Did You Notice? … The magnitude of a potential NASCAR sale? A confirmed report that the France family is exploring a deal for the company is sending shockwaves through the racing industry – and through sports. Unlike the franchise models of the NFL, NHL, NBA and MLB, NASCAR has been family-owned since its inception in 1948. That means all of its wealth is concentrated rather than spread out evenly among the teams who participate in it.
It’s incredible, when you think about it, how much just one family has been able to compete with those comparison models that involve more than two dozen owners with decision-making power. While some have criticized this benevolent dictatorship model it’s also hard to argue its financial success.
So how much is NASCAR actually worth? A lot has been written about the sport’s declining value. But while attendance, ratings and car count declines have dominated the headlines, let’s be clear: this sport will not come cheap. There’s inherent value within the largest racing series in America, likely to make NASCAR the largest sale of an American sport in history.
Let’s start with television. The sport currently has the fourth-largest annual TV contract. It’s more than hockey and (for now) on par with the NCAA Tournament. (The NCAA model reportedly has a yearly payment structure that increases to $1.1 billion yearly beginning in 2025.)
Current TV Contracts – American Sports
NFL: $4.4 billion per year through 2022
NBA: $2.7 billion per year through 2025
MLB: $1.5 billion per year through 2021
NASCAR: $820 million per year through 2024
NCAA Tournament: $770 million per year minimum through 2032
FBS Championship (College Football): $470 million per year through 2025
NHL: $200 million per year through 2021
Golf’s U.S. Open: $93 million per year through 2024
UFC: $100 million per year through 2018 (new deal pending)
MLS: $90 million per year through 2022
Tennis’ U.S. Open: $70 million per year through 2025
F1: No traditional rights fee paid by ESPN (multi-year deal)
That may surprise some who hear weekly about NASCAR’s declining TV viewership. Instead, this long-term financial boost is in place years longer than contracts in other major sports.
The time left on the deal is also important. By the time the next TV renegotiation comes, new owners will have watched the NFL, MLB and the NHL navigate an evolving entertainment landscape. We could see how much companies like Amazon, Netflix and streaming services change the game in terms of pricing. NASCAR, armed with difficult selling points at the moment doesn’t have to be the guinea pig.
The sport also has a healthy stream of sponsorship… to itself. “What?” you might be thinking. “All the sponsors on the cars have been leaving for years.”
That’s true. Lowe’s is the latest primary sponsor to bolt, leaving seven-time champion Jimmie Johnson at the end of 2018. Home Depot, Dollar General, UPS, Farmers Insurance and GoDaddy are just some of the companies who have left hoods blank in recent years.
But NASCAR’s financial backing remains strong. A quick visit to their official page lists 41 official sponsors partnered with the sport, enough to fill a whole Monster Energy NASCAR Cup Series grid in its own right.
And that’s not even the half of it. Partner sponsorships from Monster Energy (reportedly valued at $20 million), XFINITY and Camping World inject revenue into the sport’s top three divisions. There are two NASCAR Green partners, seven NASCAR Performance partners (think: parts) and individual race partnerships in terms of title sponsorship.
That brings us to one of the biggest wild cards in this deal: International Speedway Corporation. It’s unclear whether the tracks are at play in a NASCAR sale. But ISC, majority owned by the France family controls 19 of 36 races on the MENCS schedule (52.7 percent). Someone who buys a NASCAR/ISC combo gets that revenue which, while declining in recent years still remains strong.
“Revenue increased to the highest level since 2010, driven by the strength of our corporate and broadcast partnerships,” ISC CEO Lesa France Kennedy just explained – this year. “Growth in earnings per share is the result of successful integration of our strategic investments in our facilities and development projects. Consumer sales strategies continue to take root resulting in increased admissions for our fourth quarter and sold out grandstands at four of our Cup events in 2017.”
2017 revenue, reported publicly by ISC was $671.4 million. Of course, some of that comes from the television deal but not all of it. Investors still believe: ISC stock is up nearly 15 percent compared to this point a year ago. And the tracks in their portfolio produce some of the sport’s highest ratings: Daytona International Speedway, Talladega Superspeedway and Homestead-Miami Speedway, to name a few. Daytona just underwent a $400 million renovation that makes it one of the premier sports properties in America. (A track that still has over 100,000 seats, by the way. That’s a lot of potential revenue for a reinvigorated NASCAR.)
If ISC is included, that changes the game on the deal. Think someone purchasing the rights to running to the NFL and the entire group of AFC stadiums gets thrown in with it. The opinion of experts vary but Sports Business Journal reported a NASCAR sale could fetch $5 billion.
That would be $1 billion more than the reported sale of UFC last year. That organization is looked at as a growth property in sports but their FOX ratings are down 22 percent, worse than NASCAR’s and average about 2 million viewers. By comparison, every MENCS race run on schedule in 2018 has had at least 2.8 million watching.
