Business of Sports

Should Nascar Expand Overseas?


1. As Playoff System Begins, Nascar Is Chasing Revenue and Ratings

Starting in the 1980s and through the '90s, Nascar was unquestionably the fastest-growing sport in America. It's 90% dollar-on-dollar business growth rate was more than the NFL, NBA, or any of the other "stick and ball sports." However, for all of the past success Nascar has enjoyed, no sports organization faces more unanswered questions in today's economy.

First among those questions are existing TV relationships. Ratings for the 2009 regular season were down 7.6% heading into the Chase, averaging 6.899 million viewers for 23 broadcasts on ABC, ESPN, Fox, and TNT (and down from an average of 7.452 million viewers for 24 telecasts last year). Current deals with ABC, ESPN, and Turner are valued at almost $600 million per year and expire in 2014. With five years remaining on the contracts, Nascar should have plenty of time to steer the ratings ship straight.

Second, while a spate of recent team mergers is streamlining operations and creating economies of scale, some drivers and executives are convinced the mergers are damaging the sport. We don't want to see mergers of organizations. We want to see organizations have multiple teams," says Chase contender Ryan Newman in the Charlotte Observer. "I want to see six to eight cars go home every week. That's the way it should be in my eyes." For others, such as Tony Stewart's new powerhouse Stewart-Haas Racing and Richard Petty's RPM buyout of Yates Racing, it's a return to relevance in the acquisition of diverse drivers, a cutting-edge garage, and stronger supplier relationships.

The perception that the state of the auto industry means trouble for Nascar is only somewhat true. While some hospitality and sponsorship cutbacks have been unavoidable, Dodge, Ford (F), and GM in recent weeks have all restated their commitment to the sport. In addition, such nonauto sponsors as Sprint (S), Subway, and Home Depot (HD) aren't going anywhere. Yes, motor sports giant International Speedway Corporation (ISCA) has cut about 50 jobs in its business units, but anticipates "no further significant position reductions," according to a company spokesman. And Nascar has announced that next year its Sprint Cup, Nationwide, and Camping World Truck series will all maintain the same number of races from 2009: 36 for the Sprint Cup, 35 for the Nationwide, and 25 for the Camping World Truck Series.

As its business relationships continue to stabilize, Nascar should shift focus to expansion. Perhaps it is time to look closely at Ontario in Canada and to make prior exhibition races in Australia and Japan part of the yearly calendar. Or as Nascar CEO Brian France notes, "there also could be a chance to break into the Latin America market, since Miami is the gateway to Latin America." But first, it's on to Dover.

2. Whistle Blowing in the Wind? NBA to Lock Out Refs

It's official. After a couple of weeks of unresolved negotiations, the NBA has notified the National Basketball Referees Assn. (NBRA) that it has declared a referee lockout, only weeks before NBA preseason games are set to begin.

The contract between the NBA and its 57 referees expired on Sept. 1, and the two sides have struggled to come to terms on a new two-year deal. While NBA and NBRA officials claim that they agree on salary structures, at issue are three other key issues: the NBA's attempt to change the referees' retirement bonuses, the conversion of pension benefits, and a proposal to mix WNBA and D-League officials into limited early season assignments for training purposes.

The NBA has repeatedly cited the cuts it has made within its own organization in response to the down economy, and insists that its proposals to the referees "are extraordinarily fair and reasonable." The referees countered that they have agreed to $2.5 million of the $3.2 million in concessions the NBA was seeking. Reportedly the most contentious issue at stake: the gradual elimination of a severance package that provided some referees with a bonus of up to $575,000 upon retirement, in addition to pension benefits exceeding $2 million (according to the NBA).

What does this mean to the players and basketball fans? When they were last employed in 1995-96, replacement refs were considered sub-par by fans and players alike, with players mainly concerned about the potential for increased fines and injuries if replacement officials were used.

The NBA reportedly began contacting replacement referees midweek, and announced on Friday that it would open its annual preseason referee training camp on Sunday with replacement crews. The NBRA has also had "initial discussions" with the Teamsters and other unions about not crossing the picket lines if NBRA members are locked out—but has not asked the players to do the same.

