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Real Problems
NASCAR appears to be blind to the fact that mega-teams are taking over and small operations are fading away
AP File Photo
Brian France, the CEO of NASCAR, hasn’t been around the tracks much lately.
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Published: September 14, 2008
LOUDON, N.H. - It has been three years since Brian France, NASCAR's CEO, announced that he was determined to break the increasing stranglehold a handful of mega-owners had on his family's sport.
In 2005, Jack Roush had just put all five of his teams in the Chase for the Championship, triggering France's concerns. France first said he wanted to limit owners to three teams, before settling on a four-team limit. Because Roush was, and still is, the only man with more than four teams, the rule was aimed clearly at him, and it left rival Rick Hendrick, the only man with four teams, in the clear.
France said he wanted to create a business environment that encouraged new owners to join and play, an environment with a more level playing field for the smaller, independent teams.
Now things have gone 180 degrees the other way. The game isn't even close any more. France's four-team limit, rather than chopping owners down to size, has created a rush by other owners to expand to four teams, which Richard Childress is now doing and which Joe Gibbs might do, too.
However there simply aren't enough "wins" to go around, and Chip Ganassi's three-car operation is down to two, the Pettys are looking for sponsorship for their struggling operation, Bobby Ginn's four-team dreams have vanished, and mergers might be the only way for some to survive.
This sport was built by independent entrepreneurs, small-team racers, using their wits and skills to battle any Mr. Big who might show up with a lot of chips. No longer. Now, there's no place left in this sport for the little guys. They're simply cannon fodder and might as well pack up and go home.
Kyle Petty is right, NASCAR executives have proven unable, or unwilling, to rein in the four giant teams that dominate, the four teams that have taken all 12 spots in this season's Chase for the Championship.
The winged car, designed to even the playing field, is a joke. It has created an extremely costly and complicated engineering process, and it's threatening to drive out more teams. Doug Yates has predicted that as many as six teams that started this season at Daytona won't make it to next season.
There is some new money coming into the sport, but it's not going to new teams, it's buying in to existing "franchises." And once some of the outsider financiers take a good look at their bottom line, they might have some second thoughts about NASCAR as an investment.
France hasn't been around the tracks lately to readdress the situation. But when he does return, he needs to go straight to the haulers at the far, far end of the garage and talk with struggling owners such as Eddie Wood, Robby Gordon, Bill Davis, the Pettys, Michael Waltrip and Ray Evernham, and others, such as Bill Elliott and Doug Yates, who know the real game. And maybe France should call Beth Ann Morgenthau, who has had to close the doors to her Cup team.
But maybe NASCAR simply doesn't need the little guys any more. Maybe it can do just well with the four mega-teams, and their "satellite" operations. Maybe NASCAR should simply be survival of the fittest.
There is a good argument to be made that economics of scale are the only way to play this game, because running just one team and driver is so expensive. And it's the mega-teams that have been bringing in new talent -- David Ragan, Carl Edwards, Joey Logano, Greg Biffle, Aric Almirola, Kyle Busch, Brian Vickers, Denny Hamlin and Clint Bowyer -- because they have the money to gamble on young drivers.
Geoff Smith, who runs the business side of Roush-Fenway Racing, just signed UPS as a sponsor for Roush and Ragan, a big loss for rival owner Michael Waltrip. Richard Childress has hit Bill Davis in the pocketbook by snaring Caterpillar and the Pettys by taking away General Mills.
It's a cutthroat world here, and the rich get richer. But Smith said that the battle he and Roush are waging is against Hendrick, Joe Gibbs and Childress … and that it takes more money than ever.
"The business challenge has been the same, regardless of the number of teams you have," Smith said. "Here's the business challenge -- I can compete with only one team if I have as much money as Rick Hendrick has for Jeff Gordon. The difficulty comes when you can't get that kind of money because you don't have the kind of success it takes.
"This whole business about restricting the number of teams is the wrong way to go.
"And there is even a money gap right now among the four of us … and that's what you have to compete against…. It's never been about the number of teams; it's always been about who has the money."
How much did it cost General Motors to sign Tony Stewart away from Toyota? Who paid? How much did it cost GM to sign Ryan Newman, or Roush and Ford to sign Carl Edwards and Greg Biffle, or Toyota and Joe Gibbs to sign Kyle Busch? Joey Logano?
"Our drivers salaries are significantly up," Smith said. "And in 2010 we are facing the loss of 20 percent of our Cup operating revenue, when we have to shrink our teams from five to four.
"We have cost-management challenges, because our Cup program costs have escalated quite a bit. And the sponsors will only pay as much as their marketing program can justify."
Thus Roush and Ford might well follow Dodge's lead and not field any Trucks next season, which would be a major blow to the NASCAR series.
"This is what happened with the Truck series," Smith said. "When Dodge wanted to come into NASCAR, NASCAR put a ‘tax' on Dodge (requiring it to run Trucks before stepping up to Cup). There were good reasons … to put more investment into the Truck series.
"But what happened was the investment level of Dodge was higher than every other manufacturer … so what teams did was compete with price on their sponsorships…. We watched that with Dodge. And then Toyota came in."
Now, Toyota is not only dominating the Cup tour but also the Truck and Nationwide tours.
If Ford follows Dodge in pulling out of Trucks, would GM officials continue to play the marketing game against just Toyota?
France has to be asking himself just that question.
… even as NASCAR starts ratcheting up pressure on owners to add Grand American road-racing teams.
■ Mike Mulhern can be reached at mmulhern@wsjournal.com.
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