAR has.

Baseball has been at an all-time high in ticket sales, attendance and merchandise sold, but will a struggling economy lead to a down year?” asked Ryan Divish of the Seattle-Tacoma News Tribune.

The New York Yankees are one team that has been spending as if the economy were booming. During the off-season, the team spent nearly $425 million on three players, according to the Baltimore Sun.

Another league that seems insulated from the downturn is the National Basketball Association.

“Even in a difficult economic environment, we are going to maintain our attendance and our revenues,” NBA Commissioner David Stern told reporters on Saturday. He later added that the league is at the beginning of eight-year television deals with Time Warner and Disney, and teams have long local television contracts in local markets.

“So we think that is some cushion,” Stern said, though he acknowledged that the economy has led to him talking to the players’ association about possibly reopening the collective bargaining agreement, which is set to expire in 2011. He didn’t specify what the league and association are discussing.

Background: NASCAR’s troubles started last summer

Last July, news surfaced that car owner Chip Ganassi shut down the race team of 2007 IndyCar Series champion Dario Franchitti because the team lacked sponsorship; his 71 employees lost their jobs.

Fifty-three cars strove to qualify for the sport’s 2008 season opener at Daytona International Speedway in February. Because of financial difficulties, only 45 made it to Daytona.

The economy is hitting NASCAR from several directions. Automakers pump about $500 a year into NASCAR, but General Motors shares hit a 54-year low after reporting an 18.2 percent decline in sales. Sales for Ford Motor Company dropped 27.9 percent, Toyota experienced a 21.4 fall, and Chrysler’s numbers tumbled 22 percent.

NASCAR teams are also fighting to win sponsors, and Bob Margolis of Yahoo Sports explains how vital sponsors are to the sport: “Approximately 65–70% of the cost of this infrastructure, along with a team’s other operating expenses, is funded using sponsorship dollars. The rest comes from purse money and endorsements.”

But sponsors are hardly immune from the flailing economy, leaving many with less money to spend. For example, Starbucks recently announced it will close 600 stores. Sponsors have also starting moving some of their marketing money to media, particularly television, because gas prices have stymied plans to travel and watch the races.
 
Last summer the sofetning economy hit smaller, less successful teams more seriously than larger teams, who can rely more on sponsors.

Fan attendance at NASCAR races has presented another problem. Record high gas prices last summer contributed to a 20–30 percent decrease at the mid-season Daytona race.

Opinion & Analysis: ‘NASCAR’s money game’

Reference: Auto racing guide

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