Caution Flag Flies for Nascar as Ratings Slip

After Years of Strong Gains, League May Be Suffering a Slowdown

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NEW YORK (AdAge.com) -- After an unrelenting six-year streak in which it lapped all other professional sports except football in popularity and TV viewers, the $3 billion business of Nascar is suddenly having to market itself.
Average TV ratings for the 10 final Nascar races of the season dropped 10%.
Average TV ratings for the 10 final Nascar races of the season dropped 10%. Credit: AP

Ratings down
Whether it's just a pit stop, or whether the rubber has finally worn off the racing league's popularity remains to be seen. But its easy ride appears to be over, as average TV ratings for the 10 final races of the season, dubbed the "Chase for the Cup," dropped 10% from 4.8 to 4.3, and some 31 of the 36 races drew lower TV ratings this year than in 2005. And while Nascar doesn't release attendance figures at its tracks, there were clearly empty pockets of seats at several recent races.

Combine the ratings falloff with the sport's freshly inked eight-year, $4.48 billion TV deal with ABC/ESPN -- some 40% higher than the previous agreement with NBC and Fox -- and this week's traditional annual post-season celebration of cocktail parties and driver appearances start to look more like work for Nascar. In fact, it may well be as big a marketing week for the league as its season-opening race in Daytona, Fla., its version of the Super Bowl.

"It's a fair question," said Steve Phelps, Nascar's chief marketing officer, but he added, "I wouldn't say it's any more imperative to have a good marketing week in New York than we have in the past."

'Nip this thing in the bud'
"This is the time for Nascar to set the stage for next year," said the chief marketing officer for a prominent sponsor. "I do think there's a sense of taking measures or precautions to nip this thing in the bud before it gets out of hand, so to speak."

To be sure, Nascar is far from crashing. Where just three years ago teams were struggling to pull in primary sponsors -- those willing to shell out the estimated $18 million needed to bankroll a driver through the 36-race season -- Nascar officials say a whopping 48 drivers will be fully funded for the 2007 season. Toyota is making its long-awaited debut in the main Nextel Cup Series, to the chagrin of the Big Three. And popular Formula One driver Juan Pablo Montoya is jumping to Nascar for the 2007 season, perhaps opening a marketing avenue to Hispanics.

But there are signs its popularity may be waning, attributed to everything from the length of the February-November season; the length of races, which can push four hours; rising costs of attending a race; and a perception by hard-core fans that Nascar has somehow gotten away from its roots.

'We're poised to rebound'
Some say a ratings slip is inevitable after a period of meteoric growth, something even Nascar concedes. "Being down for the first time in a while is disappointing, but the ratings fluctuate for all sports and entertainment. We had a record year last year and a lot of times it's difficult to sustain double-digit growth," Mr. Phelps said. "Sponsorships are still strong, the tracks are doing far better than what people are giving them credit for, and we're poised to rebound significantly from a rating standpoint."

So, too, believes, Roger Vandersnick, CMO for International Speedway Corp., which owns 12 tracks across the country and hosts 21 Nascar events. "Reports of Nascar's demise are greatly exaggerated," said Mr. Vandersnick, a former chief marketing officer of the sport. "It's in vogue right now to say Nascar has chinks in the armor."

He said any anecdotal evidence of falling attendance at the tracks has to be taken in perspective. The August race at the Indianapolis Speedway, for instance, was noted in a report by USA Today as being 20,000 fans shy of capacity -- even though 240,000 fans were estimated to be in attendance. "That's three Super Bowls," Mr. Vandersnick said.
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