NASCAR Product Issues

NASCAR launched its 2008 season with its marquee event, the Daytona 500, on Sunday. Jerry Bonkowski of Yahoo! Sports sees the circuit at an important crossroad:

Sunday’s 50th Daytona 500 could not only set the tone for how the 2008 season goes, but also how NASCAR goes as well.

With TV ratings and at-track attendance slumping the last two years, it’s imperative that the sport not only gets off on the right foot, but keeps moving forward with whatever momentum is generated from the season opener.

Among the candidates for the slowdown in interest, Bonkowski considers

  1. Rising prices and NASCAR focus on the “almighty dollar” rather than fans;
  2. Too many crackdowns on post-race outbursts by drivers;
  3. Dale Jr.’s sliding performances;
  4. Cookie-cutter tracks

For economists, the first item falls in the silly category. Prices rose because of rising consumer demand for the product. While NASCAR may not gauge fan interest correctly, their pursuit of fans and dollars are one and the same (as the NASCAR ownership implicitly expresses in the article). The second item seems to be a stretch also. In contrast, the troubles of the circuit’s most popular driver has a decent chance of explaining part of the swings in fan interest.

His “Cookie-Cutter tracks” relates to one of my ongoing interests — the management of product by sports leagues and associations. I have no doubt that NASCAR manages their product to seek higher customer interest profits — but this involves some difficult decisions and tradeoffs. Several of these topics mimic the same issues faced by other sports in the past and present.

  • The optimal amount of track and race variability is one dimension. Taking the sport to new and highly populated areas makes sense, but do fans really want to see the same race each week in merely a different venue?
  • Another issue is the mix of TV ads and racing. My NASCAR-following colleagues complained loudly about this after Sunday’s race. Quantitative estimates of ad time run about 25-30 percent of air time and influences both live attendee and TV viewer experience. TV is the golden goose for sports, but who wants a 900 pound goose in the room?
  • A third dimension is the optimal degree of competitive balance between cars. NASCAR has pursued this balance with near myopia. Fans enjoy side-by-side racing and bunches of cars grouped together. However, excessive parity means that cars have trouble passing each other and/or line up in single file for long stretches of the race. Also, a tradeoff between balance and repeated winners exists. Most sports writing focuses on the fomer but ignore that possibility that dynasties (Dale Jr. and his father, for instance) may also build fan interest.
  • The branding of cars matters. Fans follow drivers, but stock car racing also grew up around a fan association with cars. The “Car of Tomorrow” essentially makes every car the same with only text or insignias marking a nominal difference. Why would NASCAR reduce such branding? Is this related to an excessive fixation on parity?
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Author: Brian Goff

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