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NASCAR is struggling to adapt to a changing sports climate

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NASCAR is a sport at a crossroads, still trying to find a solution to falling ratings and declining attendance.

NASCAR, Monster Energy Announce Premier Series Entitlement Partnership Photo by David Becker/Getty Images

In what may have been a NASCAR first, Hendrick Motorsports recently made a hullabaloo on social media regarding the firesuits its four drivers will wear next season. Paint schemes, sure, that’s a common thing where the look of the cars are ever-changing and fans want to see how their favorite drivers’ car will appear. But firesuits?

This year firesuits offered a snapshot into the uncertainty that permeates over the sport. In the upper right corner, near the shoulder, there was an unmistakable void where the patch is supposed to go, representing the premier series sponsor. No one knew with any certainty which entity would fill the role of entitlement sponsor.

That the process for a new sponsor extended two years after Sprint’s announced departure — well beyond anyone’s expectations -- meant teams had to begin 2017 preparations without knowledge of who would become NASCAR’s most important partner. Meaning, such details like series sponsor patches on uniforms and cars would need to be left blank and photoshopped in later.

New @nationwide88 gear for @dalejr! #NW88JR

A photo posted by Hendrick Motorsports (@teamhendrick) on

Finally at a seemingly hastily scheduled Dec. 1 press conference in Las Vegas, NASCAR CEO and chairman Brian France introduced Monster Energy as Sprint’s replacement. Still, the actual name for NASCAR’s top division wasn’t unveiled until Dec. 20.

"Though it's December and a bit late in the game, they have the activation tools, the plans, and the people ... so they're ready on day one," France said at the introductory press conference. "They're a fun brand that's going to interact with our core fans in kind of a cool, neat way, actually, and we've seen some of the plans, and they'll get bigger and more robust as we go along."

Monster’s introduction as entitlement sponsor resolved the primary worry many within the industry had heading into the offseason. What it did not do is provide a sense of tranquility, with NASCAR entering 2017 at a crossroads and facing an array of issues.

Despite a captivating Chase playoff featuring Jimmie Johnson’s pursuit of a record-tying seventh championship, largely competitive racing throughout, and Jeff Gordon’s likely final two NASCAR starts, television ratings continued to sag, and in many instances appear to be cratering.

Twenty-two Cup races accumulated fewer total viewers of the 29 that could be compared to the previous year (because of rain delay, postponements, and other factors), according to Sports Media Watch, including 15 that plummeted by double-digits in either total viewership, ratings, or both.

Ratings have fallen to such a level that NASCAR’s television partners have taken notice — and even attempted to take action. Specifically, as ratings plummeted during the schedule’s second half of the season, NBC Sports executives went to NASCAR multiple times offering suggestions on how to better promote the product. One meeting held the week of the Cup Series awards banquet in December was described as “heated” by multiple sources.

“There have been good conversations about ways to rethink and relook at the competition,” NBC Sports president of programming Jon Miller told SB Nation.

Among the numerous ideas NASCAR is considering to enhance its product: Utilizing heat races where drivers earn their starting position in the main event, which would then be shortened from the typical 400- and 500-mile distance, similar to what was rolled out in the Xfinity Series last season. There is also the possibility of splitting a race into two separate events, both of which would award points and earn a driver Chase eligibility were they to win. The thinking is with consumers’ attention spans shrinking, it’s best to present a race with a more palatable distance that a viewer can better digest.

NASCAR has not formally determined if it will modify its race formats in any way. If the sanctioning body does elect to do so, a decision would be announced during the annual preseason media tour later in January.

Another idea pushed by TV executives is staging of midweek night race(s) during the summer to better maximize viewership, thereby allowing for a more condensed schedule with fewer events in the fall that have to go head-to-head against the NFL and Major League Baseball. This concept is well received by those within the industry SB Nation spoke with, though any implementation couldn’t happen until 2018 due to the 2017 schedule having already been solidified. But in all likelihood, the Cup Series will have at least one midweek race on next year’s calendar.

The number of spectators watching in-person has also fallen. The three publicly traded companies that operate all but two of the 23 tracks on the schedule report a decline in admission revenue from 2010-2015. Dover Motorsports Inc. suffered a 51 percent decline, Speedway Motorsports Inc. a 28 percent decline, and International Speedway Corp., a 19 percent decline.

