State of the Sport takeaways from Friday at Phoenix

AVONDALE, AZ —  NASCAR president Steve Phelps and chief operating officer Steve O’Donnell were available at their annual State of the Sport Press Conference from the Phoenix Raceway on Friday morning, the site of this weekend’s Final Four.

Phelps started off making a massive statement on just how much this sport has grown since he first made this address in 2018 at Homestead.

“I thought it would be appropriate to actually take a step back. Many of you were in the room in Miami when I had the opportunity to do this for the first time. I think at that particular time we were a sport that frankly was struggling,” Phelps said. “Our ratings were down; our attendance was down. There weren’t a lot of bright spots.

“I stood in front of you, and you talked about our best days being in front of us. I know that seemed kind of foolish. Maybe some of you were snickering, like, I’m not sure that’s going to happen. But where we sit here today, I think that’s exactly what’s happened.

“I think you look at 2019, our ratings were up. Our attendance was up in 2019. 2020 we started the season off with a sitting president at the Daytona 500 and then the extraordinary events of Ryan Newman at the end of that race, how scary that was.

You look at the first four races of that year, our ratings were up. Then COVID hit. COVID was a brand-new world for us. On March 13th, when we closed down, shut down our operations, sent everyone home from Atlanta, that following Monday Steve and other senior members of the team, we sat down in Daytona Beach, Florida, and we devised a plan or started to architect a plan that would get us back to racing, which is exactly what we did.

“That was a very scary time. Those 71 days, what our industry did to come back, collaborate, to get back to be the first sport competing, which is what we did on May 18th at Darlington. Initially without fans, then the first sport back to competing with race fans when we went to Homestead-Miami Speedway, then on to Talladega.

“It was the events that happened in June of 2020 that I think set the course of NASCAR to change where the sport was from a reputation standpoint and from a relevance standpoint. That was the stance on social justice.

“It’s interesting, we just had Jimmie Johnson here. What terrific news having Jimmie come back in the ownership position at Petty GMS. It’s great to have Jimmie back.

“Jimmie led a group of drivers to create a video that talked about learning, being educated, doing better with respect to understanding what was happening in this country and kind of the reckoning that was happening.

“Jimmie gave permission for the sport to come out and do the things that we did and say the things that we did. That changed the face of this sport forever.

“You look at the results that have happened just in 2020, frankly: New ownership with Michael Jordan and Pitbull and others, frankly; people of color coming to the sport; our own hiring practices and what we’ve done; what has happened throughout the garage, drivers like a Daniel Suarez winning this year, Bubba Wallace winning again this year. It’s important. It’s changing the face of the sport as we move forward.

“You can do that without taking away from what’s happening with your existing fans, fans who have been here for 30, 40, 50, 60 years. They want great racing. They want story lines. They want their drivers to win. They want us to serve them content that is interesting, unique and special. That’s what we’ve done while we’ve been able to serve this new fan.

“Having finished 2020, I think it was a terrific year. Again, attendance was a bit wonky. Here two years ago, I think we had 11,000 fans, right? Last year we were packed. This year we sold out of the Sunday race in March.

“2021 was a special year in that we had the boldest schedule ever, at least in 50 years, at NASCAR. That really defined NASCAR doing things boldly and differently than they’ve done before.

“That also added to the reputation of the relevance of this sport. That is something that continued as we look to — by the way, the ratings were strong and attendance was up again versus 2019.

“You fast forward into 2022. Yes, I’m getting towards the end because we are doing this chronologically. The thing I was struck by is you think of the Clash at the Coliseum, the importance of what the Busch Light Clash of the Coliseum, what it meant to the sport. It was a proof point that we could do something like that, that we could build a track inside a stadium, certainly an iconic one. That was important for us.

“Again, it showed being bold and being innovative and being relevant. The biggest thing to me, and that was incredibly important, frankly I’ve never been to a NASCAR race that every single person that you talk to in this industry, drivers, fans, everyone had a smile on their face, everyone. It was unbelievable. Never seen that at a NASCAR race. Someone is always complaining about something, right? Not there.

“But importantly was the Next Gen car and the introduction of the Next Gen car that was so important. If you consider that before this year, the Next Gen car, you had to have a relationship with one of five race teams if you wanted to come into this sport. You had to.

