With President Obama at the wheel of the U.S. economy, the car-racing industry appears to be wrecking, with few signs of getting back on the right track.
That according to a new study examining the financial state of NASCAR, the National Association for Stock Car Auto Racing.
The report notes:
As the unemployment rate began to climb starting in 2008, a rising attendance started to fall, and in 2010 attendance dropped below the 4 million for the first time since 2003. As people either lose or fear losing their jobs, they cut back on trips to the track.
Team sponsorship is expensive, so when the economy slows, and choices need to be made about which costs to cut, advertising through race sponsorship is a likely first place to start cutting and teams can race less often.
The stock prices for the two major track ownership groups, International Speedway Corporation and Speedway Motorsports, Inc., were rising on average from 2002 until 2007, when the stock prices of each firm began to fall. The prices bottomed out in early 2009 as the economy has floundered.
During bad economic times, sponsors, looking for their money to gain a bigger return, choose to focus their attention on the larger, more noticeable teams. This has caused the income gap from rich to poor to expand, leading to a greater concentration of success in a few teams.
When inflation and prices rise, putting a race team together gets more expensive.
The study said unemployment and even the fear of being jobless have a major impact on the industry, explaining if enough people become unemployed, changes can be seen in the choices people make.
“Those without a job will cut back on things they deem to be unessential,” the study said. “Here is where NASCAR begins to feel the pinch. No matter how much you want to see a race, if you have a lack of funds, you cut the trip to Daytona out of the budget. That much we understand, but there are other forces at work that may impact the bottom line of NASCAR more than just those who are directly out of work.
“As the unemployment rate rises, even those who have jobs begin to get a little nervous. Seeing their neighbors and co-workers losing their jobs makes the employed start to wonder, ‘Am I next?’ Thus, they are likely to cut back on extra spending as well. So, next year’s trip to Daytona gets cut from their budget, just in case. Ticket sales start to fall not only because the unemployment rate is rising, but also because people are feeling less secure in their finances.”
The study shows a direct relationship between rising unemployment and lower track attendance
Elizabeth Dyar, strategy and outreach manager of Race Fans 4 Freedom, commented on the report, saying: “This study illustrates that NASCAR has seen a marked downturn since the beginning of the recession, but more importantly the fans of this great sport are suffering the consequences of a bad economy.
“High gas prices, a high unemployment rate and uncertainty over their future has limited the fans’ ability to enjoy and participate in one of our country’s most popular sports.”