The Frontstretch: Big Three Bankruptcies and New Government Mandates Spell Doom For NASCAR and Motorsports by Vito Pugliese -- Wednesday May 20, 2009

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Big Three Bankruptcies and New Government Mandates Spell Doom For NASCAR and Motorsports

The Voice Of Vito · Vito Pugliese · Wednesday May 20, 2009


There is no way to be polite about this. The United States auto industry is circling the drain.

Two-thirds of the largest manufacturing entities on the planet will have filed for bankruptcy within two months of each other in the next few weeks. First Chrysler filed for Chapter 11, and now word has come down recently that GM is readying for a quick sale to the government, biting the bullet and ripping off the band-aid for good. Sure, Chrysler has always been a bipolar brand, but who would have dreamed that ten…or even five years ago, that General Freaking Motors would be handing the keys over to the government? And while Pontiac gets thrown into the ash heap of automotive history along with Plymouth and Oldsmobile, 789 Chrysler and Dodge dealers across the country are turning out the lights for good.

Is it possible that NASCAR as we know it may not be far behind? Truth-time: Yes. It very well may be.

It is no secret that race cars run on one thing; money. We’ve all heard the old adage of, “to make a small fortune in racing, you must first spend a large one.” The Big Three automakers have, over the past 20 years, been shoveling millions of dollars into motorsports marketing like a Bessemer furnace during the Industrial Revolution. NASCAR has been getting the lion’s share over the last decade; after all, that is where the biggest return has always been. Be it for research and development, assisting race teams, sponsorship, or race promotion itself, it was always seen as a boon to be aligned with the hottest thing on four wheels.

Henry Ford’s saying of, “Win on Sunday, sell on Monday” may have lost a little steam once the cars stopped baring any sort of resemblance to what you might find on a dealer lot (that was about the same time David Pearson’s wheels fell off his Wood Brothers Mercury at Darlington), but even today, motorsports marketing and NASCAR in particular have still proven to be one of the most effective marketing tools used by car companies to move iron.

At least, it had been. Unfortunately, the traveling carnival that has always been Lollapalooza on leaded fuel could soon be coming to an end.

Chrysler is only a few weeks into their bankruptcy reorganization but is already getting a foreshadowing of what may be to come. The manufacturer had planned to spend $134 million in short-term advertising during the nine week period that their plants are idle and distribution channels shut down. But the current Auto Task Force slashed that figure in half – this, after Chrysler already drastically reduced what they had planned to spend during this same time frame to help move inventory and maintain their brand’s recognition in the public conscious.

Obama and Washington have come down hard on Chrysler, leading to speculation as to how much longer Chargers will be taking to the track.

While racing budgets may not be directly affected this year, what might this spell for 2010 and beyond? There are already rumblings that Dodge may be on their way out, with their flagship Penske Racing operation repeatedly popping up as a future Toyota team. After getting out of the Truck Series altogether and only having token participation in the Nationwide Series – a total of four Chargers having competed in the last race at Darlington – might Chrysler be preparing an exit similar to the one that played out in the late 1970s?

Apparently, my dreams of finally seeing the Challenger compete in Nationwide CoT trim are going to forever squashed. Sigh…

Yes, we’ve seen this act before. In the early and mid-70s, things weren’t exactly coming up roses for the Big Three either. The dawn of unleaded gas, catalytic converters, and rising insurance premiums coupled with a burgeoning fuel crisis and dearth of anything performance-related rolling out of Detroit brought about the end to factory participation in motorsports, including NASCAR. The sport managed to survive – not surprising for one that has its roots sewn in hauling contraband during Prohibition, then finally going legit in the post-war era when manufacturers stopped cranking out B-17s and Sherman tanks and got back to the business of building cars and trucks. Back then, sponsorship was still available and privateers plentiful, even during the dark days of disco, butterfly collars, and Billy Beer.

It is a different sport today, to be sure; vastly more technical, complex, and exponentially expensive. The circumstances surrounding it, however, are startlingly similar to what transpired 30 years ago.

Back then, America had just ended what was an increasingly unpopular 10-year engagement 10,000 miles away, the economy was sputtering along on seven cylinders, and everybody had a bad haircut. But just as many families did then and are doing now, racing trudged along and made it through the same time period. We have a long and storied history of repeating the past, and are about to embark down the same path as we did a generation ago. Except this time, as far as racing is concerned, it is akin to a cow being lead down the chute at a slaughterhouse. We already have one automaker in bankruptcy, and another – the largest manufacturer in the galaxy – soon to join.

