For those who haven’t noticed, there are a few extra NASCAR fans in town this week.
With Charlotte Motor Speedway hosting the All-Star Race last weekend and the Coca-Cola 600 set for Sunday, hotels are packed, roads are jammed and checkered flags are waving throughout the region.
It’s a sign that racing is still a major economic engine in the Charlotte area. Despite a struggling economy that has affected NASCAR, as it has many other industries, racing fever is still going strong, according to Charlotte marketing companies.
Still, the racing industry has not been immune from the economic downturn.
Speedway Motorsports reported a first-quarter net loss of $1.5 million, or 4 cents per diluted share, compared with net income of $9 million, or 21 cents per diluted share, in the same quarter last year.
Among other things, the Concord-based company, which owns Charlotte Motor Speedway in Concord, blamed the results on a drop in consumer and corporate spending and higher fuel prices. This year, as in 2010, Speedway said it has had to reduce ticket prices to boost sales.
Dean Noble, vice president of business affairs for Joe Gibbs Racing in Huntersville, said racing, like any other sport, mirrors the economy.
“If unemployment is up, ticket sales are down,” he said. “If layoffs are occurring, one of the first budget cuts is to marketing and advertising. That’s not just racing. That’s across all sports and all forms of media.”
A tough time to get sponsors
NASCAR ticket sales and advertising are not the only areas affected by the economy. The downturn has also made it tougher for the sport to maintain and attract sponsors.
Noble said sponsoring a NASCAR team can create a public relations problem for companies who have laid off employees in the Great Recession.
“You’ve got the reality of what’s happening in the economy, plus you’ve got the public relations piece of whether or not it’s the right thing to do in this economy,” he said.
“There are a lot of people in this economy who have pain and suffering and you have to be sensitive to that,” he said. “I applaud companies who are sensitive to that.”
One notable example, he said, is the Wachovia/Wells Fargo Championship, which took place this month at the Quail Hollow Club in Charlotte. Wells Fargo dropped the Wachovia name from the event’s title partially because of the company’s past financial troubles. The sponsorship of the event runs through 2014.
Fortunately for NASCAR, the Army, Air Force and National Guard will continue their sponsorships of NASCAR teams, despite a proposed bill in Congress to block the military from doing so.
A sponsorship of a top NASCAR Sprint Cup team can cost a company from $500,000 to $20 million.
To save money while still sponsoring NASCAR teams, track and drivers, some companies are splitting the costs with other companies.
An example of that is Stewart-Haas Racing in Kannapolis, which has co-sponsors: Office Depot and Mobil 1.
Jimmy Bruns, vice president of business development for GMR Marketing in Charlotte, said NASCAR sponsors have also cut back on the number of races for which they will sponsor a car.
It’s not all bad news
Scott Cooper, vice president of communications for Charlotte Motor Speedway, points to positive signs regarding sponsorships at the racetrack.
Long-time sponsors, such as Pennzoil, Dollar General Corp. and Time Warner Cable, have signed extended partnerships or agreements this year, he said.
The track has also seen new sponsors, such as the History Channel, which signed up to sponsor the Top Gear 300 Nationwide Series race.
Also, “we’re seeing a lot of decision-makers who are at the tracks,” he said.
The teams and marketing companies were tight-lipped with The Mecklenburg Times about which sponsorship VIPs have been to races.
Bruns said teams, tracks and drivers like to impress potential sponsors by letting them witness a race. Lately there has been a lot of chatter over who will be at the racetrack, he said.
Bruns said the economic downturn has made it tough to get potential sponsors to the track to see a race, because of travel costs and perceptions about the sport’s popularity.
“We always talk about the sport, but to get somebody out to the racetrack and experience it and see those 120,000 people there who are so heavily invested in the sport and the sponsors, that makes an impact,” he said.
He said GMR has seen sponsorship activity increase to a level during the past two months that the company has not seen in a couple of years.
The planes are bigger
One sign of the increasing successes of the area’s motorsports teams: Their planes are getting bigger, said Jeff Young, director of economic development and sustainability for the city of Concord
In the past, teams used smaller, twin-engine, turboprop planes. Now they use bigger aircraft, such as 737s, capable of transporting entire race teams.
Those bigger planes bode well for the economy of Concord, which relies heavily on the tax revenue generated from the Charlotte Motor Speedway, racing teams and supporting industries.
Past studies have shown the Speedway alone has a $400 million economic impact in the region.
Racing giants, such as Hendrick Motorsports, Roush Fenway Racing and Earnhardt Ganassi Racing, are in Concord.
Teams throughout the Charlotte region get their equipment — fire-retardant suits, driver hydration systems, seats and seat covers, transmissions — from businesses in Concord.
And many race teams use the city-owned Concord Regional Airport for travel, making up 60 percent of the airport’s activity.
“A surprisingly large part of our local economy is tourism,” Young said. “The more success that our local motorsports teams have, the greater the level of tourism. But when the economy declines, tourism naturally follows to some extent.”
Tara Ramsey can be reached at [email protected].