NASCAR CASE
The term NASCAR referred both to the sanctioning body and to thewhole sport of stock car racing. NASCAR grew to become amulti-billion-dollar industry and the second largest spectatorsport in the United States. Its races were broadcast in over 150countries, and it had more Fortune 500 corporate sponsors than anyother U.S. sport.10 In 2010, the sanctioning body alone wasestimated to have generated over $56 million11 in revenues fromtelevision rights plus hundreds of millions of dollars fromsponsorship, licensing, and sanctioning fees. It owned threenational racing series: the Sprint Cup Series (the premier seriesfor stock car racing), the Nationwide Series (the minor league),and the Camping World Truck Series (a series for modified pickuptrucks).12 Corporate Culture NASCAR was privately held by theFrance family and was historically known for having a closedculture. “We had a very non-interventionalist approach where wewould just lay down the framework . . . and other than issues inwhich we’d intervene for the safety of drivers, [when it came tobusiness models of the tracks and race teams] we stayed out of yourbackyards and you stayed out of ours,” described Eric Nyquist,NASCAR’s vice president of strategic development.13 This cultureoccasionally caused tension within the sport, as it teetered on thebrink of being non-collaborative. COMPETITION The sanctioning bodyhad a proven track record in governing races. Inspecting vehiclesprior to each race to ensure that they adhered to specifications,officiating calls during races, creating policies to enhance driversafety, advancing rules and scoring conventions to ensure that thesport stayed fair, inclusive, and exciting all were among itsexpertise. As compensation, NASCAR was paid an average ofapproximately $1–2 million per race in sanctioning fees from racetracks. SELLING INTELLECTUAL PROPERTY The revenue cornerstones ofthe sanctioning body and the sport were corporate sponsorships andmedia rights (television broadcast and digital rights). In 2011,NASCAR was in the middle of its contracts for the term 2007–2014,in which ESPN, TNT (part of Turner Broadcasting System), and FoxSports paid a reported total of $4.5 billion to broadcast NASCARraces live. Revenues from media rights deals were shared among thedifferent stakeholders that comprised the sport using a 65/25/10revenue split: NASCAR distributed 65 percent of television revenuesto the race tracks around the United States that hosted NASCARraces; 25 percent of revenues was distributed to the competingteams; and 10 percent was retained by the sanctioning body.17Finally, the sanctioning body earned revenues from licensing theNASCAR brand to companies desiring to sell NASCAR-brandedmerchandise, a multi-billion-dollar business.18 PUBLICIZING RACESHistorically, NASCAR relied on traditional media outlets (e.g.,local newspapers) to cover its sport. “We’d have a [tough] timetrying to get that coverage because they were acclimated tocovering a home team and to covering certain kinds of events,” saidNyquist.19 In the early 2000s, NASCAR collected feedback from mediaoutlets and learned that the sport was difficult to cover. In early2010, NASCAR engaged Taylor, a marketing and communicationsstrategy consulting firm, to conduct an audit of the sanctioningbody’s twenty-six-person communications team as well as thecommunications capabilities throughout the sport. “Brett Jewkes, aprincipal at Taylor at the time, pushed us to be transparent andinclusive,” remembered Nyquist.22 Jewkes recalled that when hebegan the audit an insider at NASCAR told him, “You thought thatthis was just a communications review, but you’ll find that it goesmuch deeper.”23 As part of the audit, Taylor and two agenciesinterviewed nearly 300 people, including track presidents,corporate sponsors, race team executives, television executives,and PR professionals throughout the sport. A Complex EcosystemNASCAR had an unusual ownership ecosystem. “Unlike the stick andball leagues, we’re not collectively organized,” explained Nyquist,who had previously worked for the National Football League (NFL).