DRAG RACING 2009 - IT’S VERY MUCH ABOUT THE MONEY!

Open your newspaper tomorrow morning, flip to the Business or Financial sections, and you’re going to read a lot of very bad

news. Two days ago, for example, the opening spread of USA Today’s Business section featured something like 10 news articles. Seven of them referenced decreased sales and employee layoffs.

We have already reported on how the economy is impacting drag racing, and we aren’t trying to overemphasize this negative, but are merely reporting on it. You – everyone – needs to understand that you’re not alone in your concerns about next month’s house payment, that trip to the dentist for the kids that can’t be put off and your dwindling savings. Despite the appearance of plenty that you’ll see when you walk through the pits at any NHRA Full Throttle Series national event, including this weekend’s Kragen O’Reilly Winternationals, things are becoming just as tough for the competitors as they are for the average man on the street.

Take, for but one example of how critical every dollar is, how this weekend’s adverse weather is going to impact the NHRA. The spectator turnout for Saturday’s abbreviated pro qualifying, to say nothing of the fact that there was no racing at all on Thursday or Friday, will really hurt the organization’s cash flow, and that needs to be considered right along with the financial problems facing the fans. We’re certainly not privy to NHRA’s financial statements, but it doesn’t take an economics major to realize that the thousands of dollars the NHRA didn’t take in this weekend is going to hinder their ability to operate without even more belt-tightening.

Don’t Feel Like You’re Alone – The Racers Are Hurting Too

Super Stock racer Dan Fletcher notes a decrease in contingency awards, which may actually force him to race more often to make up for the lost revenue. He estimates a national event victory this year will be worth $4,500 less than in 2008.

Open your newspaper tomorrow morning, flip to the Business or Financial sections, and you’re going to read a lot of very bad news. Two days ago, for example, the opening spread of USA Today’s Business section featured something like 10 news articles. Seven of them referenced decreased sales and employee layoffs.

Mike Edwards’ car sported Penhall Company lettering in Pomona, but Edwards says the sponsorship is ending, leaving his team even further in the hole financially.

problems facing the fans. We’re certainly not privy to NHRA’s financial statements, but it doesn’t take an economics major to realize that the thousands of dollars the NHRA didn’t take in this weekend is going to hinder their ability to operate without even more belt-tightening.

Bottom line: Anyone who’s naïve enough to believe that NHRA is immune to the state of the economy is, well, incredibly naïve about financial reality. It’s often been easy to suggest that the organization is flush with cash and recession proof, but that’s just not true. The company operates on very thin margins. This is anything but an accurate number, but it’s safe to at least suggest that for every $10 the NHRA takes in during a Full Throttle weekend they probably end up spending $9 to keep the show on the road and going. If we’re even close that means that a rain-impacted weekend like the Winternationals has the potential to have a long-lasting impact on future efforts by the company.

“Honestly, last year the major impact to me was in fuel prices to get to the races. This year the impact to me is that I’ve generally had about 60 decals from sponsors that paid contingency money. It’s looking pretty slim right now. I’ve got about 45 decals on the car. It looks like I’ll take about a $4,500 pay cut if I win a race, and I don’t see it getting any better in the future. - Sportsman Racer Dan Fletcher

a d v e r t i s e m e n t

Click to visit our sponsor's website

Greg Anderson has been forced to cut employees loose and reduce his testing schedule to hold down costs this year.

If you’ve run through CompetitionPlus.com’s Roger Richards’ exceptional photos from this weekend you already know that there have been a lot of changes to the cars since the Finals came to a close in November. More sponsors have departed than have arrived. In the John Force camp, for but one example, Old Spice is no longer on the flanks of Mike Neff’s Mustang, which is now decked out in Ford blue and white. While that may appear to be a “real” sponsor Force himself has admitted he’s funding that operation himself. That’s the downside. The upside is that the men who work on that race team are still employed. The same can’t be said for the likes of Tommy Johnson, Jr. or his wife, Melanie Troxel, and they’re far from the only ones seeking employment. There are a number of experienced drivers and mechanics who are either completely “parked” for the year, or who will compete on a limited basis.