This one, folks, we may not come back from; and it has nothing to do with NASCAR, Goodyear, or the Car of Tomorrow.

All of this is not the result of any true changing trend in consumer taste or a legitimate global disaster. No, the problem this time is more localized – hidden within the halls of Congress in Washington, D.C. The higher mileage and emissions standards that have been arbitrarily set by the Obama administration this past Tuesday begin to take effect in 2012, ones that are federally mandated to be achieved by 2016.

These changes will immediately transform the American car and truck fleet to something drastically different than what we have today. The new rules force new cars and trucks sold in the United States to achieve an average of 35.5 miles per gallon, about 10 mpg more than today’s standards. Passenger cars will be required to get 39 mpg, light trucks 30 mpg. That means cars and trucks sold in the United States will have to become smaller, lighter, and more efficient. This will have the effect of adding an additional cost of approximately $1,300 to the cost of a new vehicle.

I can hear the commercial now. “Come on down to the new GM – Government Motors where we dictate what you drive, and pass the savings on to you!”

Don’t think this will have any effect on motorsports or NASCAR? I beg to differ.

Read any racing-related website (including this one), blog, forum, or talk to the fan on the street, and they will usually to a man (or woman) declare the best racing to be had is in the Camping World Truck Series. If you recall, this was a feeder series that was created in the mid-1990s to help cash in on the exploding U.S. light truck market. No longer were pickups the sole domain of farmers, rednecks, or the bastion of transients with those weird campers that sit in the back of the bed. Instead, Trucks were ruggedly handsome, useful, and came in rear-wheel and four-wheel drive. With V-8 power and in extended cab guise, they offered much more than any car had to offer.

Pickup trucks were the original sport utility vehicle.

The conception of the series, however, also came at a time when gas was less than $1.00 a gallon and everybody wanted to get a haircut like their favorite character on Friends. My, how times have changed. Gas now fluctuates between $2.00 and $5.00 a gallon depending on whatever doom some Third World despot is promising, and friends don’t let friends get Friends haircuts.

The U.S. government’s eye-opening regulation on the American auto industry may well leave the Truck Series in the same state as Mike Skinner’s Toyota left Charlotte.

If you want an expert’s opinion, Eric Fedewa, Vice President of global powertrain forecasting for the auto consulting firm CSM Worldwide in Northville, Mich., recently stated in an interview that the changes will make pickup trucks so much more expensive that they will be used almost exclusively for work, not as popular consumer items. While I don’t know if Eric Fedewa has a Friends haircut, what I do know is that if trucks are going to be relegated back to being the stripped out lumbering Clydesdales of hardhats, you can probably say goodbye to the series that promotes their sale in short order. Unless they start racing around on dirt lots and have a bunch of trailers populating the infield area to resemble a job site, manufacturers are not going to be putting forth any effort to sell trucks to the general public.

This, of course, is assuming that the U.S. government will allow any money to be directed towards motorsports at all. If fuel economy standards and greenhouse gas emissions are going to be risen so drastically and so quickly, where do unmuffled, carbureted racecars that get six mpg fit into this Red…I mean, “Green“…equation? Taking all of these radical transformations that have been set forth into consideration, government funded stock car racing could not possibly be considered a constructive or socially responsible exercise.

Or a fiscally sound one, either.

Some may say that these are simply knee-jerk responses and the over-reactions of your resident flag waver who wields a hot-rodded Mustang GT and a 14 mpg Jeep with an NRA sticker plastered on it. Far from it. This is a fairly straightforward nuts and bolts, dollars and sense arrangement. To develop these radically higher standards for fuel economy and emissions regulations, automakers – who are by definition broke and will be owned in part by the government (i.e., you and me, the vaunted tax payer) – will need to invest heavily in a Manhattan Project crash course to research and develop new vehicles, likely revamping and scrapping parts of their product assortment that is already in the pipeline. It will also likely mark the second death of the American muscle car, who, after it’s first brush with mortality in 1971, was resurrected in the mid-1980s – about the same time NASCAR began its meteoric rise to national prominence.

Coincidence? Hardly.

So what we will have are boring, underpowered, expensive cars forced upon a public that can’t afford them – with one proven and effective tool used to market them likely removed or so restricted its impact would be ineffective at best. Automakers will have to direct funds and resources elsewhere away from NASCAR and racing in general, either by necessity or government edict, as two of the Big Three no longer control their own purse strings.

