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America's Fastest Growing Sport TV Ratings Are Soaring America's Fastest Growing Sport TV ratings are soaring. Corporate money is flowing. And the crowds just keep getting bigger. How NASCAR is racing ahead. By BRIAN O'KEEFE September 5, 2005 (FORTUNE Magazine) – It's 10 minutes before race time at the Indianapolis Motor Speedway, and in the grandstand, a quarter of a million fans--some of them fresh from a two-day-long tailgate party--are settling onto their NASCAR seat cushions, sipping from their NASCAR cups, adjusting their NASCAR caps. All around the 2.5-mile track, 74 television cameras are poised to capture every angle of the 43-car, 400-mile race for millions at home. Out on the asphalt, amid the race officials and mechanics in fire-retardant jumpsuits, is the suntanned figure of Home Depot CEO Bob Nardelli. His mission: to introduce FedEx CEO Fred Smith, who's standing at his elbow looking slightly overwhelmed by the noise and fumes and August heat, to Tony Stewart, the roly-poly star driver of the bright- orange No. 20 Home Depot Chevrolet. Nardelli strides over to Stewart, who beams at the Home Depot chief. The driver then turns the brights on for FedEx's Smith, as if he's welcoming a new member to the club--which in fact he is. FedEx is in its first year as the primary sponsor of a NASCAR team, meaning Smith is the latest FORTUNE 500 CEO to commit tens of millions of dollars to the pursuit of breakneck speed--and the best return on investment in professional sports. Stewart, for instance, isn't just Nardelli's ace driver. He's his top salesman. After winning the Pepsi 400, the 5-foot-8, 185-pound Stewart celebrated by climbing--awkwardly--the 20-foot fence at Daytona and seizing the checkered flag from amused race officials. Home Depot rushed out a print ad featuring a picture of Stewart's ascent with text that read, "Hey Tony, we have ladders," and offered a 10% discount to customers who brought it in. "Ladder sales," says Nardelli, "popped up double digits." Commerce, of course, is all around the track. Leave aside that the cars are rolling billboards for corporate sponsors. And that the name of the race has been sold to an insurance company--it's now "the Allstate 400 at the Brickyard" (the latter a nickname for the Indy track). In the parking lots outside the speedway, where keg parties, pig roasts, and wet-T-shirt contests evoke a Mardi Gras mood, a makeshift mall is also going gangbusters. Levi's is sizing up the waistlines and inseams of potential customers in its Fit Pit, while DeWalt is demonstrating jigsaws and drills from the side of an 18-wheeler known as Rolling Thunder. New sponsor Garnier Fructis, a division of L'Oreal, has dispatched a fluorescent-green-clad Fru Crew to sculpt the hair of fans in the style of its cute young driver Brian Vickers. Branded gear is hawked from foldout tractor-trailers, pickup beds, and bustling arena vending booths. All this on top of the $740 million Nextel has ponied up over ten years to headline NASCAR's championship series--and the exclusive B-to-B summits NASCAR arranges for its sponsors to meet and greet each other. This, race fans, is the new world of NASCAR, the fastest-growing, best-run sports business in America--with the emphasis on business. Once the province of moonshine runners and good ol' boys, the sport has courted corporate America for decades. But NASCAR's recent explosion in popularity--and the establishment of its racetracks as big-time commercial venues--is unprecedented. Stock-car racing is now a multibillion-dollar industry. The second-most-watched sport on television behind pro football, NASCAR has seen its ratings increase by more than 50% since it inked a six-year, $2.4 billion network deal five years ago. The sport is on pace this year for its highest TV viewership ever; the last time a major professional sport set a new high was the NFL in 1981. Licensed retail sales of NASCAR-branded products have increased 250% over the past decade, totaling $2.1 billion last year alone (up from $1.3 billion in 2000). Nascar.com is one of the most highly trafficked sports websites. The NASCAR name is so hot that market research firm PSB picked it as the country's No. 2 brand for 2005, ahead of both Google and iPod (BlackBerry was No. 1). With NASCAR claiming one-third of all American adults as followers--including a growing swarm of blue-state and female fans--corporate America is stumbling all over itself to get in on the action. It doesn't hurt that while other major sports keep waking up to one PR nightmare after another--baseball's ongoing steroid scandal, last season's NHL lockout, fisticuffs between NBA players and fans--NASCAR drivers