The bond between Detroit and Daytona Beach, Fla., began 60 years ago when production cars, replete with cigarette lighters and working radios, rolled off U.S. assembly lines and onto racetracks.
In 21st-century NASCAR, Camrys compete against Chevys and “win on Sunday, sell on Monday” — the adage in American showrooms that you retail what you race — is a concept outdated by the evolution of a Sprint Cup vehicle that bears little in common with its street-ready counterparts.
The identity of the country’s largest auto racing series, though, remains as tied to its ailing auto industry as to the names Earnhardt, France and Petty.
“This sport has become driver- and personality-based, but it’s still been about Ford vs. Chevy vs. Dodge vs. now Toyota,” says Ray Evernham, ESPN analyst and founder of Gillett Evernham Motorsports. “This sport was built on the competitiveness of the manufacturers. It’s what we race.”
As the nation’s three largest automakers fight for survival, their uncertain future threatens a longstanding connection to another American staple: NASCAR. Ford, General Motors (through its Chevrolet division) and Chrysler (Dodge) made up roughly 75% of the cars in the field in the premier Cup circuit last season, and there are many questions about how much manufacturer support — a multilayered package of cash, technical support and parts — those teams will receive in 2009.
Chevy already announced plans in July to slice its motor sports spending (eliminating NASCAR track sponsorships), and Ford will end commitments next year to the lower-tier Camping World Truck and Nationwide series. Dodge is dialing back its teams (Chip Ganassi Racing with Felix Sabates’ two cars move to Chevy) and promotions. The cuts will reduce each company’s NASCAR outlays by at least 20%.
Peter De Lorenzo, the publisher of autoextremist.com and an auto industry analyst and consultant, estimates the automakers spend about $120 million to $140 million annually on NASCAR (between marketing and competition) and says more cuts could be coming, even in the wake of the White House bailout to stave off bankruptcy for the auto industry.
“If the automakers could make significant changes in their commitments to NASCAR, they would,” De Lorenzo says. “They get a return on their investment, but it doesn’t justify what they’re spending. With Washington oversight, it’ll be difficult going forward to write hefty checks to NASCAR. This could be the end of team contracts as we know them. … If the manufacturers go away completely, NASCAR’s going to be truly hurting.”
In an offseason dotted by seemingly daily reports of crew layoffs and teams folding, merging or reducing schedules because of declining revenue, a reduction of manufacturer support would be another blow to a sport whose fortunes are tied closely to corporate support.
But it wouldn’t necessarily be a death knell.
NASCAR survived the desertion of automakers during the 1960s and ’70s when it wasn’t nearly so flush with cash. A multibillion-dollar TV contract that started in 2001, a $70 million annual deal with title sponsor Sprint and sponsorship from more than 100 Fortune 500 companies have helped diversify teams’ revenue streams during an era of $20 million to $30 million budgets for each championship-caliber car.
NASCAR chairman Brian France, who lobbied Congress for the bailout in a letter this month, says the manufacturers are part of the sport’s heritage in a unique way. “But we won’t live or die in a pullout or pullback,” he says.
Hendrick Motorsports owner Rick Hendrick, who has a $4 billion auto sales empire encompassing more than 80 dealerships in addition to eight Cup titles, says, “As long as there’s a GM, they’ll be in NASCAR, because it’s part of their DNA.”
But, he says, “Financially it’s not the lifeblood anymore. It’s going to hurt if they’re not there, but we’ll adjust.”
NASCAR’s standardization of its cars last year will make it easier to adapt. Beyond the bumper logos, brand identity virtually is non-existent, and some, such as Roush Fenway Racing co-owner Jack Roush, say that has minimized the impact on competition and the fan base.
“The fans want to see the cars and stars going fast, and that’s going to continue,” Texas Motor Speedway President Eddie Gossage says. “When the manufacturers left before, it continued without them.”
Says Richard Petty, a seven-time champion who raced during the pullout: “If the factories all went home, the general public in the grandstands wouldn’t know the difference.”
Other circuits hit hard
If one or more of the Big Three leaves, NASCAR won’t be the first racing series to lose a manufacturer in the economic downturn. Earlier this month, Honda pulled out of Formula One, the world’s most popular series, as did Audi from the high-tech American Le Mans Series sports car circuit. Last week, Suzuki (citing a drop in sales) left the FIA World Rally Championship, a popular series in Europe.