“This car changed that. What does this car do? There was a relevance to this car for OE partners. The styling was fantastic of this car. Then the question would be, Well, what’s the raceability of the car? The raceability of the car was such that it resulted in 19 different winners, so more than half the field won a race in NASCAR this year. Five first-time winners. More passes throughout the field in a single season.

“By the way, that happened four weeks ago. So I would say the racing has delivered. It’s been terrific.

“I wanted to touch on one thing related to the safety of the vehicle. I’m sure there’s going to be a question from one of you. The car was designed as safety as the number one priority for that car. That’s how it was designed. It was designed to make sure that the horrific situation that we saw with Ryan Newman at the Daytona 500, the intrusion that happened into his vehicle, or the crushed roof that happened with Joey Logano at Talladega, that those things needed the strength of the car to be there. That is something that was first and foremost into why that car was designed.

“I would say, I want to give a public shout-out to Steve O’Donnell and his team, nothing short of spectacular. What a bold play, right? So a year ago I think someone asked me, What keeps you up at night? The car kept me up at night, whether we could put that car on the racetrack at the Clash at the Coliseum. You had supply chain issues, all the rest of it.

“If you think about it, get to the Clash at the Coliseum, and you don’t have a race car? There’s no safety net. You can’t go back to the old car. It’s too late. You’re done. We wouldn’t race.

“I know that sounds dramatic, but if you think about it, there was no safety net, no wires. It was our car and needed to be on the racetrack.

“Then working with the race teams and the drivers, we made sure the car was as racy as it could be. I think it delivered against that, too.

“As you look forward to our 75th season, more exciting news. For the first time in our 75-year history, we are going to race a street course. Not just any city; we’re going to race in Chicago. Not at the outskirts of Chicago; we’re going to be in downtown Chicago, Lake Michigan, Lake Shore Drive, Michigan Avenue, Columbus. It’s going to be like any NASCAR race ever, not just because it’s on a street course, but because of what we are going to do around the development and the hospitality of that racetrack. It will look nothing like any NASCAR race we’ve ever had.

“As a race fan, I’m incredibly, incredibly excited about that.

“As we think about the raceability of the vehicle, you think about the Playoffs, we had three winners that were not part of the Playoffs win our first three races in the round of 16. The round of 12, special shout-out for Christopher Bell for what he did at the Roval, incredibly unexpected. As he would say, I didn’t have the fastest race car there, but they went out and won that race.

“Go to Martinsville, another walk-off win. Unprecedented in NASCAR history. Certainly, overshadowed by Ross’ move, incredibly, because no one had ever seen anything like that ever.

“But I wanted to make sure that Christopher Bell got his due because he did something extraordinary. He deserves to be in the Championship 4, as do the other drivers.

“Again, thrilled for where this sport is. Thrilled for where the sport is going as we head into our media rights negotiation next year, as we head into kind of unchartered territories with the Chicago Street Course. We are going to continue to be bold and we’re going to continue to be innovative.

“What I would finish with is what I finished with in Miami, which is I believe the best days of NASCAR are in front of us. I believe that to be true.”

Here are the top other topics he discussed on Friday.

TALLADEGA, ALABAMA – APRIL 24: Bubba Wallace, driver of the #23 McDonald’s Toyota, spins wall after an on-track incident, followed by William Byron, driver of the #24 Liberty University Chevrolet, and Kurt Busch, driver of the #45 Monster Energy Toyota, after the NASCAR Cup Series GEICO 500 at Talladega Superspeedway on April 24, 2022 in Talladega, Alabama. (Photo by Sean Gardner/Getty Images)

On NASCAR Not Making Changes To Address Cars’ Safety

“I think it’s important to go back. I think one of the myths that was out there was around all the testing and what went into the Next Gen car,” said O’Donnell. “If you take a step back, there was more testing done for this car than at any time in our history, on track, simulation, you name it.

“One of the things that got out was NASCAR didn’t do anything after William Byron’s incident. That’s not true. We actually did. We changed the rear clip of the car based on that information that we had, looked at a lot of tweaks to the car.

“As you fast forward for this year, as with anything that is new, you’re going to learn, collect data, which we’ve done. Adjustments have been made to the rear clip that’s already gone out to the race teams for next year.

“I think that dialogue with the race teams, with the drivers, about how we continued to – what Steve talked about – protect from the catastrophic is the number one priority, then as you go, what are you learning about this new car.

