Growing Pains

NASCAR provides another lesson for the business world: Successfully growing a business induces growing pains. Now that NASCAR is as firmly entrenched in America's sports scene as any of the so-called "big leagues," it must redouble its efforts to manage its growth, identify emerging opportunities, and fend of new competitors like Team Racing Auto Circuit (TRAC), a longshot that hopes to chip away at NASCAR's dominant position.

NASCAR began hitting its marketing stride during the mid-1990s while the economy was strong. It capitalized on its fan loyalty and generated hundreds of millions of dollars in corporate support. However, as the economy entered a mild recession in 2001 and rumors of corporate fraud were becoming a reality, many sports sponsors began to reel in their sports marketing budgets. Two drivers, Todd Bodine and Joe Nemechek, were forced to find a new sponsor only days before the 2002 Daytona 500, the first race of the Winston Cup season, after their main sponsor, Kmart, filed for bankruptcy.

Against this backdrop, NASCAR found itself wrestling with growing pains that threatened to limit its impressive growth. As with any company that grows, it must sometimes learn how to shed its old partners to establish more profitable relationships. When NASCAR sold its broadcast rights to Fox, Turner, and NBC, it had to limit longtime partner ESPN, which was so integral to NASCAR's growth, from conducting trackside interviews for ESPN's bellwether NASCAR show, RPM2Night. To protect the investment of a network like Fox, which was starting up its own competitor to RPM2Night, NASCAR had to limit ESPN's access to races. Although it handled the situation awkwardly by allowing the story to play out in the press, NASCAR had little choice because it had to demonstrate an extraordinarily high level of commitment to those networks that were now financing the sport's ongoing growth.

New business relationships also require their share of massaging. Just as NASCAR was protecting Fox's investment in it by blocking out ESPN, NASCAR also put its foot down when it believed Fox was compromising a critically important component of NASCAR's business model.

In the first month of broadcasting under the new deal, Fox's computer-generated cars shown for less than a minute in the Budweiser Shootout race only featured the logos of companies that had purchased ads on their broadcast. As discussed earlier, sponsor investment in NASCAR is integral to the sport's growth, both past and present. Fox never did it again. In this case it was Fox that was forced to deal with growing pains of its own. Although Fox had televised most major sporting events and leagues, it did not fully appreciate NASCAR's sponsorship culture, an oversight that generated significant attention throughout sports business circles.

Accordingly, when businesses grow they must appreciate and acquiesce (when appropriate) to the wants and needs of strategic partners if growing pains are to be transformed into profitable, long-term business relationships that increase shareholder value.



On the Ball. What You Can Learn About Business from America's Sports Leaders
On the Ball: What You Can Learn About Business From Americas Sports Leaders
ISBN: 013100963X
EAN: 2147483647
Year: 2003
Pages: 93

flylib.com © 2008-2017.
If you may any questions please contact us: flylib@qtcs.net