By the mid-2000s, NASCAR had evolved from modest origins — car races on the sands of Daytona Beach more than 60 years ago — to become a multibillion- dollar industry. Capping nearly two decades of double-digit growth, stock car racing was attracting an average of 75 million TV viewers a year, second among sports only to professional football. Fortune magazine had declared it America’s fastest-growing sport, and marketing firm PSB had named NASCAR the second-hottest brand, ahead of Google and iPod. (Blackberry was No. 1.)

But 2006 marked a turning point. Within five years, attendance at NASCAR races had declined by 22%, and racetrack revenue was in free fall, dropping from $235 million to $144 million at International Speedway Corp., the largest racetrack operator. Meanwhile, TV viewership was down 30%, and key sponsors were leaving.

In 2011, NASCAR CEO Brian France, who took over NASCAR from his father, Bill France Jr., in 2003, began looking for answers. Advisers told him that the recession had been particularly hard on NASCAR’s workingclass fan base and suggested business as usual, awaiting a rebound.

France “just didn’t buy” that the recession alone was to blame for NASCAR’s woes, however.

“The digital age was upon us, so I was wrestling with questions like, ‘Are our young fans going to consume us differently? Are attention spans really shortening, and are these new devices really going to be what drives content? If so, how does our industry understand all these things?’” France is quoted in a 2015 article published by Northwestern University’s Kellogg School of Management.

“Everywhere I looked,” he says, “we were doing things very traditionally, which had worked for a long time but wasn’t working anymore.”

In 2011, France hired a consulting firm to conduct a market study, and the results were even worse than he’d feared. According to the Kellogg School article, the consultant described NASCAR in 2011 as being in a state of “dangerous irrelevance.”

NASCAR — with a fan base dominated by white men over 40 — hadn’t engaged younger people or identified new customer segments. It also lacked a strong online presence. NASCAR drivers, whose season, at 10 months, is the longest of any professional athlete, weren’t interacting with fans on social media. Even when Millennials came to the races, there was limited cellphone service or wifi to let them share their experiences online in real time.

France and his team responded with a plan aimed at expanding the sport’s base. During the following months, NASCAR brought back in-house the website and other digital properties that it had outsourced. Drivers received media training and marketing resources, and racetracks pledged capital improvements.

In 2013, International Speedway Corp. (ISC), a publicly traded company led by France’s sister, Lesa France Kennedy, announced plans to spend $400 million to revamp Daytona International Speedway.

The project, called Daytona Rising, delivered new concourses, restrooms and concession areas, wider seats and free wifi. By tearing down the back grandstand, ISC reduced the number of seats to 101,500, about two-thirds of the track’s previous capacity. Two years ago, the newly renovated facility opened in time for the Daytona 500, drawing its first post-recession, sell-out crowd.

ISC also has invested in upgrading other tracks, spending nearly $180 million to revamp Phoenix International Raceway in Arizona.

So far, the results of the turnaround strategy are promising, if modest. Annual ticket sales fell again last year, but admissions in just the fourth quarter grew over the year before.

ISC, which owns 13 NASCAR racetracks across the U.S., said its total revenue rose by 1.6% in 2017 because of an increase in sponsorship and broadcast income. Media broadcast fees are the single biggest source of revenue for NASCAR and its racetrack company partners.

Despite the decline in TV ratings, NASCAR has secured an estimated $8.2 billion from Fox and NBC for race broadcast rights through 2024. It also has introduced stage-based racing with playoff points and a knockout championship format that dials up the competition. Last year, coverage of the Daytona 500 garnered a 16% increase in viewership among 18-to-34 year olds.

Meanwhile, ISC has moved to capture new revenue streams by engaging fans away from the racetrack. The company is finishing a $100-million, mixed-use development across from Daytona International Speedway called One Daytona. The development features shops, restaurants, a Cobb movie theater and Fairfield Inn hotel. A six-story, 145-room Marriott Autograph Collection hotel will open later this year.

“About 60% of the crowd at the Daytona 500 comes from out of state,” explains company COO Joie Chitwood, who oversaw Daytona Rising as track president from 2010 to 2016. “They travel from over 300 miles away and stay here for four or five nights. The more we can offer them to make it a great experience, the better chance we have to get them back.”

ISC executives point out that NASCAR remains the second-most popular sport on TV after the NFL, and has more than 120 Fortune 500 companies as sponsors. ISC is profitable: In 2017, the track operator netted a $110.8-million profit on $671.4 million in revenue — a 16.5% margin.

Last year’s profit was the largest since 2008, and well above an average annual profit of $54 million from 2009 to 2016. There also are signs that fans are responding to NASCAR’s digital efforts. On average, NASCAR’s website and mobile apps had 1.7 million unique race-day visitors last year, up 7% from 2016.