3. Chicago and Obama Mount a Last-Minute Campaign for 2016 Olympic Gold

Like the U.S. contingent that will make its way to Copenhagen on Oct. 2, the race to host the 2016 Summer Olympic Games is currently without a clear leader. An interim report released by the International Olympic Committee last Wednesday on the four host city finalists' plans—Chicago, Madrid, Tokyo, and Rio de Janeiro—failed to hint at an obvious winner, a departure from similar studies in the past. Most Olympic handicappers, however, point to Chicago and Rio as the true contenders; Rio is considered a popular choice among some IOC members because the Games have never been held in South America.

Whatever the truth, this race is close, and in the less than four weeks left before the IOC's Oct. 6 announcement, one thing is clear: It's on.

In the U.S., popular First Lady Michelle Obama will serve as the official ambassador for Chicago 2016 when officials from that city make their final presentation to the IOC. However, the White House has left the door cracked for President Barack Obama to attend as well, if the President can make enough progress toward passage of his health-care reform legislation to stem criticism of the international jaunt. (The situation is basically no-win for Obama, as U.S. Olympic Committee leaders are doubtful that Chicago will prevail without his personal appearance, and universal-health-care foes and the media will have a field day if he goes.) The First Lady will be joined by White House Senior Adviser Valerie Jarrett and a contingent of athletes and celebrities possibly including Oprah Winfrey.

Rival heads of state are expected to lobby the IOC hard in Copenhagen. Brazilian President Luiz Inácio Lula da Silva and Spain's King Juan Carlos have both announced they plan to attend the October vote, while Japan's royal family and new Prime Minister are set to go. But IOC President Jacques Rogge has dismissed speculation that Chicago's chances will be harmed if the President doesn't make the trip. "There is no obligation to come" he said. "We are not asking for heads of state to come there. They are most welcome, but this is not something that we consider as being the most important thing."

Back at home, the city of Chicago is taking the final steps toward ensuring 100% financial coverage of the games by pledging $750 million in additional public funds ($500 million city, $250 million state), and arranging for close to $2 billion in private insurance to insulate taxpayers. The Chicago 2016 committee contends that the $4.8 billion estimated cost to host the Games "would be paid for with contributions from wealthy donors, corporate sponsorships, television rights, and ticket sales to ceremonies and sporting events." The latest move, according to Chicago 2016 officials, "eliminates the city's competitive disadvantage over other finalists whose plans are government-guaranteed."

Perhaps the President has summed up Chicago's exhaustive efforts better than anyone else. "Chicago is ready," Obama said on Wednesday. "The American people are ready. We want these Games. We. Want. Them."

4. Sports and Technology, BC (Before Cisco)

While the Miami Dolphins have recently made headlines mostly for acquiring celebrity investors, owner Steve Ross is equally interested in technology. On Monday, the Dolphins and Cisco Systems (CSCO) announced an extensive technology partnership for Land Shark Stadium. The deal includes implementing Cisco's StadiumVision technology in more than 1,500 HDTV monitors at the stadium, providing fans with Flip Video cameras allowing them to contribute to the entertainment, and the first permanent installation in a sports facility of Cisco's TelePresence video conferencing system.

All sorts of other cool tech innovations have helped pave the way for Cisco's cutting-edge sports products. Here's a handful of the most memorable:

1908: Electronic scoreboard invented by George Baird (not used in pros until 1930s)

1935: First Night Baseball Game (Phillies at Reds, Roosevelt flips light switch from White House)

1939: First Sports TV Broadcast (Columbia vs. Princeton College Baseball)

1963: Instant Replay Debuts on Television

1982: CBS "Football Chalkboard" implemented

1996: Fox introduces the "Glowing Hockey Puck"

1998: Football's First Down Line becomes ubiquitous

2009: MLB and NFL games available live on your cell phone





Karla Swatek is vice-president of Horrow Sports Ventures and co-author of Beyond the Box Score: An Insider's Guide to the $750 Billion Business of Sports.
Rick_horrow
Rick Horrow is a leading expert in the business of sports. As chief executive officer of Horrow Sports Ventures, he has been the architect of 103 deals worth more than $13 billion in sports and urban infrastructure projects. He is also the sports business analyst for CNN, Fox Sports, and the Fox Business Channel. Karla Swatek is vice-president of Horrow Sports Ventures and co-author of Beyond the Box Score: An Insider's Guide to the $750 Billion Business of Sports (2010). Horrow is also the host of Sportfolio, a new program on Bloomberg TV that airs Wednesday nights at 9 pm ET.

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