It was two years ago leading up to NASCAR weekend when Las Vegas Convention and Visitors Authority and Las Vegas Motor Speedway officials gathered around the hood of native son Kyle Busch’s race car and signed a seven-year, $17.5 million sponsorship and marketing agreement.
The result was Las Vegas receiving a second Cup Series race.
Better late than never, they said.
With crowds estimated at 140,000 regularly packing the massive grandstands and hospitality suites during the NASCAR boom, and money pouring into city coffers faster than the cars on the track, a second NASCAR race was viewed as an economic goldmine.
But NASCAR no longer is booming.
Attendance is down, TV ratings are down, tracks have been downsized. Longtime sponsors have left the sport. Car owners are getting older. Star drivers such as Dale Earnhardt Jr., Jeff Gordon, Tony Stewart and Danica Patrick have retired. Rumors persist that NASCAR, privately owned and operated by the France family of Florida since its inception in 1948, might be for sale.
On the eve of the recent Daytona 500, the Daytona Beach News-Journal published a 3,500-word dissertation on stock car racing’s downward spiral. The headline included a quotation that said NASCAR probably had lost its way.
The source of the quote was Steve Phelps, NASCAR’s new president.
“The TV audience has been falling off. That gets a little tougher to justify,” longtime car owner Barney Visser said during last year’s fall race at Las Vegas about spending money to compete in the Cup Series. When 5-hour Energy decided to end its 14-race sponsorship of driver Martin Truex Jr., Visser folded his team — which had won the NASCAR championship the year before.
It raises the question: Was the LVCVA prudent in spending $17.5 million over seven years for two NASCAR races?
Bullish on NASCAR
The meeting at which the 2017 contract was approved lasted 15 minutes. Although NASCAR’s slump was well underway, signing the agreement was considered a formality. Any second-guessing was done behind the scenes.
Lisa Motley, director of sports marketing and special events for the LVCVA, said the tourism bureau’s faith in NASCAR hasn’t waned.
“One hundred percent,” she said about the LVCVA standing by its commitment. “The deal was in the works for 10 years, so it was very exciting when we got that second race. It drives tourism to Las Vegas. People come to Las Vegas not just for the NASCAR race but to do everything on the strip from Cirque (du Soleil) shows to dining to shopping.
“We’re a destination, and then aligning with NASCAR and reaching close to 70,000 out-of-town visitors per race — that’s one of the highest attended out-of-town special events in Las Vegas.”
While attendance had plummeted at most NASCAR tracks, the drop in Las Vegas had been less severe. It was more noticeable last year. The LVMS spring race attracted an estimated 60,000 spectators — NASCAR does not disclose official attendance — with the inaugural fall race run in near 100-degree weather drawing about 45,000.
‘Still a great deal’
Statistics generated by the LVCVA research center and applied analysis economists state an estimated 85,575 spectators attended the 2018 Pennzoil 400 weekend, generating an estimated economic impact of $146.1 million. The inaugural South Point 400 had estimated weekend attendance and economic impacts of 72,350 and $90.5 million.
By comparison, the 2018 National Finals Rodeo attracted 170,750 attendees and produced an economic impact of $113 million. USA Sevens Rugby, part of the “Ultimate Vegas Sports Weekend” that offers the Pennzoil 400 as its centerpiece, drew an estimated 65,000 spectators in 2018 and generated $41.7 million in estimated economic impact, also according to statistics provided by the LVCVA and its research partners.
Provided the numbers are accurate, the city’s return on its NASCAR investment remains significant.
Television coverage of the two NASCAR Cup Series races and companion Xfinity and Truck Series events adds an estimated $10 million in media exposure for the city. Las Vegas also receives prominent signage, a booth in fan engagement areas, access to hospitality tickets and program advertising at other Speedway Motorsports Incorporated tracks such as Texas Motor Speedway, Atlanta Motor Speedway, Bristol Motor Speedway and Sonoma Raceway as part of the $17.5 million agreement.
With the sanctioning body planning major schedule revisions beginning in 2020 and Las Vegas having added a second race, the city also is better positioned to land the coveted championship race at season’s end, should it be put out to bid.
“I think (spending) a million dollars (per race), what we’re getting on our investment from branding and economic impact, is still a great deal,” Motley said. “Fifteen years ago this deal may have cost $10 million (per race).”