“We’re investing in the sport because it makes sense,” Chitwood says. “It’s not just a sport anymore. It’s entertainment. I wouldn’t say we’re competing with the NBA or NFL. We’re competing for people’s time. The key is, do we have compelling content, great venues and great star power to attract fans? I think we do.”

In February, the 60th running of the Daytona 500 drew a third straight sellout crowd. Newly retired fan favorite Dale Earnhardt Jr., son of the late Hall of Famer Dale Earnhardt, gave the command to start the race.

Darrell Wallace Jr., driving Richard Petty’s iconic No. 43, became the first African-American full-time driver to compete at NASCAR’s top level since Wendell Scott retired in 1971. Danica Patrick, who’ll retire this year as racing’s most successful woman driver, ended her NASCAR career with a crash and a 35th-place finish. Austin Dillon, grandson of team owner Richard Childress, won the race and made history driving No. 3, the same number Earnhardt Sr. raced under when he captured the Daytona 500 title 20 years earlier. Nearly half of the field’s 40 drivers, including Dillon, were younger than 30.

France says in most respects NASCAR is facing the same challenge as other spectator sports — the fundamental change in how young people consume all sports.

“We’re not isolated here,” France said last year at Richmond International Raceway in Virginia. “Every sport is trying to unlock the new consumption levels and fan interest by a younger demographic. Of course, we love our core fan, and everyone does, but every sport is thinking carefully about how to reach the Millennial fan to get them excited about their sport.”

NASCAR Timeline

• 1947: Bill France Sr. holds a meeting of drivers, car owners and mechanics at Daytona’s Streamline Hotel to standardize rules for stock car racing.
• 1948: NASCAR is incorporated with France as the leader.
• 1971: R.J. Reynolds Tobacco becomes a NASCAR title sponsor after Congress bans cigarette ads on TV and radio. NASCAR’s premier series is renamed the Winston Cup.
• 1972: Bill France Sr. retires and turns over control of NASCAR to Bill France Jr.
• 1979: The Daytona 500 is telecast live in its entirety for the first time. A trackside fistfight between Cale Yarborough and the Allison brothers thrusts the sport into the national spotlight.
• 2003: Brian France succeeds his father, Bill France Jr., as NASCAR chairman and CEO.
• 2004: Nextel takes over as title sponsor for NASCAR’s Cup series from R.J. Reynolds.
• 2013: NASCAR secures an estimated $8.2 billion from Fox and NBC for race broadcast rights through 2024.
• 2014: NASCAR announces a new championship format that encourages drivers to win races rather than race for points throughout the season.
• 2015: NASCAR signs five-year agreements with 23 tracks to host Cup races in hopes that track owners will make long-term investments.
• January 2016: Daytona Rising, a $400-million renovation of Daytona International Speedway, opens in time for the Daytona 500.
• February 2016: NASCAR introduces a new franchise-like charter system to give team owners more financial stability. Richard Petty calls it the most important thing to happen in NASCAR since its founding.
• 2017: Monster Energy becomes title sponsor of NASCAR’s Cup series, replacing Sprint, which had assumed the naming rights after it bought Nextel. Monster’s two-year deal reportedly is worth $20 millionplus annually, much less than the $75 million a year that Sprint paid.

NASCAR’s First Family

NASCAR functions as a sanctioning body for stock car racing. For more than 17 years, NASCAR has negotiated with TV networks on behalf of racetracks for the rights to telecast events. The France family controls NASCAR and publicly traded International Speedway Corp., which operates racetracks. Both NASCAR and ISC are headquartered in the same building across from Daytona International Speedway.

• Brian France, 55, grandson of late NASCAR founder Bill France Sr., is chairman and CEO of NASCAR.
• Brian’s sister, Lesa France Kennedy, 56, is chief executive of International Speedway Corp.
• Their uncle, Jim France, 73, is ISC chairman.

International Speedway Corp. (ISC)

Publicly traded ISC owns and operates 13 racetracks that host NASCAR races, including Daytona International Speedway and Homestead-Miami Speedway. The company also has a stadium-concessions business called Americrown Services and a motorsports radio network, MRN Radio.

• Headquarters: Daytona Beach
• Founded: 1953
• â-ºCEO: Lesa France Kennedy, 56
• Employees: 820
• 2017 revenue: $671.4 million
• 2017 profit: $110.8 million

Where the Money Comes From

NASCAR makes money from corporate sponsors, TV deals with broadcast partners, licenses for race teams and sales of NASCARlicensed merchandise. It also charges racetracks sanctioning fees to host events.

ISC, meanwhile, generates most of its revenue from broadcast licensing fees and corporate sponsorships for motorsports events.

Declining Ticket Sales

Ticket sales at ISC-owned racetracks are down by half from their peak in 2007. ISC’s main competitor, Concord, N.C.-based Speedway Motorsports, has seen a similar decline in admissions revenue during the past decade. The two companies operate 21 of the 23 racetracks on the NASCAR Cup circuit.

 

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