The year 2014 shapes up as a big period of transition for Nascar. On the track, the stock car racing series is using a new championship-points system as a way of drumming up the brand’s entertainment value for fans. This is also the final year of a long-term television contract that will see ESPN (DIS) and TNT (TWX) disappear in favor of NBC (CMCSA), starting in 2015. Nascar could use a boost: Races are nowhere close to the sellouts they used to be, TV ratings are lower, costs have risen for corporate sponsors, and drivers are signing new contracts for less money than before.
All of this weighs heavily on Lesa France Kennedy, who serves dual roles as vice-chair of Nascar and chief executive of the publicly traded International Speedway (ISCA). ISC owns tracks in Daytona, Talladega, Michigan, Chicagoland, Watkins Glen, and Phoenix, which are used in such major series as Nascar, IndyCar, and others. Right now, the biggest ISC undertaking is a $400 million investment in improving its flagship Daytona International Speedway. The goal is to bring the stadium into modern times: wider and more comfortable seats, better amenities, and better access for fans and corporate sponsors.
The number of seats will be reduced to 101,500, down from 147,000 currently. (As a point of reference, the 2008 Daytona 500 drew 190,000 attendees.) The idea is to get back to reality: With too much seating capacity, management realized that races were not going to attract sellout crowds any more. Too much capacity made tickets too easy to buy because fans could wait until the last minute to make a decision without fear of losing out. By reducing seat availability and introducing scarcity, administrators hope to make Nascar races a premium purchase, prompting fans to commit by buying early.
Kennedy spoke with Bloomberg Businessweek about the big transitions happening in her business. As far as this year goes, she is excited about Dale Earnhardt Jr. having won the Daytona 500. “His fan base is going wild,” she says, considering this a good sign for TV ratings this season. She thinks the new points system—featuring win-or-go-home eliminations similar to those in other sports—is going to bring “a lot of excitement” because fans will see “a lot of changes this year.” “Teams will have different strategies and approaches,” she says.
Despite her dual roles with ISC and the privately owned Nascar organization, Kennedy says her “primary focus is ISC, and that in itself is all-consuming.” ISC is the company that owns the tracks used in most races, while Nascar is the sanctioning body. They made a big play a few years ago to enter the New York market with a track in Staten Island, but it didn’t work out in the face of local and state political infighting throughout the approval process. Kennedy says it “wasn’t in the cards” for them at the time; “maybe down the line in the future” they might try again to return to New York, she says, “but not right now.”
Meantime, a lot of work must be done on the tracks they currently have. Some teams contend that when track surfaces get repaved, the smoother asphalt changes the racing characteristics: Newer surfaces are less abrasive, making it more difficult for tire rubber to stick to the track surface and thereby reducing grip and discouraging side-by-side racing. Kennedy admits that “everybody has a different point of view” but says that “sometimes, outside forces help you determine repaving—Daytona was very necessary.” She says there isn’t a magic formula for when a track gets repaved. “The tracks in the North have different weather, for example. So many factors go into making this decision.”
For next year, Kennedy says she’s “very excited” about what NBC will bring next year. She says they are “already in heavy planning stages for the first races” of 2015. NBC is bringing “different ideas about presenting the sport.” The new 10-year TV contract is worth $8.2 billion, of which everybody gets a piece. Some team executives have complained that the money is not split fairly, with teams not getting enough of the pie. Kennedy didn’t specifically address that question but said: “The way it’s divided up has been that way for a number of years, with good reason,” before going on to say that the new contract will benefit everybody.
As far as fans returning to the track, Kennedy says Daytona sellouts will “for sure” return in 2016, once the renovations—and seat reductions—are completed.