“We have independent tracks, teams, and drivers.”27 That consortiumof independent entities experienced double-digit growth annually inthe 1990s and early 2000s. During that period, there was a sense ofcompetition between the various business models that sharedrevenues within the ecosystem. The sport’s structure and thesanctioning body’s perceived closed culture made catalyzing changesacross the ecosystem challenging, particularly as it pertained toappealing to the unique priorities of each stakeholder. Tracks Twopublicly traded companies—International Speedway Corporation (ISC)and Speedway Motorsports Inc. (SMI)—dominated NASCAR-sanctionedevents. Of NASCAR’s thirty-six Sprint Cup Series races,approximately 50 percent were held at ISC tracks, 36 percent at SMItracks, and 14 percent at independent tracks. In addition to theirportion of tracks’ 65 percent cut of NASCAR’s television rightsdeals, track owners’ revenue streams included 100 percent of theproceeds from sponsorships of the tracks themselves and eventrevenues from race days. Tracks’ share of the overall revenues ofthe sport differed from that of the venues of other major sports,such as the NFL, Major League Baseball (MLB), National BasketballAssociation (NBA), and National Hockey League (NHL), in whichowners and players captured nearly all of their industry’s revenue,and venues garnered little. Project EVOLVE In summer 2010, Brianfurther engaged Taylor to lead a team of research companies inconducting what became one of the largest marketing initiativesundertaken by a U.S. sport, Project EVOLVE (Exhibit 5). EVOLVE tooka deeper look into the insights generated from the communicationsaudit, with four strategic research focuses: (1) NASCAR’s coreequity with fans and how it compared with that of other sports, (2)the broader sports industry’s digital and social communicationscapabilities and how it compared to NASCAR’s, (3) the level of starpower of NASCAR’s drivers, and (4) fans’ live experience on racedays. It involved numerous methodologies— ethnographic fieldwork atraces, focus groups, expert roundtables, and strategic trendforecasting. NASCAR’s core fan base proved to be less interested inthe sport, not only was the traditional passing down of fandomeroding, but existing fans (“Tommys”) were being lost as theymigrated to other sports and events that their children were beingexposed to through digital and social channels. As the researchersassessed NASCAR’s level of engagement with high-value fan segments,they saw gaps among Hispanics, kids, and Generation Y thatrepresented tremendous potential. Although each of thesedemographics offered opportunities for growth, they also posedsubstantial challenges. “For something like developing the Hispanicmarket . . . the skillset . . . the types of activities that [we]would need to engage in to begin to build a platform . . . weweren’t equipped for that,” said Nyquist.45 In addition, there wassome concern among senior leaders about how NASCAR’s traditionalcore fan base might react if it saw NASCAR making substantialinvestments in new consumer segments. Event Day Experience ThroughEVOLVE’s ethnographic studies on race days, the researchersobserved groups of friend and family “cohorts” as they attendedraces during NASCAR’s Chase to the Sprint Cup, the sport’schampionship. Each cohort was given tickets to attend one NASCARrace,68 another live sporting event, and one live entertainmentevent (e.g., a concert). Some cohorts were given no guidance on howto approach NASCAR races, while others were provided a “sherpa,” anexpert to advise them on how to prepare and what to do at thetrack. The ethnography gleaned key insights: many people wereunsure of how to be NASCAR fans; the infrastructure and amenitiesat tracks were in many cases inferior to those of otherprofessional sports venues; and the race day experience was adisappointment from a technology standpoint. When new fans arrived,they were both pleasantly and unpleasantly surprised. “Seats werebetter and the food was better at the [Kansas City] Royals, butNASCAR was more exciting,” said one female participant.69 Still,the excitement wasn’t sufficient to distract from what spectatorsperceived to be “run-down” and “inadequate” facilities. Theyreported that seating was uncomfortable, restrooms were not clean,and jumbotrons were non-existent or not placed where spectatorscould watch the track while in line for the bathroom orconcessions. When they finally reached the front of concessionlines, many fans were surprised to find that most tracks did notaccept credit cards. Among the most frustrating aspects to fans wasalso the lack of cell phone access and Wi-Fi. How Should NASCAREvolve? By April 2011, there was general agreement that manyaspects of NASCAR needed to change. The lingering question was howto proceed. Who would lead the ecosystem through these changes?Among the four areas identified in the research, which were thehighest priority and should receive greater financial supportinitially?
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