That fact was reinforced in an AP article Tuesday in which a global consultant emphasized that, unlike other growth sports properties for investors NASCAR already has a strong fan base. It’s also notable merchandise sales of the top 7 drivers under 30 is up 74% year-over-year. Sources within the NASCAR television world also tell me current ratings were expected to be down 20 percent this year with the sport’s Most Popular Driver, Dale Earnhardt Jr., leaving the series. FOX was thrilled with their Daytona 500 performance in that context.
Overwhelming pessimism surrounding the current state of the sport can block out these numbers. But talks with all kinds within the sport I’ve had this year center on the same theme: 2018 is a “bottoming-out” type of season. These ratings are a baseline from which they feel NASCAR can grow again. (The Frances, by selling, know about their timing. Earnhardt is the perfect excuse in the boardroom to explain the recent value decline. (Think golf and Tiger Woods for a comparison. Their ratings declined exponentially with Tiger on the sidelines and are now up significantly with his 2018 return).
Lastly, the perception that NASCAR is dying can come from teams struggling to gain revenue. Since NASCAR’s franchise model is new (this first charter contract expires in 2020) the sport is still learning to share the wealth. Hendrick Motorsports, the top-valued team by Forbes this season was tabbed at $325 million. Compare that to the Dallas Cowboys, the most valuable NFL franchise who the same magazine valued at $2.1 billion. One of the sport’s chartered teams, BK Racing, entered bankruptcy, and charter medallions have been reportedly sold for as little as $2-$3 million. That pales in comparison to franchise sales in other major sports.
These teams need to be better fed financially; a new owner would likely have to fork over more cash for their long-term stability, which hurts. But in the end, any potential suitor isn’t paying for the teams. They’re paying for the sport. The entity itself is always going to be proportionally larger and more valuable than the cars on the grid.
One last point: a sale removes the perception the France family is making the decisions surrounding the sport. That’s regardless of whether they keep an actual stake in the company. I respectfully disagree with Larry McReynolds’ take on NASCAR RaceHub this week that fans don’t care who’s running the sport. He made an example, as a Carolina Panthers fan, of his NFL team being sold and he could care less who the owner is.
I think that’s the wrong comparison. If we’re selling a sport, to me the better comparison is NFL Commissioner Roger Goodell. Only 12 percent of voters in a 2017 survey had a favorable view of the commissioner, his handling of the national anthem and other items. There’s a myriad of reasons ratings are down in that sport but such a low favorability can’t help.
We don’t have an official poll on NASCAR fans’ favorability of the Frances. But considering the rash of fan departures in the wake of the Chase, Car of Tomorrow and other competition-related changes it’s clear Brian France is a polarizing figure. Critics of his leadership have been loud and vocal over the past decade of decline.
Making a personnel change at that level – especially when the Frances have run things for 70 years – would cause both fans and corporations to pay attention. Sometimes, the perception of change can reinvigorate a sport approaching a crossroads, forcing companies to take a second look.
- One more point on the sale before switching to racing: expect some companies you haven’t heard a lick about to step up. O. Bruton Smith and son Marcus of Speedway Motorsports Inc. are easy choices for potential NASCAR buyers. But Bruton is 91 and his wealth (estimated $1 billion) isn’t enough to buy it on his own, no matter how much son Marcus may want to initiate. I question whether SMI truly has the revenue and the outside investors.
Comcast, another potential suitor sponsors the XFINITY Series. But a report Tuesday had them making an all-cash offer of $60 billion to buy assets in the Disney-Fox deal. Their focus may not be NASCAR, even though it makes sense considering their recent three-year agreement to be the exclusive broadcaster of resurgent IndyCar.
One longshot I wouldn’t be surprised pops up unexpectedly: Sinclair Broadcast Group. Their upcoming merger with Tribune Media (valued at $3.9 billion) has made the owner of local TV stations a media powerhouse. SBG has tried to get involved in the sports landscape with a failed national sports network (American Sports Network) and has now transitioned to running Stadium. The multi-platform property is in need of a programming anchor and NASCAR’s long conservative history fits with the company’s political ideologies.
- Quietly, Hendrick Motorsports has weathered the storm. While Johnson, Chase Elliott, William Byron and Alex Bowman have yet to win this season, three of them are currently in NASCAR Playoff position. That’s with Johnson not leading a lap and Elliott surviving not two NASCAR inspection penalties. Considering the Camaro will only improve over the course of the year, no barrier to playoff entry still makes this group plenty dangerous heading into September. Remember Toyota a few years ago with their new Camry? At this point in 2015, Kyle Busch was still sitting on the sidelines. In November? He wound up the champion.