“There once was a period of time where not everyone was trying hard — they didn’t have to try hard, they just opened the gates,” Texas Motor Speedway president Eddie Gossage told SB Nation. “For a while there, it was out of control upward growth. And it’s hard to stay on top. Some can do it, but it’s tough.

“Nowadays I think everybody is really trying hard.”

Not only are fewer people watching and attending Cup Series races, but those that do are primarily older and fall well outside the 18- to 34-year-old demographic coveted by advertisers. Which made NASCAR’s successful courting of Monster a significant triumph, something NASCAR executives have not been shy in touting.

"Obviously, they're an edgy brand," France said. "They're a fun brand. They get at a millennial audience in a different way clearly than we've ever been associated with, particularly at this level, and they know what they're doing. This is their DNA.

"They understand how to reach across and excite our core audience and help us deliver on a new audience, and that was very exciting for us."

The stands were not full in Indianapolis as Kyle Busch wins at the Brickyard.
The stands were not full in Indianapolis as Kyle Busch wins at the Brickyard.
Photo by Brian Lawdermilk/Getty Images

In spite of the widespread euphoria that exists within the industry about the potential Monster brings as a series sponsor, many facets of the deal raise concerns. Unlike when Nextel (later absorbed by Sprint) signed a 10-year contract to come on board as entitlement sponsor in 2004, Monster isn’t assured to be a long-term partner, agreeing only to a two-year contract with a two-year option, according to the Sports Business Journal, which sources confirmed to SB Nation as accurate.

Such a lack of commitment sports business experts believe could limit the kind of effective marketing campaign NASCAR is banking on to revitalize itself.

“If you’re thinking of allocating a lot of your marketing dollars as a sponsor to a signature property and it’s going to be big part of your overall corporate marketing strategy going forward, it can be difficult to get that return investment,” David Carter, executive director of the University of Southern California’s Marshall Sports Business Institute, told SB Nation.

Of additional concern is what Monster is putting up to be the Cup Series sponsor, a figure reported at $20 million a year, according to the Sports Business Journal, with the actual number closer to $25 million, sources told SB Nation. Regardless of what the specific terms of the deal entail, there is no denying Monster is committing considerably less than the reported $50 million that Sprint was paying annually.

There is a sense of trepidation within the ownership ranks that, with NASCAR generating less revenue, teams will eventually see a reduction in the payouts they receive annually, according to multiple team executives SB Nation spoke with. Be it this coming year or in 2018, those left to foot the bill are wondering if team ownership — a tenuous proposition even during NASCAR’s robust times of the mid-1990s to the mid-aughts — is untenable for everyone but the upper-class (i.e. Hendrick Motorsports, Joe Gibbs Racing and the like).

“I don’t know exactly what NASCAR is getting [from Monster], but I know it’s less than before,” a team executive told SB Nation on the condition of anonymity. “So how will that discrepancy be made up? Is NASCAR going to write a big check to cover the difference, or will they cut costs and expect the teams to figure out the rest for themselves?”

The feeling of unease within the ownership ranks isn’t limited to the possibility of shrunken revenue streams. Although measures have been taken to lower operating costs, ownership remains an expensive venture heavily dependent upon sponsorship to stay solvent.

Attempting to help owners achieve a modicum of financial stability, NASCAR broke away from its longstanding approach that organizations are independent contractors and devised the team charter system last year. Akin to a franchise in stick-and-ball sports, a charter ensures an owner entry into all 36 point races, along with predetermined guaranteed income. Additional money is earned through a three-year weighted performance scale.

But while the charter structure is still in its infancy — with some owners bullishly confident about the solidity it provides in the years to come — there is skepticism whether the smaller teams are actually better off. Also, whether potential new owners are stymied from entering what is now essentially a closed society with limited avenues to startup and field a competitive team.

That charters may not provide the desired security is evident in what’s occurred in the weeks since the 2016 season wrapped on Nov. 20 at Homestead-Miami Speedway. Since then, four teams have downsized or folded, with HScott Motorsports (two cars) and Tommy Baldwin Racing (one car) completely shuttering. Roush Fenway Racing and Richard Petty Motorsports each dropped a car — RFR from three to two, and RPM from two to one. Turnover was offset at least slightly by Furniture Row Racing and JTG Daugherty Racing each expanding from single-car teams to become two-car organizations.