While Dodge will likely fade into the distance with a whimper as they did in the late 1970s, the reduced financial investment of General Motors will have an even greater impact. Might this cause a domino effect where even Ford and Toyota axe sponsorship and investment in NASCAR? It’s like watching somebody play Jenga with the future of motorsports… and it isn’t very pretty.

In the meantime, will the last person leaving Detroit please turn out the lights? And you thought the ’70s were bad…

Contact Vito Pugliese

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Beyond the Cockpit: Alexis DeJoria On The 300 mph Women of the NHRA
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05/20/2009 07:45 AM

C’mon now! NA$CRAP uses 1950’s technology, I.E. rear wheel drive, V-8’s, CARBURETORS, (can you believe that?), and cookie cutter piles of metal! (called the CoT)

NONE of these items require manufacturers support! You can go to any junk-yard and get all the V-8’s you want, forever! (ok, slight exaggeration but you get the idea)!

So the (poor) product that is on the track right now can continue forever, and I mean forever! (now that’s a chilling thought)

The average fan will NEVER know that a car or cars has not been thru a BIG 3 wind-tunnel!

The average fan will never know or care what the engines valves are made of!

So the ONLY thing that will affect NA$CRAP is the money, but that will ONLY AFFECT King Brians wallet! (mostly anyway, he he will find a way to fleece other sponsors)

So, and very unfortunately, it appears with minor adjustments, NA$CRAP can continue running their CAR OF YESTERDAY, today, and forever! (can I puke now?)

OK, OK, some drivers pay checks will get smaller, but so what? Instead of a driver making $30mil a year, he may have to take a pay cut to say $5mil. BIG DEAL!

Actually, I have not seen a REAL DODGE, FORD, or CHEVROLET race in one heck of a long time!

Remember, decals are cheap! Really CHEAP! (and they can be printed in China)

Carl D.
05/20/2009 08:19 AM

I guess it’s better to assume the worst and not be disappointed than to be cluelesslly optimistic. Still, a sport that started with a marriage between moonshiners and visionaries won’t completely cease to exist due to a change in the political winds. We may be inside a domed racetrack watching electic cars silently compete for the Google Cup, but there will always be some form of “stock car” racing. It probably won’t be Nascar, but as it has been pointed out numerous times, Nascar has been doing everything it can to destroy itself since long before the current economic mess we’re in.

The real question is how long will a driver have to wait for government approval to be seen by the doctor at the infield care center.

05/20/2009 09:06 AM

NA$CAR NEEDS to change. From the top. Brian (the man who put the ass, in NA$CAR) France needs to Ride off into the sunset, on his money bags. We now have the big 4 owners, & some bit players. If some of the insane money were to leave the sport. Then it might open things up for more people like Alan Kulwicki. As it is we have the same 6-8 cars winning every week for the same 4 owners. The fact is the product has just gotten stale. Maybe the shake up it needs is coming.

05/20/2009 09:12 AM

AND! you say: “The United States auto industry is circling the drain.”

Well, King Brian is flushing Stock Car racing down the toilet!

Jerry P
05/20/2009 09:46 AM

Time for a big change, change the COT into 4 doors, and make it the same shape of the street versions, also make it a v6 or even 4cly, why not, I love the sound of a V8, but that motor is going away with Chrysler and Government Motors, this format will open up our sport to other manufactors like BMW, VW, Hyundia ect, get rid of half of the mile and a half tracks, I TV-O them anyway and fast foward all commercials and half the race, add 2 more road courses, there fun to watch, and alot more passing. Bruton smith wanted at one time to split from NASCAR, nows the time Bruton, do it. Oh on Jeremy Mayfield, I think he is getting Railroaded, no drug list, that means NASCAR can pick and choose who fails and passes a drug screen, you think a top 12 driver will fail, just drivers that nascar doesnt like, like Mayfield

Joe Biden
05/20/2009 10:15 AM

I’m reading this right now from my deep underground bunker underneath my residence, the Naval Observatory. This article is crap. GM has made extremely bad choices leading up to this point. Their cars are not fuel efficient, which is what the modern day consumer wants, and lets face it, nobody likes the HHR except people of color who also love McDonalds. Get a grip you neocon. Vote for me 2012.