“What we’re learning is those smaller hits, which we’ve never seen before in terms of a car that we’ve raced, are the ones we really need to concentrate on. That’s why you’re seeing the tweaks being made to the clip, for those smaller impacts, even a bump on a restart, those types of things.

“It’s not just the car. I think the dialogue we’ve had with the teams now involves how are you fitting in your seat, helmets, foam head surround. All those things are part of this dialogue, which is really, really good. We’re seeing some improvements on a daily basis as we look towards 2023.”

On Dialogue With Teams On Being Profitable

“I think two things, right? We want to make sure that teams are profitable,” Phelps said. “It’s important to us. We fully believe that having profitable teams does lead to more competitive racing.

“If you look at it, there are two areas to do it: increasing revenue, which we have every intention of doing with our race teams, and controlling expenses, right?

“The teams have asked us to control expenses. Where those come from, I don’t know. That will be up to the race teams to determine the best way to figure out how they would control those expenses.

“I’m not suggesting that we have a specific discussion around what that would be or the mechanisms that we put in place. The teams, the idea of having caps, floors, ceilings, luxury taxes. Those conversations, to the last part of your question, will be between ourselves and our race teams.

“We’ll continue to have dialogue with our race teams. The charters go through the end of 2024. We will have meaningful dialogue with our teams next year, I’m sure. We’ll figure out what is going to be a fair opportunity for all stakeholders. Moving forward in 2025, what that looks like, I don’t know. It will absolutely have to be around both revenue increases as well as some type of expense restriction in some way.”

On Future Of The Charter Arrangement

I think the charter system has been very good for NASCAR,” said Phelps. “I think if you look at it, there are many positive things.

“What do you get when you buy a charter? You get three things. You get guaranteed entry into the race, which helps the teams from a sponsorship standpoint. You get two pieces of revenue: fixed revenue and then revenue you compete for on the racetrack. The third piece is governance.

“Steve and the top competition guys, they’ve got meetings all the time with the race teams to move the sport forward from a competitive standpoint.

“So I would say the charter system, although not perfect, has worked really well. You look at the enterprise value, which I’m not going to get into what charters are going for, what they were at, but the number right now is a significant multiple of what it was three years ago.

“We have people out there that want to get charters who are both in the sport and are outside of the sport that can’t get them right now because the teams are holding them. That’s their right. Whether we want that to happen or not, there’s nothing we can do about that.

“To answer your question fully, do I think we’ll extend the charters? I do. Do I think it’s a good thing for the sport? I do.

  1. But there’s a possibility you might not?

STEVE PHELPS: “There’s certainly that possibility. I don’t want to get into the negotiating through you all. We’ll get with our race teams.

“My intention and all of our intentions is to renew the charters.”

Could there be more charters allowed if a new OEM comes in?

 “I think we have the ability to do that. If you look at the landscape today with the ownership and the number of charters we have, a new OEM coming in, we certainly would want that OEM not to be blocked from coming in. That’s why it was put there.

“I think best-case scenario for us is to have one or more of your existing charter teams have an affiliation with an OEM. It’s important as we continue to grow to make sure that that OEM support is throughout the field. That is going to be a real key for us to look at going forward.”

What About That New OEM?

“No fresh news other than there is ongoing dialogue,” said Phelps. “I think it’s a really complicated time in the auto industry in general. So balancing that in terms of what is the sport going to look like three, four, five years from now.

“The good news is you heard Steve talk about the growth of the sport, the eyeballs, the interest. So no matter what you’re racing, that interest is there.

“But I think the ability for us now to line up what type of engine, what type we do across all three national series, gives us a really good opportunity.”

On TV Deals

“With respect to where we go from a television standpoint, our relationship with FOX and NBC has never been better, ever,” said Phelps. “It is at a level that we haven’t seen from a television perspective since the early 2000s when kind of this whole new model came to be. That’s done through a lot of hard work. It’s done because the sport, its ratings have stabilized and grown.

“You look at our share over the last just two years, share this year for NASCAR Cup races, plus 11%, share last year for NASCAR Cup races, plus 14. Our share has increased in two years by 25%, while our friends at FOX and NBC have sold out their inventory, CCPM increases.

“The sport is having a moment on television, but it’s also having a moment on our own digital and social channels, our own channels. On NASCAR digital, we haven’t seen numbers this high since 2005. There’s something that’s coming here.

