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NASCAR Boss Brian France on the state of NASCAR

NASCAR
Sunday, November 09, 2008

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NASCAR Chairman and CEO Brian France speaks with the media prior to the Checker O'Reilly Auto Parts 500 at PIR
Rusty Jarrett/Getty Images for NASCAR
THE MODERATOR:  Good morning, folks.  We've got our chairman here, Brian France, who will be happy to answer any questions. 

Brian, do you want to say something to start with? 

BRIAN FRANCE:  First of all, good morning.  I thought I'd make a couple of comments, because I know there's been a lot of discussion recently about the economy and how that affects NASCAR, certainly the manufacturers and what they're going through, the recent earnings announcements for both Ford and General Motors. 

And obviously, as we've said for, oh, for at least a year now, that as the economy either got better or worse, but certainly if it got worse, NASCAR would not be immune to the effects of a tough economy. 

It wouldn't be immune if our partners were struggling and we would need to work very hard to make sure that we were good partners in the reverse as they got through challenging time. 

And that also included our fans who, as you know, have had to fight high fuel prices in the summer, which had an effect on us.  And they also have had to fight the credit crunch and everything else that's been thrown at them. 

So NASCAR as an industry is not immune.  We've said that from the beginning.  And so the question that you may ask, and I'm sure you will, what are we doing about that, is I and Mike Helton have been to see CEOs of each manufacturer or relatively high executives at Ford, GM, Chrysler and Toyota in recent months. 

So we're trying to understand very carefully what they're going through.  And as importantly how it relates back to the team owners who rely on engineering and the commitments that the manufacturers have. 

So we're as up on that as we think that we can be to stay abreast of it.  And so with those general comments on the economy, I'd be happy to take any question that you may have. 

THE MODERATOR:  Questions.

Q Is there any role that NASCAR can play in terms of stepping in, helping teams.  I mean the NFL, I think, raised a $2 billion line of credit for its teams.  Is there a role for NASCAR in sustaining individual teams, or does that the work in the NASCAR model?

BRIAN FRANCE:  No, it does work.  There's two things you want to be thinking about.  One is the cost model that we have, which is the rules packages or any related items that we have control over. 

And so, in particular, the truck series, which you can imagine the manufacturer support is going to be very challenging in the months and years ahead, because of lack of selling big trucks. 

So the point is, is we need to be more aggressive than we've ever been in taking cost out of the system.  We're always aggressive.  That's always a core requirement on our part. 

So that's the first thing that we can do.  The other thing that you don't really want us to do, and I've heard a lot of things about well NASCAR ought to be cutting their own cost.  We are going to be as efficient as we can as a sanctioning body.

But all the initiatives that NASCAR has ongoing that affect us next year or many years in the future, things like diversity, things like end market promotion or our youth initiatives, things that cost the media group.  We're trying to build out a digital opportunity for the whole industry, that costs millions and millions of dollars are simply areas that will ultimately, hopefully, grow the fan base.  But the tracks are not going to be able to fund those kind of initiatives. 

They haven't been in the past.  They're under increasing pressures of their own.  So when I hear people say well NASCAR, we can do that, and we will be as efficient as we can as a business; but the things that we want to do for the sport, overarching, to look past a tough economy, to make sure that these initiatives that we've had in place that may be very close to giving us a big benefit, that we be very careful about not cutting those.  So those are the things we think about. 

Q Specifically, on the team side, we're hearing from teams, sponsors are looking to cut back their initial sponsorship, the monies that they have dedicated these teams.  Teams that are looking to merger are having trouble going back to getting lines of credit to make those kind of roles.  Can you guys get them a line of credit, and as far as the team side, what specifically can you do now to help these teams when we have four organizations right now that, even at that level, are cutting back?  But even below them, there is such a crisis out there on the back end of the garage where these people, they don't have sponsors.  They're wondering whether or not they're going to be here next year?

BRIAN FRANCE: Well, we want them to look, what can we do?  Can we establish lines of credit?  They're individual businesses.  And there are literally, there are literally hundreds of them that can be affected, depending on how far you would go in our national series, different teams starting up or exiting all the time. 

So we're not talking about 20 or 25 traditional sports teams where some halo credit line could be established for them.  That's not practical. 

But what's important is that we have said routinely, of course we're concerned about that.  The advertising market has come to a screeching halt in many respects.  So I'm meeting with our television partners who are feeling that very, very directly. 

So this is not just a, hey, the team owners, some of the team owners are in dire straits.  We understand that.  But the entire country is in dire straits in one form or another.  Quite frankly, we may come out of this, we'll see how the economy sustains in terms of how bad it gets, but better than most.  Even though it's hard sometimes to see that.