05/20/2009 10:18 AM

When the factories pulled support in the early 70’s teams still went on as Independents. Bud Moore, the Wood Bros., carried the Ford banner competively for years. Not sure about the Dodge teams, but I expect most top chevy HMS, SHR and RCR teams will do the same. Unless you were a Mopar fan, NA$CRAP carried on quite well back then. With the potential of an only Toyota/Ford IROC show, race addentence and TV ratings will drop big time even more. NA$CRAP will be forced swallow their greed and adjust the playing field. As CLUELESS as NA$CRAP is being run these days by BRAINLESS FRANCE, when he gets over his $$$ hangover, NA$CRAP will change their business model. When the auto industry emerges in 2 or 3 years, they probably will be back with some form of support.

Vito Pugliese FS-Staff
05/20/2009 10:59 AM

It did not cost $25 million to run a season back then – not even in 1974 dollars. This was also during an era when a tobacco producer was the series sponsor, and everbody looked like they were homeless.

As for VP Biden’s comments, GM’s folly is the result of being beholden to the UAW, not making cars that people don’t want. If they consistently compete with almighty Toyota for global sales, they must be doing something right.

The ONLY place on the planet where GM loses money is in North America. As far as building fuel efficient cars, all of them compare favorably with the competition. When gas went back down under $2.00 a gallon, people started buying trucks and SUVs again.

American’s don’t want small cars that will get obliterated by a Super Duty in side-impact. Those of us who live in Nothern climates kind of need 4wd as well.

05/20/2009 11:26 AM

Stock car racing , and for that matter auto racing of all types , got started because two men who owned cars wanted to see who’s car was fastest . And no matter how little money Detroit spends on racing in the future , no matter whether Brian France actually succeeds in driving Nascar right off of a cliff , and without any input whatsoever from any santioning body or individual , auto racing will continue . Maybe in a modified form from what we see today . But there will always be two or more car owners who want to find out who’s car is faster .

MJR in Springfield VA
05/20/2009 01:04 PM

What ever is meant to happen will happen. But know this one solid fact; if it has wheels and there are two of them, then men will race them against each other. It has been going on for centuries.

Vito Pugliese FS-Staff
05/20/2009 01:34 PM

That might be well and good, but if I want to see racing, I can go downtown on a Saturday night and watch cars race.

If you want it televised for free into your living room and promoted so that it continues unbated, then this is probably going to pose a problem.

J. Meyer
05/20/2009 01:38 PM

If ‘Win on Sunday, Sell on Monday’ held ANY water at all for the last 25 yrs, then GM wouldn’t be the sinking ship that they are, now would they?
Ever since they took the chrome bumpers off the ‘stock cars’, that saying belonged in the trash heap.
When any owner or team can switch ‘manufacturers’ barely two weeks before the season begins, as R Gordon did, that should tell you right there that nascar has been racing a spec car for yrs and the ‘manufacturers’ are there in DECAL only! And maybe a few engine parts.
nascar will continue with or without the big 3 because the big 3 in nascar is just in peoples heads.
Personally, I would prefer to buy a Chevy over a Ford as my street vehicle, but both my favorite drivers in nascar the last 15 yrs have driven a “Ford”.
I say, get Brian France AND the ‘big 3’ OUT of nascar lets just build the damn cars and go racing. Spec cars, spec engines…RACE! WTF…we already ARE! Most people are just too obtuse to see it.

Carl in PA
05/20/2009 03:17 PM

Vito, I’m almost certain that that wasn’t Joe the VP since it wasn’t scrawled in crayon on his monitor.

Seriously though. I’ve bought my last GM or Chrysler product. I don’t buy gov’t surplus.

Vito Pugliese FS-Staff
05/20/2009 03:30 PM

Amen. Though I am willing to make an exception for the Challenger SRT8. Because it is totally awesome. And by totally awesome, I mean, “Totally Sweet”.

don mei
05/20/2009 03:39 PM

Good riddance to the “Nascar as we know it now”. I guess the teams will just have to learn to struggle along with the rest of us. Just think where they will be; budgets of only 2, 3 million a year, shops of 25,000 square feet or so instead of 300,000 square feet, three or four cars per driver, no more Gulfstreams just Beechcraft Kingairs, and the salaries will drop from the millions to maybe 200 to 500k a year. Maybe some simpler cars..who knows? I’ll bet one thing…the racing will be just as competitive..maybe more so.Feeling sorry? I’m not.

J. Meyer
05/20/2009 03:43 PM

Well, look at it this way…
Perhaps the gov. has the balls to finally break the UAW and bring them to their senses. Like with the air traffic controllers, the gov. said ‘go to work’ they said ‘no’ gov said ‘your fired! How you like me know?!” and hired new ones.
The unions DO serve a purpose, but they have long overstepped their usefulness and carry the most weight for putting the big 3 in the place they are now. As long as common sense can prevail (I know, I know…common sense in gov?!) they should be better off. At the very least, the government can NOT screw the big 3 up anymore than they did themselves!

