Question

NASCAR CASE

The term NASCAR referred both to the sanctioning body and to the whole sport of stock car racing. NASCAR grew to become a multi-billion-dollar industry and the second largest spectator sport in the United States. Its races were broadcast in over 150 countries, and it had more Fortune 500 corporate sponsors than any other U.S. sport.10 In 2010, the sanctioning body alone was estimated to have generated over $56 million11 in revenues from television rights plus hundreds of millions of dollars from sponsorship, licensing, and sanctioning fees. It owned three national racing series: the Sprint Cup Series (the premier series for stock car racing), the Nationwide Series (the minor league), and the Camping World Truck Series (a series for modified pickup trucks).12 Corporate Culture NASCAR was privately held by the France family and was historically known for having a closed culture. “We had a very non-interventionalist approach where we would just lay down the framework . . . and other than issues in which we’d intervene for the safety of drivers, [when it came to business models of the tracks and race teams] we stayed out of your backyards and you stayed out of ours,” described Eric Nyquist, NASCAR’s vice president of strategic development.13 This culture occasionally caused tension within the sport, as it teetered on the brink of being non-collaborative. COMPETITION The sanctioning body had a proven track record in governing races. Inspecting vehicles prior to each race to ensure that they adhered to specifications, officiating calls during races, creating policies to enhance driver safety, advancing rules and scoring conventions to ensure that the sport stayed fair, inclusive, and exciting all were among its expertise. As compensation, NASCAR was paid an average of approximately $1–2 million per race in sanctioning fees from race tracks. SELLING INTELLECTUAL PROPERTY The revenue cornerstones of the sanctioning body and the sport were corporate sponsorships and media rights (television broadcast and digital rights). In 2011, NASCAR was in the middle of its contracts for the term 2007–2014, in which ESPN, TNT (part of Turner Broadcasting System), and Fox Sports paid a reported total of $4.5 billion to broadcast NASCAR races live. Revenues from media rights deals were shared among the different stakeholders that comprised the sport using a 65/25/10 revenue split: NASCAR distributed 65 percent of television revenues to the race tracks around the United States that hosted NASCAR races; 25 percent of revenues was distributed to the competing teams; and 10 percent was retained by the sanctioning body.17 Finally, the sanctioning body earned revenues from licensing the NASCAR brand to companies desiring to sell NASCAR-branded merchandise, a multi-billion-dollar business.18 PUBLICIZING RACES Historically, NASCAR relied on traditional media outlets (e.g., local newspapers) to cover its sport. “We’d have a [tough] time trying to get that coverage because they were acclimated to covering a home team and to covering certain kinds of events,” said Nyquist.19 In the early 2000s, NASCAR collected feedback from media outlets and learned that the sport was difficult to cover. In early 2010, NASCAR engaged Taylor, a marketing and communications strategy consulting firm, to conduct an audit of the sanctioning body’s twenty-six-person communications team as well as the communications capabilities throughout the sport. “Brett Jewkes, a principal at Taylor at the time, pushed us to be transparent and inclusive,” remembered Nyquist.22 Jewkes recalled that when he began the audit an insider at NASCAR told him, “You thought that this was just a communications review, but you’ll find that it goes much deeper.”23 As part of the audit, Taylor and two agencies interviewed nearly 300 people, including track presidents, corporate sponsors, race team executives, television executives, and PR professionals throughout the sport. A Complex Ecosystem NASCAR had an unusual ownership ecosystem. “Unlike the stick and ball leagues, we’re not collectively organized,” explained Nyquist, who had previously worked for the National Football League (NFL). “We have independent tracks, teams, and drivers.”27 That consortium of independent entities experienced double-digit growth annually in the 1990s and early 2000s. During that period, there was a sense of competition between the various business models that shared revenues within the ecosystem. The sport’s structure and the sanctioning body’s perceived closed culture made catalyzing changes across the ecosystem challenging, particularly as it pertained to appealing to the unique priorities of each stakeholder. Tracks Two publicly traded companies—International Speedway Corporation (ISC) and Speedway Motorsports Inc. (SMI)—dominated NASCAR-sanctioned events. Of NASCAR’s thirty-six Sprint Cup Series races, approximately 50 percent were held at ISC tracks, 36 percent at SMI tracks, and 14 percent at independent tracks. In addition to their portion of tracks’ 65 percent cut of NASCAR’s television rights deals, track owners’ revenue streams included 100 percent of the proceeds from sponsorships of the tracks themselves and event revenues from race days. Tracks’ share of the overall revenues of the sport differed from that of the venues of other major sports, such as the NFL, Major League Baseball (MLB), National Basketball Association (NBA), and National Hockey League (NHL), in which owners and players captured nearly all of their industry’s revenue, and venues garnered little. Project EVOLVE In summer 2010, Brian further engaged Taylor to lead a team of research companies in conducting what became one of the largest marketing initiatives undertaken by a U.S. sport, Project EVOLVE (Exhibit 5). EVOLVE took a deeper look into the insights generated from the communications audit, with four strategic research focuses: (1) NASCAR’s core equity with fans and how it compared with that of other sports, (2) the broader sports industry’s digital and social communications capabilities and how it compared to NASCAR’s, (3) the level of star power of NASCAR’s drivers, and (4) fans’ live experience on race days. It involved numerous methodologies— ethnographic fieldwork at races, focus groups, expert roundtables, and strategic trend forecasting. NASCAR’s core fan base proved to be less interested in the sport, not only was the traditional passing down of fandom eroding, but existing fans (“Tommys”) were being lost as they migrated to other sports and events that their children were being exposed to through digital and social channels. As the researchers assessed NASCAR’s level of engagement with high-value fan segments, they saw gaps among Hispanics, kids, and Generation Y that represented tremendous potential. Although each of these demographics offered opportunities for growth, they also posed substantial challenges. “For something like developing the Hispanic market . . . the skillset . . . the types of activities that [we] would need to engage in to begin to build a platform . . . we weren’t equipped for that,” said Nyquist.45 In addition, there was some concern among senior leaders about how NASCAR’s traditional core fan base might react if it saw NASCAR making substantial investments in new consumer segments. Event Day Experience Through EVOLVE’s ethnographic studies on race days, the researchers observed groups of friend and family “cohorts” as they attended races during NASCAR’s Chase to the Sprint Cup, the sport’s championship. Each cohort was given tickets to attend one NASCAR race,68 another live sporting event, and one live entertainment event (e.g., a concert). Some cohorts were given no guidance on how to approach NASCAR races, while others were provided a “sherpa,” an expert to advise them on how to prepare and what to do at the track. The ethnography gleaned key insights: many people were unsure of how to be NASCAR fans; the infrastructure and amenities at tracks were in many cases inferior to those of other professional sports venues; and the race day experience was a disappointment from a technology standpoint. When new fans arrived, they were both pleasantly and unpleasantly surprised. “Seats were better and the food was better at the [Kansas City] Royals, but NASCAR was more exciting,” said one female participant.69 Still, the excitement wasn’t sufficient to distract from what spectators perceived to be “run-down” and “inadequate” facilities. They reported that seating was uncomfortable, restrooms were not clean, and jumbotrons were non-existent or not placed where spectators could watch the track while in line for the bathroom or concessions. When they finally reached the front of concession lines, many fans were surprised to find that most tracks did not accept credit cards. Among the most frustrating aspects to fans was also the lack of cell phone access and Wi-Fi. How Should NASCAR Evolve? By April 2011, there was general agreement that many aspects of NASCAR needed to change. The lingering question was how to proceed. Who would lead the ecosystem through these changes? Among the four areas identified in the research, which were the highest priority and should receive greater financial support initially?

