WILMETTE, Ill. — This month we examine how the sports industry continues to be impacted by the shutdown during the pandemic and what lies ahead.
This year has been like no other. During the past century, world wars have been the only reason the sports world has shut down. The COVID-19 pandemic of the last few months has brought everything to a complete stop.
All sports around the globe have been affected. From the postponement of the Olympic Games to the rescheduling of major events such as The Masters, the Kentucky Derby and the Tour de France, the impact is far and wide.
Motorsports is no exception, as it has been hit fast and hard.
The season took the green flag in February, but the caution lights and eventually red flags came in mid-March at events around the world.
The initial reaction was short term, hoping the next weekend or the next month would bring the return of competition. That was not the case and this racing season is going to look much different than those of the past.
The initial adjustments involved rescheduling races to later in the season. This requires flexibility, which purpose-built tracks are used to dealing with — multiple series, track reconfigurations and rain delays. Temporary venues have more complicated issues and may choose to cancel this year’s events.
The last year has seen several major transactions take place in the racing industry, including NASCAR’s acquisition of International Speedway Corp., the Smith family’s purchase of Speedway Motorsports and Penske Corp. buying Indianapolis Motor Speedway and IndyCar.
These were large, complicated deals. The ability to service debt repayment depends on the ability to generate cash flow from major events. It is expected during this crisis that financial institutions will be flexible on loan terms, but it will be challenging.
Professional race teams are among the most severely affected. They are largely dependent on sponsorship contracts and race winnings for revenue. Shops spend heavily during the early season building cars and stocking up on parts inventory. When the racing stopped so did the funding.
The broadcast partners are working with the series to fill the time slots with racing-related content. Replays of old races from historical archives are part of the solution.
Virtual racing has taken victory lane during this crisis as sim racing was well positioned to fill in the gaps. The infrastructure was already in place to quickly launch numerous online racing series.
One of the leaders is iRacing, which has an ownership group that includes John Henry, who is also a co-owner of Roush Fenway Racing. iRacing’s relationship with NASCAR goes back over a decade to a company known as Papyrus Design. iRacing built a dedicated digital platform based on subscribers. It currently has more than 120,000 members with large gains occurring this year.
The combined efforts of FOX, NBC and iRacing created Pro Invitational Series for NASCAR, IndyCar and other sanctioning bodies. These exhibitions feature professional drivers in their home simulators with commentators calling the races. The production quality is excellent and the racing is exciting. Viewership numbers have been impressive exceeding 1.2 million.
The return to live racing is inevitable. It will be a signal of the comeback and will boost consumer spending and the human spirit.
The initial thought is to bring racing back without fans. The state of Florida has deemed sports an “essential service” to include employees at a professional sports and media production with a national audience to facilitate events only if the location is closed to the general public.
The next steps would be to have the advice and guidance of medical experts, sports scientists, behaviorists, ethicists and fan representatives. Their goal would be to assess the issues and determine the proper course of action to prevent disease spread at the track and promote responsible behavior.
The cost of the crisis has been massive. It has affected many careers and businesses, but racing will rebound as it always has, and therein lies its strength.