Learn from NASCAR, by staying flexible during tough economic times

I love baseball, and I love NASCAR. My idea of a fun afternoon is listening to Mike Shannon call a Cardinals game on the radio while I watch Dale Jr. and Carl Edwards round the track on television.

Lately, I’ve noticed attendance numbers are slightly down for both of my favorite pastimes. I thought I’d look at what impact the economic downturn is having on these two industries.

There’s no question that climbing gas prices, unemployment and the housing crisis are affecting the amount of disposable or recreational income we all have. So it’s logical to assume that ticket sales for major league baseball would be down, although they have not dipped as far as some would have predicted. Apparently, a bad team will keep fans away faster than a bad economy.

However, baseball as an industry seems to be fairly recession-proof, probably because a large share of its income is derived from other sources, such as television contracts and sponsorships. Some experts feel the latter may be hard to come by if the economy doesn’t improve with a new administration.

History tells us that attendance at baseball games does go down slightly during tough economic times, but it always returns to consistent levels once things improve. This year’s problems are compounded by the rising cost of gas to get to the ballpark and the high cost of food when you arrive. Average attendance this year is definitely down from last year. Fourteen of the franchises report lower ticket sales – some even in the double digits. Once many teams are eliminated from playoff contention, the numbers in the stands will continue to slide through the fall. Although baseball fans are a loyal lot, the realities of household budgets may dictate other priorities.

Some experts predict 2009 will be even worse since current conditions will keep season ticket holders from re-upping for next season. The stable base of 2008 season ticket holders, who purchased their packages months before gas prices went through the roof, are doing a great deal to sustain the industry this year. But financial fallout may begin to affect the ability of even the wealthy to reserve luxury boxes and host corporate parties at the ballpark.

Many of the same factors are affecting my beloved NASCAR. Fans typically flock to these events for an entire weekend of entertainment, which often includes lodging in gas-guzzling recreational vehicles, cookouts and plenty of libations, and that’s even before you pay upwards of $150 for the ticket. A weekend at the race is no longer an inexpensive vacation. People simply can’t afford to get there. Times are particularly tough in regions like the one around Michigan International, where economic blows to the auto industry have taken many NASCAR fans completely out of the race.

And, if fans quit coming, it also affects the community economy where the tracks are located. One expert believes that a well-attended NASCAR event can pump as much as $4.3 million into the area. So many tracks are working on better pricing, installing huge jumbotrons to add value to the experience, offering greater access to the drivers and creating family and package deals.

NASCAR itself is not hurting too much yet, as its television revenue is amazingly high and its sponsors are almost rabid in their loyalty, spending anywhere from $15 to $18 million to be the primary sponsor of a winning team. The industry’s own research says that 2009 will be a banner year for sponsorships, surpassing $100 million. Many sponsors are increasing their spending by either moving from smaller teams to big ones or increasing their current investment with a driver.

Clearly the NASCAR brand does not intend to lose market share during this economic transition, which led me to my next question. What can we learn from that?

The first lesson is full speed ahead. I notice when drivers are in trouble in a race, it seems to spur them on to faster speeds and more aggressive moves.  I guess they figure they don’t have much to lose by staying “in the chase.” Increase your investment in product development, services and certainly advertising. That way you will be top of mind when they throw the next green flag.

Remain flexible. I’ve seen many a driver do well, only to have a pit crew bobble a tire change. The driver then has to adjust in a moment’s notice to make up a position or two when he re-enters the race. That requires agility and an ability to respond quickly. Be the same in your business. Be prepared to adjust to competition, shifts in the market and changes among your staff.

If you run up behind a new competitor, do what the drivers do, and learn to take advantage of the draft. See what new ideas come from that competition. Or better yet, work with the competition to take on the leader. Cross market, cross sell and pass your competitor.

Be defensive. I love watching drivers keep others from passing. That’s what a good businessperson will do, as well. Keep an eye on what you see in your rearview mirror.

Be loyal to your fans. NASCAR drivers enjoy a close relationship with their “customers,” and entrepreneurs should, too.

Here’s hoping that things turn around soon so we can once again enjoy full stands and large crowds. While sadly, we may not have the opportunity to cheer the Cardinals into post-season, at least Carl is in “the chase,” and like thousands of others, I’ll be watching every turn of the remaining races to see where he ends up. If nothing else, watching our home-town hero allows us to forget our financial woes, if only for a few hours a week.