But those circuits’ funding structures aren’t analogous to stock-car racing. As its own primary sponsor, Honda poured $300 million annually into its two-car, 800-employee operation and will shut down the team if a deep-pocketed buyer can’t be found. Audi’s vacancy will leave the ALMS without a team that won nine series championships since 2000.
“Other types of motor sports rely heavily on the manufacturer, and we’re the exact opposite,” four-time Cup champion Jeff Gordon says. “Where 80-90% of their funding comes from the manufacturer in F1, it’s maybe 10-20% of our funding.”
Automakers primarily support NASCAR teams in three ways:
•Cash, which is used to hire engineers and pay drivers in personal services deals.
•Development of parts and engine design, the lone area where brand identity remains.
•Technical support to enhance aerodynamics, usually through wind tunnel time or engineering.
The latter often is viewed as a “trade-out” of sorts for manufacturers, who have equipment for developing their production cars and can offer the technology virtually for free. For example, though Ford pulled its support from the Camping World and Nationwide series, teams still can use Ford’s technical stuff.
“A lot of their technical support doesn’t cost them money,” Roush Fenway Racing driver Greg Biffle says. “It’s not like they’re giving us millions of dollars. It’s not a tremendous amount when you put in perspective how much we get from sponsors and associate sponsors.”
Though De Lorenzo estimates manufacturers make around 18-20% (he thinks Joe Gibbs Racing doubled its deal in its move from GM to Toyota this year), drivers and owners say the number is lower. Hendrick says it’s less than 10%, and Roush says it’s closer to 15%.
But Hendrick and Roush are expecting to reduce wind tunnel testing this season in anticipation of reduced support and because of the next-generation car, a more generic model that doesn’t react as well to research and development as its predecessor did.
“This (standardized) egg crate template really limits what you can do on wind tunnel testing,” Roush says. “So the amount of money you can spend on making your mousetrap better is limited. As a manufacturer, you can spend twice the money and get almost nothing out of it.”
Gordon said he and Hendrick would be very nervous if the cars still varied greatly between makes as they did 10 years ago.
“I credit NASCAR for having a series that can operate without the manufacturers,” Gordon says. “I never want to see that, but this sport could survive.”
Toyota keeps status quo
The future of Sprint Cup’s foreign automaker isn’t in doubt. Though Toyota has weathered a precipitous drop in sales, theJapanese-based company still has plenty of cash to throw at racing.
Though Toyota’s budgetsare under review and expected to be at lower levels in 2009,its executives have targeted its NASCAR expenditures as critical to rebounding from the recession.
Much like with the Big Three, Toyota marketing research shows awareness and favorability ratings have spiked among fans and driven traffic to dealerships.
“If every manufacturer reduced their involvement by 30%, no big deal,” Richard Childress Racing driver Jeff Burton says. “But if Toyota continues to spend at the rate they are and the American manufacturers are reduced by 30%, that’s a big deal. If Chevrolet called Richard Childress and said, ‘We could not participate,’ it would have a major, major effect.”
Childress says jobs also would be lost (though not the hundreds of crew cuts the past month) because GM cash pays for some engineers.
If there were a pullout, it’s unclear what would happen to the teams left stranded. It’s unlikely the remaining American automakers could shoulder extra teams, and Toyota doesn’t want more than a quarter of the field (10 cars; it currently has seven).
Even if GM downsizes to insignificant support, De Lorenzo says he thinks Hendrick, the auto dealer, still would run Impalas.
“There might be a sense of loyalty sweeping through the garage for teams to stay with manufacturers as long as they could,” De Lorenzo says. “Toyota has said adamantly it wouldn’t be a one-make series, so NASCAR probably would have to look at (generic names) like NASCAR specials.”
If the bigger-budget teams were forced to slash research and development spending, De Lorenzo says, “There might be a chance for an independent to shop to make an impression like the old days if they have some genius crew guys.”
Future in past?
NASCAR is courting no other manufacturers (though Honda might become a candidate), and any new company would need to start on the grassroots level on a five-year plan to reach Cup as Toyota did.
But by bringing race cars back in line with production cars — unleaded fuel came to NASCAR two years ago, and though a Ford Fusion hybrid paced the season finale last month, alternativefuels appear a long way away — NASCAR might create more enthusiasm for manufacturers. Teams would race what companies were selling, just as they did in 1948.
“It’s a perfect opportunity for NASCAR to set a new course with a visionary approach of running a diversity of engines with fuelinjection, embracing synthetic fuels and biofuels,” De Lorenzo says. “It’d be a New Deal for NASCAR.”