We're all sensitive to a team owner who is really struggling who ought to have sponsorship.  But we can't expect to operate as an island and be oblivious to what's going on, where companies are pulling back on every form of advertising, marketing and promotion that they're doing and somehow they're just going to go, well, you know the NASCAR guys, we're not going to cut anything back there.  That's unrealistic. 

So the idea we can wave a safety or have a safety net for everybody that is in our industry, I wish we could, but it's just not practical. 

Now, we're going to take cost out.  And you're going to hear us talk about that we've talked about it in testing.  We're looking very, very hard at that, at being more aggressive than we've ever been.  The truck series, our group is meeting, has been meeting for the last couple of months in anticipation of the manufacturers having some issues in that series in particular. 

So we're going to be more aggressive, and I mean a lot more aggressive in taking cost out of the system.  But there is that difference.  You don't want NASCAR as the league or organization to be running around cutting a bunch of things that have a long term impact. 

That's the things we've got to be careful about if you're us, because a lot of those things we've had it for a long time have had a big investment in.

Q    Brian, one of the big reasons for the Car of Tomorrow was to save money for the teams.  What are you hearing from the team owners?  Are they saving money on the Car of Tomorrow?

BRIAN FRANCE:  Well, you know, I hear mostly that they are.  There are certainly some that would disagree.  It's probably a little bit too early to get a full sort of accounting.  But if you go by a couple of different metrics, number one is, are you building less cars?  Do you need less cars?  Do you need less engineering, another big cost, and have we made a bunch of progress in that area?  And the answer is we have.

How much that impacts it over the long term, we'll have to see.  We're very happy with the three principles we set out which was safety, cost containment and competition. 

And if those of you remember, we got a lot of pressure back in May to make changes on the Car of Tomorrow because it wasn't driving as well as it could and all those things.  And we're very pleased that we didn't cave to that pressure, because that would have done two things.  It would have cost the teams a lot more money because we would have in theory moved the rules around, right?  And made them chase something else.  That costs money every time we do that.  So that would be number one.

And number two, we never would have gotten them an opportunity to settle on the car from a driving standpoint that they have today, and now, if you roll the clock forward, which we have to look at it, we're very pleased with what's happening on the track.  Most of the teams are up to speed on this car. 

It's exciting.  We've had competitive events.  We always like to have more and better.  But we're very pleased with where the Car of Tomorrow is on all three of the metrics we set out for.

Q    Brian, you've championed the diversity issue in recent years.  Now we have a black world driving champion in Formula One, an African American about to go in the White House.  How much pressure are you getting from corporate partners to accelerate the diversity program, and is there anything new you can tell us about where that is?

BRIAN FRANCE:  Well, we just had the driver combines a couple of weeks ago, which we're in, I don't know, third or fourth or fifth year of Drive for Diversity, which is the centerpiece of diversity.  It's not by any means all we do, but it's an important part.  So we are getting drivers up through those ranks who are starting to show some real talent and starting to get noticed.

When will someone be in the Sprint Cup level, I don't know.  That would be to the media's litmus test, that will be what you guys thinks is a successful diversity program.  We look at it broader than that, although that's really important.  Be great to have it. 

We're also looking at positions that are filled.  Crew chiefs.  Crew members.  All through the industry we're trying to have a more diverse workplace in general. 

So that is ongoing.  We're making progress on all fronts.  And I suppose when we get to the end, which is somebody who is not only in the Sprint Cup Series but is very successful, is when most people would say that we're victorious.  But we'll think we're victorious if we're doing a lot of things in addition to that. 

Q    Brian, there are major liquidity concerns for all of the Big 3 in Detroit with GM and Ford possibly running out of monies early as next year this time.  In your talks with these high level executives, what were you specifically told about what happens if one of these manufacturers burns through all its cash next year; would they be still involved in NASCAR if they had to declare bankruptcy?

BRIAN FRANCE:  We obviously didn't talk about a bankruptcy option.  We talked about their issues and how they might get through.  Remember, they've had two huge curve balls.  Curve ball one was the run up on energy cost, which when they were on a track of building big, big trucks and bigger cars, that threw them from a production standpoint for a loop.

And now you have a credit crunch that falls in September.  So it's very difficult.  So it's been hard for them to figure out because they're on a certain business model that they think they can get through and they're all on the same boat. 

They're all trying to revamp their businesses to get to different, to a better place.  And the net of it was we didn't talk about any bankruptcy, but we talked about helping them to get until 2010 which most of you may know is when their legacy costs have been renegotiated with the unions and they have a big cost savings once they get to 2010.  That's a big milestone year for them. 

