UP FRONT: FACING A HARSH FUTURE

In late 1972 the publisher of Car Craft Magazine offered me a staff position. It was the fifth such offer I’d received, and since I didn’t figure they’d ask again, I accepted. It turned out to be a life-saver, although I didn’t know it until about six months later, when the first nationwide gas crunch hit and the bottom fell out of the economy.

With Americans sitting in gas station lines that stretched for blocks, and new car sales in the dumper, the number of jobs lost began to increase exponentially. I’m not sure of the number 35 years distant, but I think something like one in six Americans worked in jobs related to Detroit’s OEM manufacturers.

As 1973 progressed my title of Competition Editor generated laughter, for instead of heading to the track I found myself writing about customized vans. That was depressing. After insisting that the owners of the first two I shot show me their engines, I never asked again because they were covered with more grime than a rusted out ’49 Olds. Every one of them had a vehicle-long mural on its flanks, shag carpeting inside and two stickers: “Keep On Truckin’” and, so help me, “If This Van’s Rockin’, Don’t Bother Knockin’” Aggghhhh.

Heading to Detroit for new car previews for the ’74 and then ’75 models was another depressing experience, for “performance” Mustangs became gas-saving 4 cylinder slugs with tape treatments. Chrysler offered such neck-snappers as Omnis and Horizons, and if you don’t remember those gems, you’re better off. General Motors was no better, as even the vaunted Corvette was emasculated in the name of better mileage.

Detroit abandoned motorsports like rats from a sinking ship as they fought to meet the Corporate Average Fuel Economy (CAFÉ) standards that came with the ’75 models. As the name implies, the average mileage for a company’s entire product line had to fall within specific limitations, so every performance car that rolled out the door had to be balanced by something morally repugnant to a hot car fan like a Pinto or Chevette. Obviously, it was easier for the OEM companies to reach the CAFÉ standards by producing more gas-friendly cars than gas-guzzling road rockets.

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The General’s involvement with motorsports declined to just a few parts slipped out the back door to racers sworn to secrecy about where they came from. Spotting a GM executive along the quarter mile was as likely as spotting a Condor floating overhead. Chrysler remained involved only after supportive execs in the advertising department secretly disbursed parts purchased with ad budget dollars the bean counters probably figured were destined for time buys on The Mary Tyler Moore Show. When questioned about parts distribution the ad guys vehemently denied all knowledge of such activities. Ford operated in much the same manner, sliding a few engine blocks and cylinder heads out the back door to their favorites.

Why take 486 words recalling this depressing history? Because today’s frightening economic situation is going to have an even more deleterious impact on motorsports, and drag racing in particular. The economy played a major role in the outcome of the Presidential election, of that there can be little doubt. In August the unemployment rate hit a four-year high. In October the number of unemployed increased by 603,000 to 10.1 million. Another 500,000 jobs are estimated to be gone before February 1. Starbucks has reported net income declined by 97% in the fourth quarter. DHL is laying off 9,000 workers. Circuit City announced the closing of 155 stores two weeks ago and filed for Chapter 11 protection on November 10^th. On Saturday Sun Microsystems announced they were cutting 6,000 jobs. On Monday American banking giant Citigroup announced that 52,000 jobs would be chopped, this in addition to the 23,000 that were cut earlier in the year (not all of the job cuts will be in the U.S., however. Many will be in Europe.). Citi’s financial losses topped $20 Billion in the last year, and they don’t expect a recovery until 2010 at the earliest.

In our little world the news is just as bad. Doug Herbert announced his 16-year relationship with Snap-on Tools has ended. CSK has been gobbled up by O’Reilly’s, essentially “forcing” popular Del Worsham to accept a driving position with Alan Johnson’s new team. Rock Star Energy Drink has said goodbye to Jerry Tolliver and Don Schumacher Racing, and our sources report that Monster is about to do the same to Kenny Bernstein. Other sponsorships are hanging by a thread, and some team owners have already agreed to programs that will pay them far less in 2009 then they did in ‘08.

On October 31^st popular and much-venerated Fred Simmonds was forced into retirement by General Motors, and although budgets for ’09 drag racing sponsorships were submitted upstairs in September, as of the second day of the Auto Club Finals no racers, including Warren Johnson, had been told whether or not they’re “on the deal” for next season. David Hakim, one of the few people at Mopar who had his finger on the pulse of sportsman drag racing and who continually championed the Hemi Challenge race series, was summarily chopped four weeks ago. His boss was also shown the door, although his departure may have been hastened as the result of shenanigans that were discovered in an internal audit. As far as we know, other than the title rights sponsorship to the Mile-High Nationals Mopar’s only involvement in drag racing next season will be with Allen Johnson’s Pro Stock operation, and various team owners – including all of the Funny Car people -- have confirmed that they’ve been kissed goodbye. Only Ford has yet to be heard from, but whatever the news, it won’t be good.

