News & Analysis

Part 3:

Send Lawyers, Contracts and Money…Especially Money!

By Jeff Burk
11/8/2007

This is the Final part of a three-part series on the problems facing major league drag racing in the post-Wally Parks and pre-HD Partners era.

n the first two parts of this series I’ve addressed what I believe are the overall issues that will face the NHRA Pro Racing after the purchase of the NHRA’s professional assets by HD Partners. We’ve dealt primarily with the issues of safety in the area of the chassis, tires and, ultimately, the drivers and fans.

But those are not the only problems the sport has as it goes forward as a totally commercial (for-profit) entity that now must show growth and deliver a return on investment for its new owners and shareholders.

The obvious problems concerning safety of the drivers and the design of safer chassis, tires and tracks must be solved. Since they are basically mechanical issues, the new owners will simply make unemotional, non-partisan, good business decisions to address those issues and minimize their exposure to high-profile litigation and lawsuits.

But drag racing faces yet another crisis, in my opinion, that will also have to be dealt with by the new owners regardless of who they retain to administrate their professional series. That crisis is the same one that all professional motorsports sanctioning bodies are facing from the F-1 to NASCAR to drag racing: the spiraling increase in the cost of sponsorship for a competitive team and the increasing reluctance of sponsors to foot that bill.

Let’s address the cost of racing first. Almost every crew chief this magazine has talked to about that issue in the last six months has complained about not only the skyrocketing cost of building and racing professional class cars, but also the lack of parts available to them to keep their cars in competitive condition. Those two issues go hand and hand.

For the sufficiently funded teams of owners/racers such as Kenny Bernstein, Connie Kalitta, Evan Knoll, Don Schumacher, Don Prudhomme and Forrest Lucas the cost of racing is basically irrelevant. If a rotating assembly, set of rods or tires have to be replaced after one lap, so be it. If the trick supercharger costs $15,000, order six. Need spare chassis and bodies? Call GM and the chassis builders and get them on order. Want to test after every event? Book the rooms and the flights. The “haves” are gobbling up all of the parts in stock and being built to the detriment of the smaller teams, because they can. If a team can’t place a large enough order, they just have to wait for parts.

It’s no wonder the dollar number floating around to fund a competitive nitro team is around three to three and a half million dollars a year and only slightly less for a Pro Stock team! A professional race team can race cheaper, certainly, but apparently, if a team wants to compete for a championship, then a sponsorship in the millions of dollars seems to be amount required.

The fact is that none -- and I emphasize the word NONE -- of the rules recently implemented by the NHRA in the Top Fuel, Funny Car or Pro Stock ranks have done anything to significantly reduce the cost of fielding a competitive team. After talking to owners the only thing the rule changes put in place over the last five years have accomplished is to increase the cost of racing. Spec engines, spec tires, spec fuel or spec ignition haven’t helped.

There must be some rules that, if implemented, would reduce the cost of racing in the premier classes, but evidently those in charge of making the rules don’t know what they are or who to talk to find out what they are or they are afraid of stepping on the toes of the rich and famous.  Whether the return to 90% nitro -- advocated by some crew chiefs in this magazine -- will be economical will require another year to determine.

Professional drag racing is a mirror image of American society today. The gap between the rich and poor has never been wider and the middle class is being squeezed out of existence.

The NHRA’s current management seems determined that their sanctioning body will mimic NASCAR despite the fact that NASCAR is having its own problems with declining attendance, TV ratings, loss of sponsorships and skyrocketing costs. NHRA drag racing already has some but not all of those same problems. NHRA’s TV ratings, after a long slump, have returned to equal to the high-water mark they achieved in 2002, according to the Joyce Julius folks, and in general fan attendance appears to be on the increase.

There is, however, one big difference between the ownership of drag racing’s premier teams and NASCAR’s teams. The owners of NASCAR teams make huge amounts of money off of their operations and aren’t inclined to buck the organization much. NASCAR is by some accounts a 50 billion dollar operation. That certainly isn’t the case with drag racing. Most owners are content as long as their teams don’t cost them any money -- with the possible exceptions of Kenny Bernstein and Don Prudhomme.

Although no one was willing to talk on the record, sources tell me that a healthy nitro team single car sponsorship in the NHRA these days is between $1.7 and $2.2 million, with just a few being in the $3-3.5 million range reportedly needed to fully fund a competitive team. So, evidently most sponsorships are not covering the costs of running a team.

