Friday, June 21, 2024

NASCAR’s push to broaden its appeal

NASCAR’s leaders say embracing inclusion is a key strategy — and the right thing to do.

Barely six months after announcing formation of the 23XI Racing team, co-owner Michael Jordan mingled with the NASCAR elite gathered for February’s Daytona 500. The team’s car, driven by William Darrell “Bubba” Wallace Jr., the lone full-time Black driver on the NASCAR Cup series, was making its debut at the sport’s best-known track. Unique among major-league professional sports, NASCAR begins its season with its showcase event.

The owner of the NBA’s Charlotte Hornets is also the first Black principal owner of a full-time Cup Series team in a half-century. Storms delayed the race for several hours, but Jordan hung around the Florida track because of his enthusiasm for the historic moment and passion for the sport. It’s something he picked up from his late father, James, who often planned family trips from their Wilmington home to races in Charlotte, Rockingham, Darlington, S.C., and Daytona Beach, Fla. “We would spend the whole day, and from that point on, I’ve been hooked,” Jordan said in a Fox television interview.

Jordan’s entry into NASCAR comes amid a cultural shift in which the sport is accelerating its diversity and inclusion efforts and looking for a new generation of fans.

[/media-credit] Bubba Wallace, 27, has raced in three NASCAR national series since 2012.

“I can’t underestimate how big it is: [His involvement] represents a sea-change moment for NASCAR,” says Peter Jung, the company’s senior vice president for brand, media and consumer insights. “Michael sees opportunities, and I believe he feels the right people and the right investments can make a difference in the way people perceive NASCAR.”

The Daytona race also marked the debut of another high-profile team with diverse ownership. Trackhouse Racing owns the No. 99 car, piloted by Mexican-born Daniel Suárez. He’s an alumni of NASCAR’s Drive for Diversity Program, which kicked off in 2004 to assist ethnically diverse and female drivers. Trackhouse is co-owned by former driver Justin Marks and singer-songwriter Armando Pérez, a Cuban American better known as Pitbull. Trackhouse is creating excitement with younger, Hispanic fans.

But Wallace cemented his role as the star player in NASCAR’s diversity push last year when he denounced racial inequities and successfully urged NASCAR to ban the Confederate flag from its tracks. When a noose was found in the stall of Wallace’s garage at Talladega Superspeedway in Alabama last June, NASCAR immediately supported the driver and reaffirmed its commitment to diversity and equity. The incident sparked international attention and an accusation from former President Donald Trump that the noose was a hoax. While NASCAR’s investigation of 1,684 garage-door pulls at 29 tracks found no similar ties, the FBI concluded Wallace was not the victim of a hate crime.

“What NASCAR did to speak about ways to make the sport more inclusive sent a clear message to people, including those who might not be current fans of the sport,” says Steve Lauletta, a former head of Chip Ganassi’s NASCAR team who signed on as 23XI’s team president last year. Indeed, NASCAR President Steve Phelps told The Wall Street Journal in March that Jordan probably wouldn’t be a team owner if it hadn’t been for the noose incident.

Corporate America has clearly embraced Jordan’s NASCAR entry. 23XI sponsors include Columbia Sportswear, Dr Pepper, McDonald’s, Toyota and first-time entrants DoorDash and Root Insurance. Such support is needed to pay the estimated $20 million to $30 million annual expense of the most competitive teams.

“[They] all want to leverage the power of what Bubba is doing on and off the track,” Lauletta says. “When they got together with [fellow team owner and NASCAR driver] Denny Hamlin and Michael Jordan in putting together this team, everyone realized there is a strong platform for 23XI Racing to move into the future.”

NASCAR needs a rebirth after experiencing a dramatic decline in popularity over the past decade. From a peak in 2005, the sport’s TV ratings have declined more than 50%. Fewer than 5 million people viewed this year’s Daytona race, down from more than 10 million a decade ago and 15 million in the glory days, according to rating services. The declining ratings stabilized in recent years, but NASCAR executives concluded that a rebound was coming from mostly white, older fans instead of younger, more diverse ones.

Whether the new teams will propel the sport deeper into new markets or just reflect the benefits of diversity initiatives undertaken by NASCAR over the last two decades is unclear. But they are unarguably having an impact on the sport’s advertisers, sponsors and fan base.

