UP FRONT - RANDOM THOUGHTS AS THE SEASON BEGINS
Drag racing, on both the
NHRA and IHRA side of the track, is at an important crossroads. The decisions made, or not made , over the
next year or so will go a long way towards determining the sport’s long term
future. Will it grow into the mega-sport
many think it could become, or will it continue to more or less muddle along,
never quite reaching the heights we’d all hoped for?
Drag racing – both on the
NHRA and IHRA side of the track – is at an important crossroads. The decisions made – and unmade – over the
next year or so will go a long way towards determining the sport’s true
future. Will it grow into the mega-sport
many of us think it could become, or will it continue to more or less muddle
along, never quite reaching the heights we’d all hoped for?
NOW WHAT?
This is the two-word
question we’ve been hearing ever since the HD Partners stock holders voted not
to continue pursuing the purchase of NHRA’s pro racing assets. Considering the state of the economy, that
decision shouldn’t have come as a major shock to anyone.
As author Len Romanick so
carefully pointed out in his authoritative series on the purchase procedure on
these pages, HDP had raised a significant war chest through an IPO that had to
be considered successful. But, since
that money was raised and the economy went south, those investors obviously
began to have second thoughts about a nine figure investment that they felt
didn’t exactly have the kind of upside potential of, say, something like
satellite TV. This is not to suggest
that NHRA might not be a good investment for someone, but my guess is if there
is another buyer lurking out there somewhere it would have to be someone with a
more complete understanding of motorsports and its financial potential. The reality is that purchasing NHRA in
whatever form is going to require a buyer with patience when it comes to
recouping that investment.
Some within the NHRA
family have tried to portray the failure of the purchase to go forward as
nothing more than tech investors unhappy with the choice of a non-tech venture
– NHRA – as the acquisition target. We
consider that little more than ineffective spin, because the HDP stock holders
knew what the target was as long ago as June of last year. If their disappointment was really over
NHRA’s non-technical nature they would have voiced those opinions before the
all-important no vote took place.
If NHRA were a publicly held company the news that the HDP purchase wasn’t going through would have knocked about 50% off its stock price, and it’s likely that banks and investment houses would have lowered the company’s rating dramatically. Ultimately, they could have tagged it with an “Immediate Sell” suggestion. That might have depressed the stock price even more.
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If NHRA were a publicly
held company the news that the HDP purchase wasn’t going through would have
knocked about 50% off its stock price, and it’s likely that banks and
investment houses would have lowered the company’s rating dramatically. Ultimately, they could have tagged it with an
“Immediate Sell” suggestion. That might
have depressed the stock price even more.
In these trying financial times a development like that might have
spelled doom for the company.
The NHRA has already
indicated that they’re going to go forward in much the same manner they have
for the last few years. While that
sounds all right, it’s anything but.
Whether or not they’d ever admit it, our sources have reported that many
projects seemed almost on hold for the last six or eight months as the
management team awaited the finalization of the purchase they apparently
believed was a foregone conclusion.
We don’t know for sure,
but suspect that the anticipation of new overall bosses may have made the
organization back off on some projects.
If our information is correct – and we have no reason to doubt it – the
organization is going to have to play catch-up, probably for the next year or
more, and that’s something drag racing can’t afford. The corporate world sometimes moves with the
alacrity of a glacier, and setbacks – and this was definitely a setback for
NHRA – don’t help the public perception of the organization and the sport
itself.
A sponsor contemplating involvement in NHRA drag racing who does his research may be more than a little concerned about the HDP failure to launch. That could be enough for him to recommend a thumbs down on NHRA drag racing, at least for the immediate future.
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WHAT’S NEXT?
Bruton Smith’s apparently
good faith offer of some time back to purchase the NHRA, apparently in its
entirety, could once again become something of interest to one of the most
colorful and dynamic figures in motorsports.
Or, Smith might now decide to go his own way.
We’re not suggesting that
anything is in the works, at least that we know about. We’re merely speculating, but there are some
things that just can’t be ignored. First
and foremost is the new track in
More than just the race
dates themselves, Smith’s facilities are arguably among the best in all of drag
racing, from all standpoints, including market penetration, media acceptance and
coverage and the all-important racer and spectator amenities. These are anything but inconsequential
matters because no national event is financially and artistically successful
without at least most of these items being on the plus side of the equation.
It’s common knowledge that
Smith put plans to build a drag strip on the grounds of Texas Motor Speedway on
hold a few years ago only after NHRA made a public statement in support of
Texas Motorplex owner Billy Meyer’s facility in Ennis, a long 35 miles from the
actual Dallas Metroplex. TMS is
considerably closer to the heart of the Dallas-Ft. Worth area and has
consistently out-pulled the Motorplex in terms of media exposure and fan
support, but we’ll agree that part of that “pull” is the overall popularity of
NASCAR vs. drag racing. If Smith were to
decide to go his own way, and build a track a TMS, he’d then have the center
around which to build his own sanctioning organization. If he were to do that we could easily see an
opening salvo with a 10-race schedule, with rapid expansion to follow.
We have little doubt about
the marketing ability of Smith’s efficient staff, meaning that a series sponsor
and relevant TV package would probably quickly follow. We also have little doubt that independent
track operators concerned about their bottom lines would be giving the “new”
organization a serious look.
A decade ago this would
have been a far-fetched concept. Now,
with the passing of NHRA Founder Wally Parks, the end of the HD Partners
acquisition efforts and the seemingly moribund NHRA as we now know it, anything
could happen.
