FROST: There’s Optimism On All Fronts

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Tim Frost

WILMETTE, Ill. — The new year, new decade and new racing season bring optimism on all fronts.

As a result, we will take the time to look forward at the calendar of business aspects affecting racing.

Let’s first review the monumental developments that occurred during the last 12 months.

Publicly traded track operators — International Speedway Corp. and Speedway Motorsports, Inc., declared their intentions to go private. These entities completed these deals with minimal delay. There was shareholder litigation, an increased offering price and anti-trust review of the ISC/NASCAR merger, but those things are typical of corporate transactions.

Investment banks provided the necessary financing to the France and Smith families to assume full ownership.

The sale of selected Hulman-George family entities to Penske Corp. was the benchmark of acquisitions, and one that came as a complete surprise. The transition of Indianapolis Motor Speedway, the NTT IndyCar Series and IMS Productions to Roger Penske is a natural fit.

The ownership of major motorsports assets under the France, Smith and Penske family banners provides a solid foundation for the future of motorsports. These groups have made a significant commitment to the passion-based business of sports.

Formula One finished its third season of ownership under the direction of Liberty Media. A stable calendar of events, teams, drivers, sponsorship and ratings eased the change in leadership from the legendary Bernie Ecclestone to an American company headed by Chase Carey.

Major decisions are ahead for the industry, the most significant of which are pending media-rights contracts.

NASCAR’s current broadcast rights expire in 2024. These contracts provide the largest source of contractually obligated income to stakeholders.

The existing partners, FOX and NBC Sports, have made significant investments in technology and on-air talent. The extensive programming on multiple platforms will reach viewers wherever they may be located. Analysts are estimating NASCAR and the networks will enter new long-term deals that provide an increase in fees.

Disruption forced the sports industry to evolve. Traditional methods had to change, which can be difficult with a long-storied history and an aging fan base.

Analytics and data are important in everything. Direct personal interaction is the core of racing. Walking through the pits, signing autographs and social media engagement strengthen the brand of drivers. Metrics indicate the economic value of these efforts.

Competition in racing is a balance. Going fast takes money and racers want the latest and greatest. The packed aisles of the Performance Racing Industry Trade Show were a good indicator of the business environment in the motor­sports industry.

The long-term health of the sports relies on parity and economic viability. Keeping costs reasonable will allow race teams to remain competitive on and off the track.

The realities of sponsorship are being adjusted. Multi-year full sponsorship of racing series and teams are not the norm. Properties are offering shorter terms of contract and with flexible options. Tiered levels with more partners serve as the basis for solid economic models.

The future relies heavily on the next generation of fans. Who are they, where are they and how do we effectively reach them are questions that are being asked behind the scenes.

Esports is a key initiative for motorsports. Online racing develops talent and creates fans. Bringing sim racing trackside during race weekends has resulted in successful partnerships with teams and sponsors.

Another area for growth is sports betting. The recent Supreme Court decision on wagering is being phased in. Sanctioning bodies must maintain integrity, while also finding ways to benefit from this new wave of interest. This will provide another way for spectator involvement while deriving revenue for selected stakeholders.

The outlook for the motorsports business is bright. Technological advancements and cultural changes will be at the forefront. Racing professionals must continue to lead with innovation to be successful on and off the track.