NASCAR plummet update: ISC reports plunge in profits International Speedway Corporation recorded a 72 percent plunge in third-quarter profit, blaming it on mounting losses in its sportswear business and several one-time expenses.
ISC, which owns Daytona International Speedway and 11 other tracks, recorded third-quarter earnings of $9.5 million, or 18 cents per share. That was less than one-third the $34.3 million profit, or 64 cents a share, that it made in last year’s third quarter.
The company also reduced its full-year financial forecast for the second time in three months. It now expects revenue of $810 million to $815 million, down $10 million to $15 million from its last estimate issued in July. Earnings per share are expected to be in the $2.70 to $2.75 range.
While revenue for the June-August quarter rose to a record $196.3 million, several problems cut heavily into the company’s bottom line. Among the setbacks was a charge of $12.4 million to cover ISC’s 50 percent share of losses suffered by Motorsports Authentics, a clothing and souvenir company ISC operates jointly with Speedway Motorsports.
ISC had acknowledged earlier the sportswear business could lose as much as $20 million because its Dale Earnhardt Jr. clothing inventory with “No. 8″ designs became obsolete after Junior revealed plans to change teams. On Wednesday, ISC said the joint venture will lose about $5 million more because of team-hopping by Kyle Busch, the merger of Ginn Racing with DEI Inc., and other racing team changes.
Detroit's Infatuation with NASCAR begins to unravel
Note: This excerpt of Fumes is from The United States of Toyota - How Detroit squandered its legacy and enabled Toyota to become America's car company. The book (Inkwater Press) is available now at Barnes & Noble, Borders, Powells.com and of course, Amazon.
Detroit. I have long been the most outspoken national critic of NASCAR, using the term "NASCAR Bubble" to forecast the inevitable decline of the stock car series more than three years ago. It is now clear that the automobile companies, television networks and corporate America will not only have a front row seat for NASCAR's slide – they're all going to be dragged down with it.
With NASCAR's sudden decline in popularity catching corporate America off-guard in the beginning of 2007, marketing types around the country were choking on their cornflakes with the realization that their "can't miss" investment in NASCAR was starting to look more than a little shaky. When even The New York Times, a publication that has been notoriously slow on the uptake when it comes to its motorsports coverage, finally noticed that NASCAR's seemingly unstoppable upward trajectory in popularity has not only flattened out – it was starting to head downward in a hurry – then you knew things were heading for trouble in NASCAR-Ville.
By late spring, The Times ran a headline at the top of the Sports section, which blared the ugly reality: "NASCAR's Days of Thunder Are Giving Way to a Period of Uncertainty." The article outlined the fact that the NASCAR money machine was running out of gas, reeling from a merry-go-round of empty seats, declining TV ratings and a growing resistance across the U.S. to roll over for NASCAR's push into new markets. Funny, but you could almost hear the corporate marketing honchos across America wincing and groaning from here, because after all, they'd bet the farm on the idea that the sun would never set on the France family empire – and a lot of people who should have known better were going to get caught up in the wreckage when the NASCAR marketing juggernaut finally imploded.
How bad was it? The Times reported that from 2004 through last season (2006), television ratings – NASCAR's bread and butter as far as corporate America is concerned – plummeted. Down 28 percent in Philadelphia, 22.2 percent in Los Angeles, 12.5 percent in Chicago and stagnant in New York. NASCAR apologists quickly pointed out that the cities mentioned weren't exactly hotbeds for stock car racing "fans," and they would be correct. Fair enough, but how do you account for the fact that NASCAR's ratings in Atlanta dropped 18.2 percent in that same period?
Much to corporate America's consternation, the pendulum had begun its inevitable swing back the other way for NASCAR – and this in just the first year of an eight-year deal with ABC/ESPN, Fox, TNT and the Speed networks valued at $4.5 billion, or a hefty $560 million a year. Not good would be an understatement, but it would get even uglier than that for the France family's "racertainment" series.
The fact that the wheels were coming off the NASCAR money train shouldn't have been a surprise to anyone, because you could see it coming a mile away. Sky-high ticket prices, empty seats, market oversaturation, too many sponsors creating a paralyzing amount of message clutter, the abandonment of traditional dates and race tracks, cookie-cutter cars that bear no resemblance to recognizable production car versions, too many races, etc., etc., etc. – the France family had provided a working model of how not to keep momentum going.
I should point out that everyone saw NASCAR's inevitable slowdown coming except for the so-called marketing experts in corporate America who fueled the runaway frenzy to begin with – and they're being caught flat-footed. After all, the denizens of The Land of Synergistic Brand Extensions, Co-Promotional Partnerships, Targeted Media "Buckets," Marketing Myopia and Flat-out Stupidity had distinguished themselves time and time again over the years by their innate ability to flog a marketing "sure thing" right into the ground.
There wasn't a chief marketing officer in corporate America worth his or her bonus over the last five years who didn't blindly "green light" some sort of NASCAR marketing, advertising or sponsorship program. And the beauty of it is that they didn't actually have to sell a damn thing or conduct their due diligence when considering it, either. Instead, they were greeted by a conference room full of blithering yes-heads chanting in unison – NASCAR! NASCAR! NASCAR!
It's no wonder then that this inevitable plateau reached by NASCAR had caused anguished cries of "What the f---?" from people who should have seen it coming a long time ago, because the herd mentality that is so pervasive in corporate America is driven by one fundamental guiding principle day-in and day-out – and that is that there's never too much of a good thing – until that good thing bites you in the ass. More at Autoextremist.com