“I’m not sure where the future’s going to be with respect to our media partners. I do know that it will go through NBC and FOX. Whether there are additional folks that want to come bid and we get to that particular point, I have no idea.

“I do know there is a significant amount of interest in NASCAR from those that are not our incumbents. That’s a good thing for our industry, right? Frankly, our media deal, it feeds a lot of mouths in this industry. It’s important to do that. It is the future of what healthier teams look like. It’s the future of continued investment in capital at our racetracks, continued investment in expenses around creating better fan experiences that we talked about before.”

HAMPTON, GEORGIA – JULY 10: Chase Elliott, driver of the #9 NAPA Auto Parts Chevrolet, celebrates with a burnout after winning the NASCAR Cup Series Quaker State 400 at Atlanta Motor Speedway on July 10, 2022 in Hampton, Georgia. (Photo by James Gilbert/Getty Images)

On Inflation And Why NASCAR Is Somewhat Surprised Their Metrics Are Still Growing In The Midst Of A Struggling Economy

“It’s a good question. We have been concerned about it,” Phelps noted. “We have been monitoring it significantly. We have something at NASCAR which we call our sales academy, which is a group of sales folks that are selling tickets. They are able to have real-time dialogue with our race fans to try to understand the difficulties that we’ve had.

“I got to be honest, I’m surprised that we’ve seen the type of consumer numbers that we’ve seen. Our consumer numbers are up over 20%, ticket sales, ’21 to ’22, despite what was happening with the gas prices earlier in the year or obviously the very true inflationary things that are happening.

“We haven’t seen a decline in ticket sales. We haven’t. We’ve actually seen the opposite. I don’t understand it frankly. It’s a bit puzzling. We are one of the only sports, frankly, that by and large have held ticket prices flat over the last four or five years.

“I think that NASCAR is one of the best places, from a value perspective, for our race fans, right? The opportunity to bring in coolers, trying to keep our ticket prices in a manageable place, having different options for our race fans to be able to buy different levels that will work for their own budgets.

“It’s something that we’re going to keep an eye on for sure because we want to make sure that the grandstands are packed. We’ve had nine sellouts this year. Last year we had five. We’ll be double-digits next year. We believe that to be true as we bring more races online.

“Again, as I said, we’ll monitor it, make sure that we continue to be a place for our race fans to get a good value for their buck.”

STEVE O’DONNELL: Just around the event, the fan experience, I applaud all of our tracks for doing this, we have really invested heavily. Steve talked about the ticket pricing. We’re proud of that. We’re proud of our fans being able to come and attend an event, but then really focusing on what can do they do when they come to the race.

The racing has been really good, but we’ve got to entertain people who come not only just for the race but Thursday, Friday, Saturday and Sunday.

STEVE PHELPS: That’s a really good point that Steve makes. We continue to invest more and more money to increase that race fan experience on a weekend basis, whether there are more concerts, more opportunities to entertain the fans outside of what’s happening on the racetrack.

To Steve’s point, the racing has been terrific, but it’s more than that. We want this to be something that they’re going to look forward to all year long, then just have a great experience when they’re here.

On International Races

“We certainly have nothing to announce here,” said Phelps. “Do we believe there’s interest north and south of the border specifically? Yeah, there’s interest. You talk about Chicago Street Course. Ben Kennedy and Steve O’Donnell, their phones are ringing from cities across the country that are like, We would love to host a NASCAR race at our city. We do have calls coming, as I said, north and south of the border.

“Whether that happens in 2024 or not, I don’t know. What I do know is we’re going to have continued schedule variation in 2024.”

On Improving Short Track/Road Course Events

“I think you have to start with really looking at a small sample size in terms of what we’ve been able to go out there and do, particularly on the short tracks,” said O’Donnell.

“For sure looking at some aero changes for both short tracks and road courses. We have a lot of dialogue going on with the drivers in terms of potentially looking at some power things. I think that’s a little more complicated. There are some things we’ve looked at even through Garage 56 that we found from an aero standpoint that could be put in place as early as next year for both short tracks and road courses.

“The good news is continuing to dial in on the intermediates which we believe we’re in a really good spot, but then really focus on the short tracks and road courses.

“A lot of work being done collectively to focus on both areas.”

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