How NASCAR plans to recover from a rough 2020
# 43 Victory Junction Chevrolet driver Bubba Wallace prepares for the NASCAR Cup Series Super Start Batteries 400 presented by O’Reilly Auto Parts at Kansas Speedway in Kansas City, Kansas on July 23, 2020 .
Jamie Squire | Getty Images
A welcoming environment.
This is what NASCAR President Steve Phelps said when speaking to CNBC about how the sport wants to be perceived after its defining moment in 2020
“That has been Bubba’s mantra all the back of the season since June,” Phelps said. “It’s inviting and inclusive.”
Phelps did his media rounds before NASCAR returns on Sunday with one of its key events, the Daytona 500. In his third year as president, Phelps is tasked with repairing the organization that once drew 11 million viewers to its signature race.
NASCAR hit the headlines in 2020 when it banned the Confederate flag last June. It was behind driver Darrell “Bubba” Wallace, who had a backlash after calling for the ban. And then Wallace was at the center of a noose accusation.
Previously, driver Kyle Larson used a racist arc when engaging with a live video game community. This brought NASCAR into the spotlight, which no sports company wants. It had to face its problems to move forward.
“It was the most challenging year in our sporting history, but I would say it was the most enjoyable and successful in our sporting history,” said Phelps.
Now comes the challenging part: creating a welcoming environment by considering race and diversity issues and thereby repairing NASCAR’s business.
Former NBA Chicago Bulls Guardian Michael Jordon held the crowd high during pre-race ceremonies prior to the start of the NASCAR Sprint All-Star Race at Charlotte Motor Speedway on May 22, 2010 in Concord, North Carolina.
John Harrelson | Getty Images
Bubba, Jordan, Pitbull and… Snoop Dogg?
After Wallace’s departure from Richard Petty Motorsports, basketball icon Michael Jordan formed the 23X1 racing team together with well-respected driver Denny Hamlin. They recruited Wallace as a top driver.
I am a good move for NASCAR, which is betting that Jordan will spark new interest.
“We’re thrilled to have Michael here,” said Phelps. “I think this will generate considerable interest in itself. Like most owners, Michael only wants to be successful on the track,” he added.
The 23X1 team has already won top brand sponsors including McDonald’s, Toyota and DoorDash.
Wallace has not yet recorded a victory in his career. It has to be successful for NASCAR to get its Tiger Woods-style PGA Tour moment that draws in minority fans. He had a strong night qualifying for the Daytona 500 in 2021, finishing second in Duel 2 and finishing sixth on the grid on Sunday.
One person who spoke to CNBC about Wallace’s influence cited Danica Patrick as an example of how things can go when Wallace doesn’t win. The person asked not to be identified due to sensitivity to the subject.
Patrick set records in the sport as a driver in 2012 and cast a positive light on diversity, the person said. Despite being well known, she struggled and finally decided to leave for a full day in 2017.
NASCAR has the ability to increase viewership and engagement by using Wallace as an entry point. Pop star Pitbull is also a NASCAR team partner. He joined the Trackhouse Racing Team in January.
“I’m very optimistic about NASCAR this season,” said Dan Cohen, senior vice president of Octagon’s global media rights advisory group. “You’re back on your schedule. You have Bubba Wallace – a good storyline. You have got celebrity owners involved, which adds a little flair.”
A former NASCAR team owner, who spoke to CNBC on condition of anonymity, said NASCAR should attract even more celebrity owners. Hip-hop star Snoop Dogg was mentioned by name.
Phelps said, “There are some names that have been thrown away. I don’t know if any of them will be used.”
Bubba Wallace, driver of the # 43 Victory Junction Chevrolet, takes a selfie with NASCAR drivers that put him at the top of the grid as a token of solidarity with the driver ahead of the NASCAR Cup Series GEICO 500 on June 22nd at Talladega Superspeedway. 2020 in Talladega, Alabama.
Chris Graythen | Getty Images
NASCAR marketing strategy
In addition to celebrities and Wallace’s potential success, NASCAR needs a marketing strategy that targets a minority, suggested longtime marketing director Tony Ponturo.
