NASCAR feeling the effects of a slumping American economy
CHARLOTTE, N.C. — Chip Ganassi shocked the NASCAR industry when he shut down Dario Franchitti's unsponsored race team, putting last year's IndyCar Series champion and 71 other employees out of work.
That it happened to Ganassi, a multi-car owner who just six weeks ago won the Indianapolis 500, was a wake-up call to every team owner not named Childress, Gibbs, Hendrick or Roush.
These are tough economic times, and the sagging market is finally affecting NASCAR in nearly every facet of the industry.
When the season opened at Daytona International Speedway in February, 53 cars attempted to make the race. On the return trip last weekend, only 45 cars showed up, six of which lacked full sponsorship and are operating on shoestring budgets. And there were huge swaths of empty seats in the grandstands for Saturday night's main event.
It all coincided with the June car and truck sales reports, which forecast gloom and doom for NASCAR's participating automakers.
General Motors Corporation reported an 18.2 per cent drop in sales as Merrill Lynch downgraded GM shares to "underperform" while warning that bankruptcy is not out of the question. The analysis contributed to GM shares dropping to a 54-year low.
Ford Motor Company reported a 27.9 per cent drop, and Toyota showed a 21.4 per cent sales decline.
But the biggest danger, according to JPMorgan auto analyst Himanshu Patel, lies with Chrysler. Sales are down 22 per cent, and Patel last week warned the automaker could be forced to file for bankruptcy protection or sell off parts of its business in the second half of 2009 if industry conditions don't improve.
The automakers spend an estimated combined $500 million annually on their NASCAR programs - funds that could shrink, or even disappear, if conditions don't improve. And deep-pocketed sponsors also are losing the budgets they once had to splash their logos on the front of a race car.
As more big businesses suffer, fewer sponsorship opportunities will exist. Scratch Starbucks off the list of potential new NASCAR money - on the same day Ganassi made his cuts, Starbucks said it will close 600 stores.
NASCAR chairman Brian France is adamant his family-owned business ebbs and flows with the economy, and points out that a little over a year ago, he was being questioned about an overly saturated market of heavily funded race teams in the premier Sprint Cup Series.
"Too many cars, too many well-funded teams - they're going to be disappointed when they go home (fail to qualify). What are you going to do? Are you going to expand the field? Tell me what you are going to do," France said, mimicking the questions he was asked a year ago.