Advertising budgets are being slashed as companies tighten their belts, and we won’t be at all surprised to hear that more than one long term builder of quality aftermarket products is going under before mid-year. Publications, both online and in print, won’t be immune either. The company that produces the bi-monthly, Drag Racer Magazine, changed hands two weeks ago at fire sale rates, and other publications are also struggling. The SEMA Show in Las Vegas used to be a gathering place for both magazine advertising sales people and editorial writers, but Source Interlink, the home of Hot Rod and Car Craft, limited attendance to the ad people this year.

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Even big time players are feeling the heat. Bruton Smith’s holdings in his two public companies – Sonic Automotive and Speedway Motorsports (the race tracks) – have declined in value from $1.4 billion last November to about $434 million. Yeah, I know. You’d take it, but that’s not the point. The point is the overall decline in value.

The leaders of the major motorsports series in North America must take decisive action to help ease the financial burden facing their sponsors, competitors and fans. Surprisingly, the first organization to take direct action was the IHRA, now a division of Feld Motorsports. Citing, among other reasons, a decline in sportsman entries over the last year that coincided with vastly increased costs for gasoline and diesel fuel, the IHRA statement said in part, “Businesses everywhere are adjusting their model to accommodate their customers in these difficult times… The economy has changed and travel has become the primary unmanageable cost to compete at any event.” Without going into the details, the sanctioning body released the outline of a new sportsman racing program for 2009 that will severely curtail the need for national travel in order to win a championship, and this is a very smart move.

On Friday NASCAR announced a virtual testing ban in 2009 for all three of its major series, plus two regional series, at any tracks hosting such races next year. Their release read in part, “The suspension of testing should save the industry millions of dollars.”

It is evident that sportsman participation in the NHRA national events began to decline as travel costs began to truly skyrocket in the early spring of this year. Those travel costs also impacted spectator attendance at some races. The U.S. Nationals, for example, had what appeared to be a visually smaller crowd on Labor Day Monday than at any time in recent memory.

While the NHRA has long offered a 10% discount on tickets for active duty and retired military personnel, the first actually free ticket program we can recall was for a single entry for Friday’s action at the Finals, this in honor of Veteran’s Day. Better they should have included family members as well, but that’s something for others to determine, not me.

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But, as things now appear, at least, NHRA is once again playing catch up in publicly acknowledging a major problem and taking action to address it. If the sanctioning organization has some plan to ease the financial burdens facing their competitors and fans they need to announce it sooner rather than later so that everyone involved can make their plans accordingly. If, for example, the fans knew now that in 2009 General Admission tickets to the Full Throttle Series would be reduced by 15% or 20% it might convince more fans to come out. Similar reductions in Reserved Seating prices would be even more beneficial because those make up the bulk of the grandstands at present.

If sportsman entry fees were also reduced proportionally, not just at the national events but at the Lucas Oil Series races as well, it could have the same result. Recognizing that the tracks that host the Lucas Oil Series events have a considerable say in these matters, it’s still up to the NHRA to lead the way and push for these reductions.

No doubt the NHRA will cite their own rising costs and reduced profits as reasons that such plans can’t be considered, and I’ll readily acknowledge that the organization’s bottom line is far smaller than some might imagine. But by the same token NHRA president Tom Compton once reneged on a solemn promise to increase the Pro Stock purse by telling the competitors that just as NHRA was making an investment in the sport, so too, would they have to make that investment. Well, they’ve been making – and increasing that investment – for years, with nothing to show for it. Every competitor, from Top Fuel to Stock eliminator, makes a serious investment in drag racing, but now those “investment” dollars are disappearing in lost jobs, foreclosed homes (now said to be 1 in every 452 homes in America – a staggering figure), and unpaid health insurance premiums.

In 2009 the national event purses will be slightly increased, but it’s not enough to come close to offsetting the increased expenses the competitors will face.

The National Hot Rod Association needs to tighten its corporate belt, and one way of doing so would be to reduce the almost obscene financial compensation some Board members receive for doing little more than attending a monthly meeting. If Americans are vocally outraged by the compensation paid to the executives on Wall Street and at companies like AIG that we’re bailing out to the tune of billions – a figure soon to be in the trillions – supporters of NHRA should be just as outraged about the compensation levels at the top of the organization.

The NHRA could make changes, changes that they could readily and understandably call temporary, changes that could positively impact every competitor and fan. But as is so often the question in these situations, will they? And when?

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UP FRONT: FACING A HARSH FUTURE