Flat is the new up
Based on the buzz generated by the season-opening Daytona 500 and a respectable follow-up race at Atlanta that marked the debut of a new rules package designed to promote closer competition, Phelps is hopeful the series might start finding its way again and give the LVCVA and other sponsors more bang for their bucks.
“If you look at the races we’ve had so far, I think we’re 2-for-2,” Phelps said in a phone interview with the Review-Journal this week. “I think the race in Las Vegas, frankly, is going to be even better.”
Phelps’ optimism notwithstanding, TV ratings for the first two races were basically the same as last year. On the plus side, NASCAR was the most-watched sporting event both weeks, beating the NBA All-Star Game, a Golden State Warriors-Houston Rockets regular-season game and an NHL stadium series matchup featuring the Pittsburgh Penguins and Philadelphia Flyers.
➖ That makes NASCAR Cup the top-rated sports event for the second straight weekend.
➖ Race got a 3.6 in 2017. pic.twitter.com/Vg0L3fEXDF
— Adam Stern (@A_S12) February 25, 2019
“From a ratings standpoint, flat is the new up,” Phelps said about shifting viewing habits among sports fans. “With that said, I was quite happy with the ratings we had, and our digital and social engagement numbers were the highest they’ve ever been. People are consuming sports, including NASCAR, differently.”
NASCAR is not alone in facing the ebbs and flows in popularity that many believe are inevitable in sports and entertainment. Until rebounding during the recently concluded season, even the NFL was witnessing a decline in TV ratings. And its 2018 average regular-season attendance of 67,100 was an 11-year low.
At the Daytona 500, NASCAR announced a sellout after downsizing — or “right-sizing,” as Phelps prefers to call it — from 168,000 seats to about 101,000. Other tracks have removed significant numbers of seats. LVMS will take out another 10,000 after the Pennzoil 400, reducing seating capacity to about 70,000.
That’s still a nice crowd, even by NFL or college football standards. But when 70,000 spectators are scattered about facilities built to accommodate twice that many, the optics are not good. A bigger concern: How will the networks react when NASCAR’s $8.4 billion contract with Fox and NBC expires in 2024?
“It’s difficult to sell 120,000 seats to anything, frankly, but we are still drawing significant crowds,” Phelps said.
“Most of the time, (our races) will be the No. 1 sporting event of the week from an attendance standpoint. Although there has been some softening on the attendance side, those are still fantastic crowds. Then it’s the racetrack’s obligation to make sure the race-day experience is a good one, and it’s on NASCAR and its teams and drivers to make sure we’re putting on an entertaining race.”
In the manner of football and baseball games, some races are more entertaining than others. But there’s a sentiment in NASCAR that if cars don’t cross the finish line upside down and on fire, it’s time to change the rules. Again.
“What we don’t have, what our stick-and-ball brethren have, is multiple games on a day,” Phelps said. “On an NFL Sunday, you have 15, 16 games. The dogs don’t get as much coverage, and you’re going to have some great games. If we have a race where a driver wins by eight seconds and he leads 80 percent of the laps, a fan’s standpoint is that it wasn’t a very good race.”
Exit, stage left
To promote competition, NASCAR has adopted radical and controversial changes such as a playoff system, stage racing and the new high downforce package the cars will run in Las Vegas.
Phelps said about 80 percent of NASCAR fans support stage racing, in which races are divided into three segments with points awarded for each.
It would seem the other 20 percent complain about it on Twitter.
“There’s some scrutiny there,” Phelps said. “Do we have more than in other sports? Some would say yes. We’re not overly concerned about it. Fans expect more today than they did in yesteryear. They want to see more competitive side-by-side racing, more beating and banging, more raw emotion from our drivers … and we want to give them more.”
On Thursday, NASCAR got a little in return when Mars Global and Joe Gibbs Racing announced a multiyear sponsorship of driver Kyle Busch of Las Vegas said to be worth about $20 million per year through 2022.
“This is a three-decade-long relationship with NASCAR,” Mars executive William Clements said. “We were part of it when it was primarily a Southern sport in the 1990s. We were with them when it grew tremendously. And we feel that now NASCAR needs it sponsors.
“We think they’re making the right moves.”
Latest economic impact numbers for Las Vegas sporting events:
Event, Estimated attendance, Estimated economic impact
2018 NASCAR spring race: 85,575, $146.1 million
2018 (projection) National Finals Rodeo: 170,750, $113 million
2018 NASCAR fall race: 72,350, $90.5 million
2018 USA Sevens Rugby: 65,000, $41.7 million
— Source: LVCVA