NASCAR and the Recession - Is This the Beginning of the End for Racing?

We all know that the Recession is taking its toll on sports worldwide. Perhaps no sport is being hit as hard as motorsports around the globe. Honda is quitting Formula One, not only discontinuing its sponsorship but folding its team, saving Honda $987 million per year. Yes, Honda spends nearly a Bilion dollars a year on F-1 racing. Other car manufacturers are cutting back on their sponsorships to F-1 racing.

However, no sport is being hit as hard as Nascar because there is no sport that is, at its core, as tied to the American auto industry. In addition to the very visible sponsorships of teams and races, there is significant support provided throughout the Nascar structure. The Big Three provide engineering and technical support to the racing teams, as well as funding for the parts and pieces that make the cars go. It is estimated that the Big Three spend at least $500 million a year involving Nascar sponsorship and support.

With sponsors pulling back, teams are having a hard time finding car sponsors. Cost cutting is everywhere and formerly competitive teams are now talking about merging. Dale Earnhardt and Chip Ganassi have merged and Gillett Evenham, which recently announced a cutback in its second tier Nationwide Series program, is discussing a merger with Petty Enterprises. Layoffs abound. It is estimated that 500-600 people throughout Nascar have lost their jobs since the conclusion of the 2008 season.

If the Big Three don't get a bailout from Washington and one or more go into bankruptcy, the effects are likely to be devastating. I think it may well mean the end of Nascar. The absence of any one of the Big Three from the track is probably too big of a hole to fill. The loss of the fans of that company's cars, not to mention that company's employees who are now out of a job and unable to afford tickets to racing, will simply be too much for Nascar to overcome.

Nascar has just as much riding on the White House bailout discussions as does GM and if I were Brian France, the Nascar CEO, I would be very, very worried right now. The prospects for that bailout don't look promising and from Nascar's perspective, it's somewhat ironic. The Senate Republicans from Nascar's Southern heartland are the ones that killed the bailout in the first place. I guess Nascar didn't do a very good job in activating and motivating its fan base to reach out to their senators.