are media-savvy, fan-friendly marketing machines. (They never talk about their cars without mentioning their sponsors: "the Cingular Chevrolet," "the Viagra Ford," and so on.) According to the IEG Sponsorship Report, NASCAR had total corporate sponsorship revenue last year of $1.5 billion, compared with $445 million for the NFL and $340 million for Major League Baseball. "Talk to anybody in sports marketing right now," says Larry DeGaris, who runs the Center for Sports Sponsorship at James Madison University, "and NASCAR is the first thing out of their lips." There are 106 FORTUNE 500 companies involved as sponsors--more than in any other sport. "We had been talking about it for over a decade," says FedEx CFO Alan Graf Jr. of his company's decision to sponsor a team this year. "But the sport has gone to such a higher level, we decided we had to jump in." At the center of it all is NASCAR itself, a private, family-controlled, for-profit company started 57 years ago in Daytona Beach, Fla., that now includes offices in midtown Manhattan, L.A., and the center of U.S. retail, Bentonville, Ark. Once focused on simply bringing order to the cheerful, low- down chaos of stock-car racing--where vehicle standards used to shift from track to track--the business today is run like a FORTUNE 500 company, dot-com, and media conglomerate rolled into one. In other big-money sports like football or baseball, local franchises own teams and stadiums and dominate league management. Stock-car racing is entirely different, with team owners--who spend millions outfitting cars and fronting drivers--and track owners reliant on an independent NASCAR (the National Association of Stock Car Auto Racing) to bring them together. There are no union troubles, and if a team fails to perform, it doesn't drag down the league--it's simply replaced by the next new faster car and driver. If a track is getting shabby and failing to draw a capacity crowd, NASCAR can simply shift to another site. Meanwhile, beyond the high-profile, big-money events, NASCAR also oversees more than 1,000 races at tracks spread across 38 states. The kingpin charged with executing this bare-knuckle business model is a 43-year-old college dropout named Brian France. The third generation in his family to run stock-car racing's governing body, France took over as NASCAR's CEO just a year and a half ago--and quickly made major changes, aggressively borrowing business tactics from other professional sports and recruiting some of their top next-generation talent. France sees the sport he grew up in not merely as a racing circuit, but as an entertainment empire that happens to move at 190 miles per hour. The day that kicked off NASCAR's latest and greatest growth phase is also one of the saddest in its history. Legendary driver Dale Earnhardt--whose brinkmanship earned him the nickname "the Intimidator"--was rounding the final turn of the Daytona 500 in February 2001 when his car was bumped and then slammed into the wall. He was killed instantly. NASCAR nation erupted in grief, and the Intimidator became bigger than ever, his face on the covers of magazines and countless hats and T-shirts. His last race happened to be the first broadcast in NASCAR's huge TV deal with Fox, NBC, and TNT (Fox broadcasts the first half of the Nextel Cup season, NBC and TNT the second half). NASCAR's all-time leading money winner at the time of his death, Earnhardt had used his success and iconoclastic reputation to build a multimillion-dollar licensing business. His ability to monetize his fame became a template for other drivers, teams, and NASCAR itself. It was a coming-of-age moment for a sport long considered a regional curiosity. When "Big Bill" France founded NASCAR in 1948, his goal was to bring a set of common rules to stock-car racing. Standing a sturdy 6-feet-5 with an outsized personality to match, Big Bill established what everyone inside the sport refers to today as NASCAR's "benevolent dictatorship." He didn't hesitate to disqualify drivers for unfairly souping up their vehicles or to banish them for trying to unionize. In 1972 his son Bill Jr. inherited the dictatorship--a fragmented web of independent track operators and drivers ignored by national marketers and TV execs. With limited financial options, NASCAR under Bill Jr. cultivated corporate sponsors with an ardor that other sports found unseemly. Logos were embroidered into the fabric of the sport. The Brian France era has seen a new iteration of dictatorship. As television gradually discovered NASCAR during the '80s and '90s, individual tracks made their own deals with networks, usually getting a few million dollars for each race.
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