“If the charter system and the economic system of the sport is not given a close look at very soon, then someone is whistling past the graveyard,” Ramsey Poston, president of strategic communication firm Tuckahoe Strategies and a former NASCAR executive, told SB Nation. “The notion that this will work itself out in a few years is a really dangerous situation for the sport to put itself into. There has to be an economic path to work for teams that don’t win on a regular basis.”

Yet, even as it moves further from its turn of the century heyday and with hurdles aplenty in front of it, NASCAR’s situation isn’t unique in the sports landscape nor something it cannot overcome.

An aging fan base is a problem that MLB has encountered for years and it still remains firmly a part of the American consciousness, Carter said. And the NFL’s issues with attendance and diminished television ratings this season is well documented.

“NASCAR isn’t alone, and you have to applaud them for their understanding that they have to refine their product,” Carter said. “Now, with that kind of change comes a lot of pushback, with how they’re structuring the [Chase] system and such.

“But you cannot stand still. So even if you don’t like what they’re doing as a race fan, doing nothing in an environment where the consumption patterns are changing, attention spans are shortening at least they’re taking some swings.”

Similar to the NFL, NASCAR is aided in combating its current ailments with a robust television contract negotiated with NBC Sports in 2013 that will see the network pay the sanctioning body a record $4.4 billion over 10 years. Fox Sports’ deal with NASCAR, an eight-year extension inked in 2012, is for $2.4 billion, a 30 percent increase over the previous terms.

And though its ratings continue to dwindle, NASCAR remains a valuable commodity to its television partners. The Brickyard 400 in July was NBCSN’s most-watched and highest-rated telecast in its history, with an average of 5.2 million viewers and a 3.1 household rating. An average of slightly more than six million viewers watched Johnson win a historic seventh championship in the 2016 season finale. NBCSN also saw a 56 percent growth in its overall streaming numbers for NASCAR-related content from the previous year.

“NASCAR has delivered a lot of benefits to us,” Miller said. “The ratings have been a little bit off, but that’s across the board in sports as you’ve seen in a lot of different places. The good thing about NASCAR is that we work closely with them to innovate and create new opportunities to drive those ratings back to levels we all hope they’re going to be at.”

Still, the continued drop in television ratings and sagging attendance is hard to ignore — particularly because these two metrics are most frequently used to gauge a sport’s popularity.

NASCAR Sprint Cup Series Awards - Show
NASCAR CEO Brian France is often criticized but has done good for the sport, too.
Photo by Ethan Miller/Getty Images

Tasked with the responsibility of correcting the precarious drop in both figures is France, NASCAR’s much maligned leader.

But in contrast to a public persona that perceives him as aloof and possessing a management style vastly less gregarious than his grandfather, Bill France Sr., NASCAR’s founder, and father, Bill France Jr., who served as head of the sport from 1972-2000, many of those SB Nation spoke with contend Brian France will eventually spearhead NASCAR’s resurgence.

Though prone to public faux pas — most notably endorsing divisive President-elect Donald Trump at a rally last February — France’s vision and behind the scenes leadership is regarded as a valuable asset.

It was France who brainstormed in the late 1990s that instead of the sport’s television rights being scattered amongst an alphabet soup of networks, NASCAR should instead bundle and sell to the highest bidder. In 2013, France was at the forefront of negotiations with NBC Universal, resulting in the network paying as much as 50 percent above the second-place bidder to recapture the package to the second half of the season, according to industry analysts.

And while the Chase is derided by many fans as contrived and gimmicky, France’s idea of NASCAR instituting its version of a playoff has paid dividends with the championship now assured of always having a dramatic conclusion. It was also the 54-year-old executive who personally pitched Monster, sensing the value the company could bring the sport he oversees.

“I think Brian is unfairly beat up,” Gossage said. “NASCAR is an 800-pound gorilla and he’s driving it, but you better give him credit for all the good things he’s done. He’s done a very good job in so many ways.”

The juxtaposition to the optimism expressed in France’s favor is that he was also in charge during a downturn now entering its 10th year. Yes, the pieces are in place for a turnaround, except those pieces still need to be correctly put together.

“There are so many things to be positive about, I really believe that,” a team executive told SB Nation on the condition of anonymity. “But all these negatives are biggies, and unless we find some real solutions, I don’t know. I’m concerned.”