However, in all fairness
we must also point out that several sources have told us that Smith has
indicated he has no desire to have his own sanctioning organization at this
stage in his life, so our possible scenario could remain little more than
speculation.
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SIGN OF THE TIMES, OR THE
END OF TIMES?
The list of sponsors who
have declined to continue their involvement in drag racing just since last
season is significant. This is an
extremely serious problem, one that’s not going to go away soon, unless someone
or some firm with real marketing expertise steps in to represent at least some
of the competitors.
Racers are not and should
not consider themselves marketing geniuses, but alas, a number of them
apparently think they are. They’re the
ones who consistently sign contractual agreements that, A) fails to provide the
right level of remuneration for carrying someone’s corporate logo, B) obligates
them to unrealistic personal appearance and public relations schedules, or C),
ask them to consistently deliver the impossible or face financial
penalties. You know, “demanding” that a
racer win at least “X” number of races per year and consistently battle for the
championship. These are certainly not the
only factors that may make for a difficult sponsor/racer relationship.
Of the points raised above
the first is the key factor. From the time the first racer spun a tire on
asphalt there have been racers willing to sell their souls for a handful of
silver. In the last few years, for
example, we are aware of a seemingly major sponsorship program that generated
just $1 million dollars for the team owner, yet he signed willingly and
eagerly, while knowing that to be competitive on the NHRA circuit demands an
investment of at least $2M and more like $2.5M if you’re truly going to battle
the top teams in any fuel category.
Last year a team owner
with very deep pockets had one of his sponsors inform him of a pending cut of
more than $350,000 in his base funding.
He signed anyway. This year
another sponsor informed him of a $200,000 cut.
He reportedly again agreed to the deal.
Team owners with the financial wherewithal to race without a single sponsor’s logo on their cars are the ones who should be leading the way in setting standards for sponsorship support, yet that rarely, if ever, happens. There are far too many racers out there whose need for speed apparently overwhelms their financial good sense. They’ll agree to a bargain basement or even cellar level deal just to have a name on their cars, yet in their everyday business ventures they would never consider selling their goods or services for less than market value.
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If you want to see a
racer/businessman who’s consistently gone about it in the right way, look no
further than Kenny Bernstein. Without
going into a complete history of this remarkably sharp individual, suffice it
to say that when he first began racing in a Funny Car his machine was candy red
with only the name of his pub on its flanks.
There were no aftermarket decals, no low-buck signage. He set a price for what he felt his services
were worth, and worked to achieve that goal.
His more than two decades long relationship with Budweiser is indication
enough that he went about it in the proper manner. And yes, at some point we’ll do a complete
history of how that was done if for no other reason than to serve as a primer
for others.
Look around the pits at
the Winternationals and you’ll see two dozen race cars with seemingly
substantial sponsorship support, yet behind those flashy paint schemes and
colorful uniforms we’ll bet the house that there aren’t more than a half dozen
cars – and we mean cars, not teams – out there that have the kind of financial
support they should have.
As long as racers are
willing to sell themselves – and the sport – short, drag racing is not going to
make the progress it’s capable of.
Believe it or not, the
corporate world is just like your girlfriend or wife when it comes to assessing
the real value of something. While she
knows a bargain when she sees one (How do
they do that?), she also knows that Donna Karan sunglasses are worth every
penny more than the cheap $15 knock-offs at the kiosk in the mall. She knows she’s going to look hotter, hipper
and better in the DKs than she will in the knock-offs, which will undoubtedly
break within a week anyway.
In the corporate world you
might think you’re offering a bargain for only $1M for your fuel car, but if
the suits have done their homework – and one would like to think they have at
this level – they know before you come in for your final sit-down what your
program is really worth to them, and when you undersell yourself they
automatically re-think their own position, even if they don’t indicate that to
you. That’s why, at the end of your
first or second year, they have little problem in canceling your third and
final year. “Geez, we didn’t pay
anything for this deal in the first place.
It’s not really worth anything, so let’s move on.”
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Think that doesn’t
happen? Ask any of the people who have
had deals cancelled out from under them if that’s sometimes not the case.
While the venerable Tom McEwen won’t like this, years ago, when he was driving the Mobil Oil-backed fueler owned by former baseballer Jack Clark, he was outspoken about how it was impossible to put together instant million dollar deals, that you had to work your way up to it. We argued, with “The Goose,” but he was adamant. He pointed out that if Mobil didn’t care about their deal, why was the dragster in the front of a group rendering of all their team cars? He didn’t appreciate our pointing out that the low profile configuration of the car meant that it had to be in front or it would have been lost behind the bigger Champ, Stock cars and off-road trucks. His final shot was a statement that went along the lines of, “Yeah? Well, if we get lucky enough to win one of these you won’t believe the advertising that’s going to appear in every newspaper in the country.” McEwen would go on to win that weekend’s race at Englishtown. Mobil placed no advertising to tout that victory that we know of, even in the pages of National Dragster, although we’ll concede that we could be wrong about Dragster. The year was 1991.
We later heard on very
good authority that Clark’s deal included team uniforms, a paint job, handouts
and a few umbrellas for shade. Clark had
apparently spent too long in the sun on the baseball field before he agreed to
the deal.
When racers make “deals”
like this and so many others we know about they only have themselves to blame
when, three months into the season they begin paying their bills later and
later, and by season’s end are flat broke – and their low-buck sponsor has
departed for greener pastures.
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