Carl in PA
05/20/2009 04:00 PM

Vito – for the price of a SRT8, you can get yourself a nice original Challenger or Cuda. No Hemi of course, but still, a well massaged 383 car can show the new guys how it’s done.

J Meyer – Not much chance of that. The UAW is in bed with BHO. That’s the reason for the bail out instead of normal bankruptcy.

Vito Pugliese FS-Staff
05/20/2009 05:08 PM

Carl –

I had a REAL Cuda – a 1972 with a 440 and a 4-speed. Old school muscle is still awesome, but so is air conditioning and overdrive transmissions. If you want to know what it is like to drive a stockcar, go drive an E-body around for two hours on a 90 degree summer day. 3800rpm at 80mph on the highway provides the perfect restrictor plate soundtrack.

Having said that, there is nothing better on a summer night than loping around with 500ft/lbs of torque a flick of the foot away.

05/20/2009 07:57 PM

There is nothing in NASCAR now that resembles anything on the street, so what will changes in car manufacturing have to do with it? NASCAR is in the same mess as the car manufacturers. As for fuel, the ALMS doesn’t run on fossil fuels, nor does Indy car. NASCAR can do the same. If NASCAR fails it won’t be because of the govt. It will be because of Brian France and his minions.

05/20/2009 07:59 PM

Nascar, racing, as a true nascar fan, is dead and gone!! I dont’t think, to many fans would care! Same, drivers ,always win, to much change, and none of it good.It“s to boring to watch, much, less pay to see it. I quit, going to the races and fast forward, thru, most of it, on the t.v.!!
So, most of the old, true, race fan, would not even care.!!!!

05/20/2009 10:41 PM

If Chevy, Chrysler, and Ford are gone, dont you think we have a hell of a lot more problems in this country than if King Brian gets a paycheck. Get real, if we go in the dumper, who gives a crap about NASCAR?

Vito Pugliese FS-Staff
05/20/2009 11:23 PM

Marc –

Exactly…which is why I am in utter amazement that nobody really seems to care.

I guess the 1970’s parallels continue, with this malaise of indifference that seems to be surrounding this.

Oh well. Whatever. As long as we get to vote for who wins American Idol or Dancing With The Stars, I guess that’s the important thing.

Lunar Tunes
05/21/2009 12:01 AM

I know! Let’s (us as taxpayers)just let the big 3 keep going like they were, losing BILLIONS per year! Yeah! Obviously they know what are doing and know how to run their business! Every few years, let’s just give them another handout with out oversight just so idiots can feel good about Ford, Chrysler and GM beIng ‘viable’, productive, worthwhile companies.
Get over it people! The big 3 ARE ALREADY GONE! Well, with the possible exception of Ford (gee, never thought I’d say that!)

05/21/2009 07:14 AM

The government is setting us up to buy less gas. Whenever we’re set up to buy less of anything, the government makes less on taxes. Since our government can’t do with any less than what it has, wherever we spend less, taxes will increase, and since we’re spending less because of a restriction, our quality of life goes down.

If someone wants a truck and will pay for it, he should damn well have his truck. If you want something in this country, you can usually work to get it. These new mandates, among others, just put those things farther out of reach.

And what about Ford? If the government owns and funds GM, how the hell can Ford compete? Ford employees’ tax money will be funding a company that may help put them out of business and out of a job. Not that Ford’s future is bright anyway, but so long as they’re afloat it still seems wrong.

This country is losing it and is losing it fast. Everyone will be cruising around in Obama-buggies eventually the way this is going.

Prepare for a NASCAR Smart Car division to replace the trucks. Instead of hitting the pits for gas, they’ll pit so someone can turn the giant key sticking out of the trunk some more.

J Furjanic
05/21/2009 09:12 AM

Well, after YEARS as a MOPAR guy, even racing the only pure MOPAR @ Motordrome and Jennerstown for years, I bought a new F-150 this year. I bought the Ford precisely ecause they didn’t take the government poison pill. Rest assured that when I make my annual trek to IRP to see the Truck Series run, it’ll be a change cheering for a Blue Oval, but I’ll be cheering for FREEDOM and CAPITALISM as opposed to Fascism.

05/22/2009 09:43 PM

Nero fiddled while Rome burned.

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