“Under [NASCAR President] Phelps, NASCAR has approached diversifying its audience head on,” says Joe Favorito, a former New York Knicks executive who is a sports-media consultant. “This is a sport where they need to build heroes that look like their audience. Teams like 23XI and Trackhouse over time will bring more people to the sport who are curious and [will] be more engaged.”

NASCAR’s success is important for North Carolina, where the sport has an economic impact of more than $6 billion annually with more than 30,000 employed, including in many less-publicized support areas, says Craig Depken, an economics professor at UNC Charlotte’s Belk College of Business. “Its economic impact is felt far beyond the track,” he says, citing wind tunnels used by engineers and teams in aerodynamic car design, machine and parts fabricators, and coating and paint manufacturers.

Moving beyond the track is a key part of NASCAR’s strategic shift. Depken’s research found that 18 NASCAR venues cut spectator capacity by a combined 500,000 seats between 2006 and 2020. “In-person consumption of their product is not where they’re finding growth,” he says. “Other platforms, particularly digital, look to be where the sport is headed in growing their fan base.”

Developing drivers

One of NASCAR’s most visible efforts in reaching a new audience is found in its Drive for Diversity Program. Wallace, Suárez and Kyle Larson, a driver whose mother is Japanese American, are among the higher profile alumni. More than 400 have participated in the program since its inception, and many have gone on to hold significant positions in both racing and other sports organizations such as the NBA and USA Track & Field.

Leading those efforts is Brandon Thompson, a Drive for Diversity alumnus who was appointed NASCAR’s vice president of diversity and inclusion last June. He oversees strategy and programming and works with teams, sponsors and industry partners to expand NASCAR’s diversity work.

A graduate of Clark Atlanta University, Thompson joined the Nashville Superspeedway as an intern in 2003. He has worked in several jobs including as operations manager for Rev Racing.

“The core of our program and the one with the most focus is the driver development piece,” he says. “When the program started, it was built with all the right intentions. We were on the beginning steps of a targeted journey in terms of diversifying the sport.”

Initially, the program allocated money among existing teams that showed varying levels of commitment. Success with driver placement and team acceptance was hit or miss. When NASCAR formed the Rev Racing Team as a competitive group in 2009 and hired Phil Horton as director of athletic performance, it helped pick up the pace. Horton was a proven pit row leader who had credibility with crew members throughout the sport, Thompson says.

“An early program critique was there’s no one making it to the top levels of the sport,” he says. “That changed almost immediately when Sergio Peña was able to go out, compete at a high level and finish second in a short track race in California. Bubba Wallace followed.” He notched six wins in NASCAR’s Truck Series before moving to the Xfinity and Cup stock-car series in 2017. He had driven for Welcome-based Richard Petty Motorsports for four years before joining 23XI.

Peña, 28, is a first-generation Colombian American who began his professional career in 2010. He’s no longer a full-time NASCAR racer.

NASCAR has been able to place all of the participants in crew training into jobs with teams competing at the national Truck, Xfinity or Cup level, Thompson says.

Another promising member of the diversity program is Rajah Caruth, 18, who grew up near Washington, D.C., and attends Winston-Salem State University, a historically Black institution. Now living in Concord, he’s the program’s first driver with an extensive background in simulated digital racing, or “sim racing.”

“NASCAR’s investment in iRacing and NASCAR Heat shows a commitment to reaching a younger and more diverse audience,” Caruth says.

His first experience in a race car came four years ago, but he’d had lots of experience using a home setup to compete in online races. “My involvement in the program has exposed me to NASCAR’s outreach [in communities of color] where there isn’t a lot of visibility to the sport. For example, their partnering with the Urban Youth Racing School [Foundation] and Kyle Larson is a great way they’re getting kids interested in sim racing and our sport.” The foundation is a Philadelphia-based math- and science-oriented education nonprofit that has received NASCAR support to help inner-city kids learn about racing technology.

Left: Brandon Thompson, NASCAR’s vice president for diversity and inclusion. Top: About 10 women and 150 men are racing in NASCAR’s various series this year, the New York Post reports.

Beyond the headlines

In a tumultuous year that included a national discussion around the Black Lives Matter movement, the police-involved death of George Floyd in Minnesota, and an unusually divisive presidential election, NASCAR’s reconciliation with an ugly part of its past marks a watershed. In particular, the sport’s history with the Confederate flag is a complicated one, given NASCAR’s roots in Florida, Alabama and the Carolinas.