The government is talking to them as I'm sure all of you know.  Our anticipation is that they're building better cars and they have excellent management teams.  And we would like to hope that they get to the end.

Q    So you anticipate all three are going to make it through?

BRIAN FRANCE:  Well, we hope they will.  We don't know.  We hope they will.  And that's all we can do.

Q    Brian, some folks in the garage even this weekend have expressed just kind of a concern about, they're uncertain about what NASCAR can do to help them.  I know you guys have always talked about having an open door policy.  But they don't see you as much, don't hear from you as much.  And with the uncertainty of the possibility of the economy getting worse next year, it's created a lot of questions and questions about leadership and where things are going to be.  Is there a need to meet with these folks?  And as you look toward the future, how different is NASCAR going to have to be to address the economic concerns?  Because it looks to be worse than better. 

BRIAN FRANCE:  I know that question is everyone's mind.  Let me hit it head on.  We like the way we're structured.  We have the president of our company at every event who has the total confidence of me and the entire France family and the board at every event.  I don't know of any sport that does that. 

I'm at 12, 14 events, certainly not every event.  Most of the business elements that happen at NASCAR happen during the week.  That's when we're meeting with our team owners, our partners in all forms.  Mike Helton and myself.  That's when we're setting policy for the sport. 

When we come to the events on the weekend, we're celebrating running the events, which is what we should be.  And most of you have told me quietly or I've heard the suggestions that you would like to hear less of me and more from the team owners and the drivers and everybody else, which I agree. 

That's when we said back to the basics.  What that meant was back to the focus on what happens on the track.  That's what we should do.  Obviously we've got a different economic climate that has happened. 

But the structure and how we manage the company is deep in terms of talented people.  And as I said, running the events is one thing.  Running the sport from a policy standpoint and interacting with our partners to make sure we are doing everything we can, that really happens during the week. 

So if you saw me every day, that's not going to change what happens Monday through Friday.  That's when you really need to see me.  And it's impossible for you to see me.

Q    How drastic is NASCAR going to have to change things with the economy looking at predictions of a worse economy?  Are you going to have that we are we looking at a different NASCAR in some sense in two, three, four years down the road?

BRIAN FRANCE:  I don't know about a different NASCAR.  Listen, this isn't the first economic times we've had.  We've been in business 60 years.  We've seen the energy crisis in 1972.  We've seen the bubbles in the difficult times.  There's no question about it. 

We've seen 9/11 wasn't that long ago.  And the tourism industry was basically shut down.  And the airline industry.  So we were effected and this is a very big economic downturn, but this is not going to change our business model because we're in tough economic times.  It doesn't mean we won't be more aggressive, as I said earlier, taking out costs for team owners, doing everything we can.

We have been in the middle of talking to team owners about them realigning with one group or another should they think that a merger would be important.  We play a role in that. 

We don't publicize that, and we do that on the basis of how an individual team owner would want us to play a role.  But Mike, myself, together and separately, are meeting with them constantly. 

We obviously understand the teams that are underfunded and face the biggest risk and are working with them to find a partner, find a sponsor.  We just don't put that in bright lights every week.

Q    I know you talked about the Car of Tomorrow for the Cup Series, but Rusty Wallace was in here yesterday, outside this room, and he said thought maybe some Nationwide teams might refuse to run the Car of Tomorrow or that the cost was just too much.  Can you maybe talk about whether that's a reality or not and whether you intend to continue the Nationwide Car of Tomorrow program?

BRIAN FRANCE:  We're not there with deciding that the Car of Tomorrow is going to appear in the Nationwide Series.  What we said is the Nationwide Series is going to evolve.  It needs more of its own identity, quite frankly.  It has a new sponsor in Nationwide, and we're going to do a number of things that we need to do to keep reestablishing it's the number two motor sports series in the U.S.

So whether that's it and I've certainly heard those discussions.  Those of you who have covered this sport, we do an unprecedented amount of background and working with the team owners before we make any significant moves.  We've done that on my watch in the last five years more so than we've ever done it. 

So the Car of Tomorrow was, as an example, was two or three years of discussions.  Mike and I both led those respectively. 

We met with every team owner, every crew chief, multiple engineers.  We heard all of the issues.  We didn't just make a decision in six months.  We took a long time to do that.  And we got an unprecedented amount of feedback.  That's what we'll do on any major initiative. 

The difference is we're not going to stand up here every week and announce a progress report on that.  But that's the process for significant rules that affect them. 