How will Phelps and the company sell NASCAR to more diverse communities? What will it do to attract newer fans onto the track?
Ponturo, the former vice president of global media sports and entertainment marketing for Anheuser-Busch, suggested that NASCAR avoid “overcomplicated things” like the playoff system.
“I think they confuse more people than they educate,” said Ponturo. “As a sports fan, I couldn’t tell you how your entire system really works.”
He said a simplistic approach should work, adding, “You have to go to red and blue states and urban communities so that consumers have a reason to spend time playing the sport. And you have to work hard on that.”
George Pyne, CEO and founder of Bruin Sports Capital, agreed. Pyne served as NASCAR’s chief operating officer, helping him finalize a $ 4.5 billion media legal pact before leaving the sport in 2005
“You have to market the sport to them and a driver, a team that could make it more relevant to them,” said Pyne. “And you have to talk about why this product is interesting.”
Pyne suggested better storytelling as a method. He said NASCAR’s promotion for Wallace could be action, and NASCAR could tell the audience what goes into building a car by showing more engagement behind the scenes.
Presenting more stories that aren’t drivers could help NASCAR as well. In 2018, Brehanna made Daniels story when she joined a top NASCAR pit crew and became the first black woman to join a team.
“You have to tell the story about people,” said Pyne. “And when you can do all of this, things get interesting. The human part of it is a big part too.”
Ryan Newman, driver of the # 6 Koch Industries Ford, drives during the 62nd Annual NASCAR Cup Series Daytona 500 on February 17, 2020 at Daytona International Speedway in Daytona Beach, Florida.
Mike Ehrmann | Getty Images
Back to business
Building a new fan base takes patience and time and starts with Daytona.
Like other sports leagues, NASCAR touts its metrics, suggesting that its unique audience has grown by 17%. But money is made through sponsorship support and television viewers. And Daytona has suffered a loss in the past ten years.
In 2002 the number of spectators rose to over 18 million. In 2017 it was around 11 million and in 2019 9 million. A weather-related postponement forced the 2020 race to last two days and attracted an average of 7.3 million viewers.
Marketing managers and NASCAR experts point out various things, including the failed “Car of Tomorrow” project and a charter system that turned off long-time fans. The great recession was to blame and affected participation, while NASCAR retired stars like Jeff Gordon and Dale Earnhardt Jr.
It created a lack of interest and the number of viewers fell.
Worse still, the decision to move NASCAR to the Fox Sports and NBC Sports cable channels contributed to the loss of television exposure. It might help now that NBC shift its races to the USA Network, which reaches 86 million households, compared to NBCSN’s 80 million. The current $ 4.4 billion rights deal runs through 2024, after which NASCAR could run elsewhere.
According to advertising company MediaRadar, marketers have also declined. The company submitted data to CNBC showing 865 advertisers (for a total of $ 182 million) served NASCAR programs in 2020, up from 946 ads ($ 291 million) in 2019. MediaRadar collects advertising data from marketers through a variety of media channels including TV and online.
To counter this, NASCAR is aiming to attract attention by returning a dirt road across the Bristol Motor Speedway. Sport hasn’t seen this in over 50 years. And expect more marketing for popular drivers like 2020 champion Chase Elliott. Even the return of Larson, who was suspended for his mistake, engenders intrigue.
“The sport has a lot of momentum,” said Phelps. “And I think that will continue in 2021.”
The outside executives trust Phelps to deliver on time.
“Phelps is a smart marketer, a smart businessman,” Cohen said. “He understands – they have to change and adapt and adapt. He understands that they have to be different.”
Pyne added, “He’s a good person; a sincere person. I think he’s committed to doing the right thing.”
It’s the new NASCAR: a large, welcoming environment.
“We’re going to be disruptive,” said Phelps. “And we’ll be brave. And we’ll do it in our own authentic way. We’re not the NFL. We’re not the NBA. We’re NASCAR.”