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Widespread job cuts expected in NASCAR
Automakers' struggles are likely to spell trouble for many stock-car teams
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Published: November 10, 2008
AVONDALE, Ariz.
The moves by big team owners Rick Hendrick and Joe Gibbs in the past few days to start paring their giant rosters of crewmen have set off a wave of frantic job searching by a large number of crewmen at Phoenix International Raceway.
The fear is that next week, after the Homestead finale to the 10-month season, even more NASCAR job cuts will be made.
That, plus glum economics news from Detroit's carmakers in the past few days, brought NASCAR CEO Brian France to the dais yesterday, and he said he has made rounds to the very top corporate officers of Ford, General Motors, Toyota and Chrysler and has been reassured that NASCAR is very important in their marketing plans.
"We have been told directly, by each of these companies, that one of the things that works best for them is NASCAR," France said. "Each went out of his way to make the point that, despite having to make cuts to meet these challenging times, they will not abandon something that works so well.
"That was very comforting to us. That's one of the reasons we went up to Detroit and out to Los Angeles -- to make sure we are still working well for them, in helping them sell their vehicles, in helping them sell their brand.
"We have been aggressive in opening up the sport, even when criticized for bringing in foreign manufacturers. Because the manufacturing component is very, very important to this sport. And we'll continue working with our partners while they are facing such challenging times.
"But we're not going to live or die if one manufacturer has to pull back or pull out. The sport is on very, very solid ground, that transcends one manufacturer or another.
"As we've said for at least a year now, that if the economy got worse, NASCAR would not be immune to the effects of a tough economy. And we said we would have to work with our partners, if they were struggling, to ensure that we're good partners as they face challenging times.
"And that also includes our fans, who have had to fight rising fuel prices over the summer, which had an effect on us, and who have been having to fight the credit crunch that has been thrown at them.
"So NASCAR, as an industry, is not immune.
"The question is what are we doing about that? I and Mike Helton (the president of NASCAR) have been to the CEOs or high executives at Ford, Chrysler, GM and Toyota in recent months. We are trying to understand very carefully what they're going through, and importantly how it relates back to the team owners who rely on the engineering and other commitments the manufacturers have."
One reason for France's appearance here is the sudden question of whether NASCAR is providing enough leadership in this new crisis. France's father, the late Bill Jr., was a standard Sunday fixture in the NASCAR garage every race weekend, available to take questions from anyone, big or little. However, Brian France has been only seldom seen at the track. And Helton sometimes appears an imperial official, less than approachable.
Does Brian France himself need to become more available now?
"I know that question is on everyone's mind, so let me address that head on," France said. "We like the way we're structured -- we have the president of our company at every event. And he has the total confidence of me and the entire France family and the board.
"I don't know of any other sport that does that.
"I'm at 12 to 14 events (of the 36). But most of the business elements of NASCAR occur during the week. That's when we're meeting with our team owners and all our partners, setting policy for the sport.
"On the weekends we're celebrating the events.
"And most of you have said you'd rather hear less from me and more from the team owners and drivers. I agree. That's why we said ‘Back to the basics,' back to focusing on the action on the track.
"Now we've got a different economic climate … but our structure, and how we manage the company, is deep with people.
"Running the events is one thing; running the sport and its policies is another -- to make sure we interact with all our partners.
"And this is not the first tough economic situation we've had to face. We've been around for 60 years. We went through the energy crisis in the 1970s … we went through 9-11 and the fallout from that…. We've seen bubbles before.
"This is a very big economic downturn -- but we're not going to change our business model.
"We will be more aggressive in taking out costs … and we've been talking with team owners who are looking at mergers, though we don't publicize that. Mike and I are meeting with them constantly. We understand the teams that face the toughest challenges, and we try to find them partners and sponsors, try to facilitate that. We just don't put that in bright lights.
"But much is out of our control. The teams that are performing well aren't facing sponsorship challenges; teams that perform at a lower level, even when times are good, even though you might like them to be sponsored, they aren't performing well.
"It is a giant balancing act in this sport, and we're after the perfect balancing act…. But a lot is out of our control."
France said that NASCAR is stepping up efforts to try to cut the costs of running a team. "The cost model we have, with the rules packages, that we have control over, we need to be more aggressive than we've ever been in taking costs out of the system."
However, France said that the various marketing programs that NASCAR has launched during the past few years, such as the Drive for Diversity, will not be cut: "All the initiatives NASCAR has set up -- from the diversity program, the youth programs, the expansion of digital opportunities in our Media Group -- are areas that will ultimately grow the fan base. So looking past a tough economy, we are going to be very careful not to cut those."
In fact, with Barack Obama set to run the White House, and with Lewis Hamilton just winning the Formula One championship, NASCAR may well have to step up its diversity programs.
"We're in the fifth year of our driver diversity program, which is the centerpiece of what we do -- but it's not all that we do," France said. "And we are seeing some of our drivers coming up through the ranks who are starting to show some real talent and get noticed.
"When will one be ready for Sprint Cup? I don't know. That will be the media's litmus test for a successful diversity program, but, while that's important for us, we're also looking at positions -- for crew chiefs and others all through the industry -- to try to have a more diverse workplace in general."
Cutting the cost of fielding a NASCAR team isn't easy, of course, but there is a crisis on the backside of the NASCAR garage, where the smaller teams park, teams that are worried they simply won't be able to get enough sponsorship to run the 2009 tour. France sympathized, but pointed out there are not just a handful of Cup teams under the gun "but hundreds (of NASCAR teams and related businesses) that could be affected.
"What can we do?
"Of course we're concerned. The advertising market has come to a screeching halt, in some respects. I'm meeting with our television partners, who are feeling that very, very directly.
"This is not just an issue for team owners. Some of them are in dire straits, we understand that.
"But our entire country is in dire straits, in one form or another.
"Quite frankly, we may come out of this -- now we have to see how the economy sustains -- better than most, though it may be hard sometimes to see that.
"We are all sensitive to a team owner who may be really struggling, who ought to have sponsorship.
"But we can't expect to operate as an island, oblivious to what's going on -- where companies are pulling back on every form of advertising and marketing.
"The idea that we can have a safety net for everybody in our industry, I wish we could, but it's just not practical.
"Now we're going to take costs out. We're looking very hard at testing. We're going to be more aggressive than we've ever been.
"Our group has been meeting about our Truck series the past several months, in anticipation of the manufacturers having some issues in that series in particular.
"But you don't want NASCAR, as the league, to be cutting things that have a long-term impact, that we have a long-term investment in."
One key issue -- NASCAR executives are moving toward perhaps a virtual ban on all testing through the early months of 2009, until the economy settles down, according to NASCAR teams.
That's a reversal of the plan just a few months ago to open up testing for 24 days per team at Sprint Cup tour tracks.
Currently teams can test en masse at seven official NASCAR tests at Cup tour speedways. And teams can test anywhere else at any time. NASCAR could bar teams from testing at any NASCAR-sanctioned tracks, such as Kentucky.
"If you could pull it off, you could pull out $30 million to $40 million a year collectively, and that would be a great thing," France said. "But policing that might be an issue. And some rookie teams and rookie drivers could use testing.
"And our tracks, when there is testing, get some extra ‘awareness.' And the more awareness they can get is a positive.
"Now the economics will force us to weigh all that differently perhaps."
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