To really get the impact of the sponsorship situation requires an almost inch-by-inch study of Richards’ photos, It’s only in that way that you’ll be able to spot the sometimes subtle changes. The easiest category in which to spot these changes is in Pro Stock, where the corporate identities of Dodge/Mopar and Pontiac have been eliminated from almost every entry. However, there are some GM runners who have yet to remove the Pontiac logos from their cars despite the fact that GM has definitely departed every team save that of Kurt Johnson’s because of his on-going program with the AC Delco parts division.

For Mike Edwards the departure of GM has been a tough pill to swallow because of the parts and technological support they provided his in-house engine program.

Sportsman racers are also being impacted by the economy. Dan Fletcher, who has won a ton of races and championships, says, “Honestly, last year the major impact to me was in fuel prices to get to the races. This year the impact to me is that I’ve generally had about 60 decals from sponsors that paid contingency money. It’s looking pretty slim right now. I’ve got about 45 decals on the car. It looks like I’ll take about a $4,500 pay cut if I win a race, and I don’t see it getting any better in the future. Since I do this for a living I’m almost driven to compete at more races, not less, in order to make the same kind of money I used to make. To make up for the lost income I’ve got to win more races. I’m handcuffed, because this is what I do.”

On the other side of the coin are pro racers like Tony Pedregon who admits “This is going to be a tough year. We’re having to make a lot of adjustments. It’s easy to look back and say we should have reacted sooner (to the changing economy). The way I look at it is, Hey, we’re still (out here racing), and we’re going to continue to be out here. We have to re-train ourselves and be more creative in trying to co-brand the car at more races, because as these companies pull back some of their budgets we need to do things to compensate for that. We need to be more businesslike in how we do things.”

a d v e r t i s e m e n t

Click to visit our sponsor's website

Jim Dunn’s operation has the exact same funding it had last year, which could give him a boost against others who find themselves trying to operate with less.

DSR executive Mike Lewis reports that their cars will have the same parts and manpower allotments they had last year, but that servicing their sponsors has become more important than ever before.

Mike Lewis, a senior vice president at Don Schumacher Racing, has probably seen it all. He’s gone from being an executive at Maple Grove Raceway to having a senior position with the NHRA, then-Indianapolis Raceway Park and more recently with DSR. He’s knowledgeable and very bottom line oriented, although seeing the change in the nation’s economy has been somewhat surprising to him. “It’s making us watch every penny,” he said. “It’s making us do everything we can to help our sponsors succeed through racing. If it means renegotiation on some levels, then we might do that, although Don (Schumacher) pretty much handles those things directly. What we have tried to do is cut some corners where it’s appropriate just to minimize costs.

“Some of the cars are running graphics from last year,” he said. “If things didn’t have to be changed we’re not arbitrarily changing them just to do it. There is no difference between this year and last in terms of the parts that go in these cars, or in the number of people that are working on them.”

Bill Miller admits that the economy is impacting his team “Severely, just like it is everybody. The major sponsors we had on the car last year – Okuma, Infinity and Sandvick –have pulled back everything. Their businesses have turned down significantly, and in Okuma’s case it’s down 60 to 70 percent. They’ve laid off 40 employees out of a base of 200 (in the United States), and the reports I have out of Japan are that all of the precision tool manufacturers are down as much as 75 percent. So economically speaking their revenue stream has stopped and they’re just working on back orders.”

Former champ Tony Pedregon will, like almost everyone else, tighten his financial belt to make it through a tough year.

The economy has also hit Bill Miller Engineering significantly, and in order to avoid laying of any of his employees the work week has been reduced to 32 hours – a 20 percent decrease in income for his staff. Miller’s orders from Nextel Cup teams are down about 30 percent, and there’s been a similar decrease from his drag racing customers.

“We’re going to race on a week by week basis,” he says. “If we can go, we’ll go. If we can’t, we’ll stay home.”

Other teams, including the dragster driven by Clay Millican are, in the words of crew chief Lance Larsen, “Self-funded, so things are a little different for us. Mark Pickens (team owner) is helping us do this, but we’re going to have to watch and save as much money as we can. Everyone is having trouble finding new funding, and we’re in survival mode.” In order to cut the $5,000-per-run that Larsen believes it costs to team to go down the track they’re seriously considering skipping some qualifying sessions at future national events. If the car is solidly in the show after Saturday morning’s session, when the conditions are likely to be the closest possible to Sunday’s first round, they may skip that second session. “I hate to do that to the fans,” Larsen says, “but if you multiply $5,000 times 24 races, that’s $120,000 we’re saving, and that’s a lot of money.”