This year the spiraling cost of racing has begun to have a noticeable effect on the number of teams getting and keeping major sponsorships.
  
At the end of this season the U.S. Army dropped its backing of Don Schumacher’s Pro Stock Motorcycle program. The sponsorship of Ron Capps by the Brut folks went from being a major sponsor to a major associate. The Valspar sponsorship reportedly has gone away, and you can bet that Mopar (Chrysler) new owners will be looking at all of their motorsports commitments for what return on investment (ROI) being a sponsor delivers.

The Checker-Shucks-Kragen people have reduced their sponsorship from two and sometimes three cars to just one. Don Prudhomme was unable to secure a sponsor for his Top Fuel operation after losing his SkyTel deal and, instead of trying to keep the team going while seeking a sponsor, he folded the team and moved his American Tobacco sponsorship back to his dragster operation and will race one car in 2008. The David Powers two-car Top Fuel operation went most of the season with just one major sponsor (Matco) despite both of his teams contending for a Championship almost all season.

Just recently, Lucas Oil dropped its sponsorship of the Jim Dunn Funny Car. Hillary Will, driving for Ken Black, went through a complete season without a major corporate sponsor, and after just two seasons Jagermeister opted out of continuing to back Max Naylor’s Pro Stocker.

Don’t tell me that the sponsor pool for race teams isn’t getting drained.

If it weren’t for the largess of men such as Connie Kalitta, David Powers, Ken Black, Forrest Lucas, Evan Knoll, and a few others, who don’t mind spending their own money to subsidize race teams, professional drag racing would be in serious trouble.

If this country ever has a really serious economic correction does anyone seriously believe that those patrons of the sport will be able to continue subsidizing drag racing to the extent they are currently? In a majority of cases I believe pro teams are just one bad year or a bad couple of weeks away from extinction. The economics of taking in $2 million and spending $3 million is a formula for disaster!

There are simply too many of what I call boutique sponsorships these days: Sponsorships that appear to be the real deal but in reality are in the $350,000-500,000 range because that is all the company CEO thinks a drag racing sponsorship is worth!

The only conclusion that any reasonable person can come to is that, despite the blatant propaganda put forth by the NHRA, Corporate America in most cases simply doesn’t see drag racing as offering a sufficient return for their sponsorship investment. Remember when this sport had McDonalds, Coors, Century 21, Sears/Craftsman, Miller Beer, TRW, Pennzoil, Pepsi, and other major corporations sponsoring teams? These companies didn’t leave the sport because drag racing was too successful for them.

To make matters worse, the NHRA competes directly with the race teams for the same sponsors. Often the sponsor monies are divided between the NHRA and the race team, and when that occurs the race team is the one that usually suffers. They usually end up with a commitment to deliver a full season. One thing is sure, during the Tom Compton era the National Hot Rod Association has shown steady growth and profits -- and few if any sponsored race teams can make that statement. Rod Fuller spent most of the year without a sponsor, finally signed up Caterpillar, and shortly thereafter NHRA announced their own deal with Cat. The NHRA also just signed up GEICO, who sponsor Karen Stoffer.

The unarguable fact is that something has to change in the basic structure of professional drag racing if it is going to grow in the future. The sanctioning body management, whether it is the NHRA, HDP or a combination of both, have to admit that. With the dissolution of the old NHRA the new regime has the opportunity to make needed changes to ensure the health of the sport.

If those in charge understand that in today’s economy the sponsorship ceiling for most companies is $2,000,000 for fuel cars and $500,000 for Pro Stock, then get together with the team owners and industry leaders and develop rules to force the cost of racing down for the AVERAGE race team. Drag racing has the men with the knowledge to make those rules if someone will just listen to them and not to the guys with the biggest sponsors. There are always going to be those that will spend whatever it takes to race and win, but they don’t make up the larger part of the race team population.

Drag racing is at a crossroads just as open wheel racing was more than a decade ago. At that time you couldn’t get a seat at the Indy 500 on raceday and there were a hundred race teams trying to qualify. At the same time NASCAR track owners were building seats as fast as they could. Now you can easily get a seat to the 500 on raceday and NASCAR no longer fills their seats nor is building more. The men in charge of those organizations pushed their rose-colored glasses firmly onto their noses and went with the status quo. Open wheel racing in this country has nearly died compared to where it was and NASCAR is declining by anyone’s measure.

Drag racing has the chance to re-invent itself.

It just needs some leadership that sees the big picture and has the guts to roll the dice.