“Published studies show NASCAR’s ties to the flag were intentional, meant to ensure its long-term success. In its early years, the company used the flag and what it represented to sell tickets, and it helped cement the adoption of NASCAR stock-car racing by Southern working-class fans,” according to Denise-Marie Ordway, a veteran journalist who works for the Shorenstein Center on Media, Politics and Public Policy at Harvard University. She made the comment in a Harvard publication called The Journalist’s Resource.

The debate over NASCAR’s ties to the Confederate flag has raged for years, Favorito says. The sport once ran a promotion enabling fans to swap Confederate flags for American ones, “but the public stance was never fully changed until now.”

NASCAR’s outreach is pressuring other leagues, teams and athletes to speak out on racial issues, he says. “Make no mistake. Inclusive outreach is not welcomed in some areas. The indignance by some fringe drivers was expected. Opposition should be part of an open discussion and education as opinions and passion remain strong. Any major business, not just a sport like NASCAR, answers to many constituents, not the least of which are the fans.”

NASCAR has an employee diversity council that meets with senior executives to discuss issues and allow for unfiltered input. “We’re not looking to be a social-justice organization, but we are looking to make sure that those things that are important in and around society are important to us,” Thompson says. “What’s most important about any diversity, equity and inclusion effort is that it’s authentic. It’s got to have depth, it’s got to have substance, and that’s what we’re looking to do. We’re not just doing it for the headlines.”

Gaming, mobile and sports betting

Rajah Caruth is NASCAR Drive for Diversity’s first driver with an extensive background in simulated digital racing, or “sim racing.”

NASCAR and other pro sports are dealing with fewer fans committed to watching hours of live TV action. For stock-car racing, the biggest growth prospects are fans who engage with the sport on mobile devices rather than show up at tracks for three or four days of camping and races, Favorito says.

“Whether you’re NASCAR, the NFL, NBA or MLB, you must deliver your product on whatever device, in whatever time period your fan wants to engage in with a pristine experience,” he says. “For NASCAR, this means a deeper dive into iRacing, shorter-form racing, new brand partnerships and affiliations that bring new audiences and more engagement in the gambling space, all while not alienating your core, loyal fan.”

Making that shift presents a great opportunity for NASCAR and its brands. “[They] can have a conversation with thousands of people within a select demographic that wouldn’t have been possible only a few years ago.”

NASCAR’s pivot at the beginning of the pandemic to an audience interested in iRacing positions the sport to attract gaming-first, mobile-savvy consumers who grow into fans who follow drivers and brands — and may eventually show up at the tracks. The new platforms including iRacing, the multiplayer online eRacing series and NASCAR Heat “are lines of business with significant revenue tied to them,” Jung says.

NASCAR is also putting more resources into YouTube programming, while Jung describes sports betting as an “explosive growth opportunity as people betting on sports tend to be younger and more diverse. Our product portfolio has gotten more complex, more targeted. There’s more variety because just having a choice of going to a race or watching it on television, that doesn’t fulfill the needs or expectations of a younger and more diverse consumer profile.”

NASCAR’s iRacing, founded in 2004, is a digital racing simulation platform that is sparking new interest in the sport.

About half of the newest NASCAR fans are nonwhite, including 23% Hispanic, 17% Black and 10% Asian, according to a study by Cincinnati-based Directions Research. NASCAR has been making inroads into Hispanic markets for more than a decade. A big part of the appeal has been through Suárez and other Hispanic drivers, but also a large California presence at tracks such as Auto Club Speedway in San Bernardino County, where Hispanics make up about half of the population. NASCAR Mexico is a joint venture with OCESA, a Mexican entertainment company, that has sparked more interest in the sport through various racing series and televised events.

“We want to be inclusive, relevant and welcoming to younger and diverse audiences,” Jung says. “We’ve seen new fans coming into the sport are far more likely to be diverse fans, multicultural and younger.”

Toyota, which has been part of NASCAR’s top-level series since 2007, is impressed by its research showing that the average age of fans has declined over the past 18 months, says Paul Doleshal, general manager of motorsports and assets for the automaker’s North American division. “The fan is getting younger, more diverse, more educated and a greater percentage female. These elements trend very well in what we want to see in a diverse and inclusive sport where we want a partnership.”

For NASCAR, fans and partners, the faces of their future look to reflect a younger, multicultural America. ■

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