The way I look at it is, Hey, we’re still (out here racing), and we’re going to continue to be out here. We have to re-train ourselves and be more creative in trying to co-brand the car at more races, because as these companies pull back some of their budgets we need to do things to compensate for that. We need to be more businesslike in how we do things. - Former Funny Car champion Tony Pedregon

a d v e r t i s e m e n t

Click to visit our sponsor's website

Lane Larsen is seriously considering skipping qualifying sessions to save an estimated $5,000 per run.

Jim Dunn says that his team has the same amount of funding they had in 2008, “so we’re ahead of a lot of the other guys because a lot of them have less than last year.” His minimal crew remains the same, so he’s hoping that the at least partial leveling of the financial scales will work to his benefit.

Tim Wilkerson is another who says his program “Is exactly like it was in 2008. We’re in pretty good shape. Now, in the way of the future, I’m sure that the economic tsunami that’s running around the world will end up in LRS’s doorstep, because they deal with Fortune 500 and Fortune 1000 companies. But hopefully, it won’t affect the race team.”

Pro Stock racer Greg Anderson pulls no punches in saying “We’ve had to tighten our belts just like everyone else. We had to let go a couple of employees, and we’ve had to stay closer to home. I usually go out and test three or four times during the winter, and we had to cut back on that. I only got out twice. We’re still trying to race as hard as we can, but we’ve got to watch our pennies. It’s tough out here. I’m just happy to be out here racing, to be honest with you. We’ve got to stretch that dollar as far as we can and still put a great product on the race track. Otherwise we won’t have sponsors like Summit Racing Equipment on our cars.

“The loss of Pontiac really hurt us, but we’re not alone in that. It hurt a lot of cars out here. I don’t want to sit here and cry, but it did put a bit of a crimp on us, but it put a crimp on everyone else out here, too.”

Anderson is concerned that later in the season there could be short fields in Pro Stock. In the recent past drivers who weren’t demonstrating a lot of competitiveness had sometimes asked GM honcho Fred Simmonds for permission to skip the high altitude race in Denver and then Seattle and Sonoma after it, and Simmonds had usually granted those requests. With Pontiac – and Mopar – almost completely out of the picture for 2009, short fields could be the result. Anderson also believes that a number of competitors who appeared at Pomona did so in the faint hope of attracting sponsors for the rest of the season, something he believes to be unlikely, meaning that at least some of those who raced in California might not be around come June or July.

Mike Edwards is in the same boat as many others. “We lost three of our major sponsors (due to the economy) that have been with us a long time; GM/Pontiac, Mac Tools, and Penhall Company out here in California, so (the economy) has impacted us dramatically. We’re looking for help, but right now we’re trying to see how far we can go.” Edwards is “not sure” if he can make the full tour this year.

a d v e r t i s e m e n t

Click to visit our sponsor's website

Larry Morgan’s car has added Rod Shop lettering to his Lucas Oil sponsorship, and has completely erased the signage that indicated his affiliation with Dodge and Mopar last year. “We’ll need anther engine rental customer to make it through the year,” he says.

The loss of GM was “huge when you’ve got your own engine program,” he added. “We relied on them for blocks and heads and a lot technological help. It’s huge. It’s a big hit for us.”

The simplistic bottom line here is that you’re not alone in your troubles. The competitors are feeling the heat just as you are. Some of them may fall by the wayside before the season is over, but at the same time new stars will rise up to take the place of the missing.

And before you even say it, to suggest that the struggling racers could just sell their equipment and live off the proceeds, remember that the market for used race cars is just as depressed as is the stock market on Wall Street.

There’s little doubt that we’re all, indeed, in this deepening pool together. The concept is to swim as carefully as you can while you keep your head above water, and ride out the bad times until the economy turns around.

{loadposition feedback}

Categories:

:::::: Feature Stories ::::::

Search form

DRAG RACING 2009 - IT’S VERY MUCH ABOUT THE MONEY!