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1.What is the case about?

2.What are the important events that occurred in the case?

3.What can we learn from reading the case?

4.What advice do you have for the leaders in the case and/or company in the case?

Answer 1

1.What is the case about?
Ans- The case is about Nascar which referred to the sanctioning body an to the sport of car racing. It also explains the corporate culture of Nascar and the intervening impact of it.

2.What are the important events that occurred in the case?
Ans- Nascar owned three national racing series: the Sprint Cup Series, the Nationwide Series, and the Camping World Truck Series. In the case Nascar rase to sprint series and ethnographic studies through Evolve took a deeper look into the insights generated from the communications audit.

3.What can we learn from reading the case?
Ans- This case is very educational as it tells us how an Hispanic market is developed. The skillset and type of activity required to catch attention of customers and build platform for social channels.

4.What advice do you have for the leaders in the case and/or company in the case?
Ans- Though the leaders have done extremely best of their knowledge and skills. Still an project Evolve was required because of (1) NASCAR’s core equity with fans and how it compared with that of other sports, (2) the broader sports industry’s digital and social communications capabilities and how it compared to NASCAR’s, (3) the level of star power of NASCAR’s drivers, and (4) fans’ live experience on race days.
Hence we could suggest that the company corporate culture should be exploratory and acceptable by team and customers. Secondly fan's live experience should be perfect and satisfactory.