Q      You touched on testing a little bit earlier.  But several of the owners in the garage have said that if NASCAR were to not allow any testing at NASCAR sanctioned tracks for the Truck Cup or Busch series even the smallest teams would save at least a million dollars a year in the testing.  We both know they would probably spend that somewhere else.  But given the economic times, what would be the negatives from NASCAR's point of view to eliminating testing and going to a program such as that?

BRIAN FRANCE:  Well, the challenge    I won't say negatives, because if you could pull it off, and you could pull out 30 or $40 million out of the operating budgets collectively to the industry, that's a great thing to do. 

And that's what I talked about earlier about being aggressive.  We certainly looked at that before.  Obviously policing that across the many states that host and have tracks that host our national series is one thing.  There is an effect with some of the rookie teams, rookie drivers, that really could stand to use some of the testing. 

There is also a promotional element that helps the tracks when they have activity on their speedways.  That's good for awareness.  Most of our, as you guys know, most of our facilities only host the maximum of two events a year. 

So the more awareness they can get in their marketplace, what's going on, that's a positive.  So all those things are taken into consideration, and when we say we're going to be now more aggressive, I think the economic times make us have to weigh that perhaps differently, and we will. 

Q    We hear every week in the garage, Bill Davis, Wood Brothers, Hall of Fame, Ganassi, DEI, without a merger or a miracle they may not be here through 2009.  I know we've been over what you can do to help.  Are you certain you'll have 43 car fields next year?

BRIAN FRANCE:  We're pretty confident about that.  I said before to many of you, you know, we're also criticized for having too many cars.  So that's a consideration. 

People have said how do you balance the sending home good sponsors and good teams like we did just a year    this last year.  And sometimes this year. 

So there's this perfect balance of 43 perfectly funded teams that never go home and put on a magnificent show and everybody wins.  That would be utopia. 

Obviously the cycles that occur to balance that out, much of which are out of our control, how people sell sponsorships, their performance on the racetrack dictates you don't see too many of the teams that perform well, you're not hearing sponsorship challenges at this point. 

So teams that perform at a lower level over a long period of time, there are always going to be    even when the economy is good there always going to be some of those teams that you go, gosh, you would like them to be sponsored but then you realize, well, you know, they're not performing as well as they might like. 

And so there's this giant balance that happens in this sport.  And many things are out of our control.  But it doesn't mean we don't care.  It doesn't mean that we're not doing, even if they're little things that we can do. 

Joining somebody in a meeting.  Joining somebody, adding something to their competitive balance to help them perform better.  And all the way up to bigger things, which is taking teams that aren't performing well and maybe facilitating a merger, being part of that in some way if we're asked to. 

And we often are.  And so because we're after the perfect balance.  We don't always get it.  But we're after it.

Q    Given the problems with the Big 3, the fact that Ford and Dodge are ending their direct financial support for the Truck Series, the on and off again merger talks with GM and Chrysler, is there any interest on NASCAR's part to bringing other manufacturers to NASCAR?  And on the other side of that, have any other manufacturers expressed interest in competing in this arena?

BRIAN FRANCE:  Well, the first question is yes, we would be, we would be open to other manufacturers provided that they were to operate and approach the sport like Toyota and others have done.  So that's number one.

Number two, we have talked to other manufacturers.  This is probably not the best time for them to put big bets down and so on.  And they're all trying to shore up their businesses and whatever manufacturer we're talking about. 

And I would make a final point about the manufacturers.  They play a very important role in lots of ways, in direct support to the teams, that's important; the branding and the heritage that they're part of the sport in a very unique way.  And we're proud of that and as part of our history. 

But we're not also going to live or die if one manufacturer or another manufacturer has a pull back or a pull out.  I hope it doesn't happen.  We're working like mad to make sure it doesn't.  And it wouldn't be our first choice by any stretch. 

But the sport is on very, very solid ground that transcends one manufacturer or another.  And that's how you have to look at it.  And I think we have been as aggressive as anybody, even when we got criticism for looking at opening up to either foreign manufacturers or anyone else. 

But we're going to continue to do that because we think the manufacturing component has a very big important additive thing to this sport.  And we're going to keep working with our partners even when they're in challenging times. 

And I'll make one last point on our manufacturers.  And I have been told this directly by each of the different companies that are having these challenging times; that one of the things that works best for them is NASCAR.  And each one of them went out of their way to tell me that while there may be some pull backs and cuts to meet these challenges, the last thing they want to do is abandon something that works so well. 

And that was really comforting for us, was one of the reasons we went up to Detroit and out to Los Angeles and other places, because we wanted to make sure that we were still working well.  Forgetting about who was having a tough time, they've still got to sell their vehicles.  Still have to sell their brand.   

So with that, thank you very much. 

THE MODERATOR:  Thank you, Brian. 

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