Monopoly's Money

[dsdjtlts]

Monopoly's Money

By ANDREW ZIMBALIST
Published: November 6, 2005
Never mind the drivers, Nascar's rulers seem to be spinning out of control. A few weeks ago, Nascar's chairman and chief executive, Brian France, proposed a plan to limit the number of cars that team owners could control to three. This could reduce the stable of cars owned by Roush Racing, which has five, and Hendrick Motorsports, which has four.

The France Family Holdings- France says he is concerned about equity and competitive balance. As the argument goes, when one owner controls several cars, the drivers can share information about track conditions and car technology, giving them an advantage over other drivers. And as it becomes more and more expensive to build cars and sponsor teams, owners with less capital will suffer, as will the fortunes of their drivers.

It is nice to see that France, who may soon be leaving the family business, has discovered an interest in competition and fairness. His family, after all, owns Nascar, the Motor Racing Network (the radio network that broadcasts all Nascar races) and Americrown (the catering company that sells food at most Nascar tracks); it also owns a share of Action Performance (the dominant motor car memorabilia company) and owns a controlling interest in the publicly traded International Speedway Corporation.

The corporation owns 12 of the 22 racetracks that are host to the Nextel Cup, Nascar's premier series. It also has economic ties to the owner of another five tracks where Nextel Cup races are run.

The only new tracks Nascar has sanctioned for Cup races since 1998 are owned by the speedway corporation. One of the most modern and well-equipped tracks in the country, Kentucky Speedway, has been trying to get a Cup race for the past five years. Nascar has put off Kentucky each year. Meanwhile, Nascar holds races at inferior and more dangerous tracks owned by the speedway corporation.

What about large teams with multicar entries? From 1990 to 1995, only 7 percent of all entries were from multicar teams. This proportion grew to 38 percent from 2000 to 2004.

Yet as multicar teams became more prominent, the outcome of races has become more balanced. During the past five years, no driver has repeated as the top earner or the points champion. From 1990 to 1994, there was an average of 12 different winners a season; from 2000 to '04, there was an average of 17 different winners a season.

Multicar owners also seem to make it easier for new drivers to enter the top circuits. As the expenses associated with building and maintaining a racecar skyrocket, individual drivers or car owners increasingly find the cost prohibitive. The economies of scale associated with multicar teams facilitate new entries.

So what is France really worried about? About 25 percent of Nextel race revenue is paid to the drivers and their teams. This compares with the more than 50 percent of revenue paid to players in the National Football League, the National Basketball Association, the National Hockey League and Major League Baseball. Nascar is earning a bundle by being the monopoly sanctioning agency, then controlling the production process.

If the drivers are united by multicar teams, Nascar will lose some of its leverage over the producers. The Roush and Hendricks teams, for instance, could come together and boycott certain Nextel Cup events if the drivers and teams are not offered a larger share of the spoils. Worse still, they could threaten to form a new racing circuit.

They may also begin to demand that races be transferred to the more modern and longer tracks that are not owned by the speedway corporation. And if race sites were selected based on merit rather than on ownership, the profits of the Nascar/International Speedway Corporation cartel would shrink. If France were truly concerned about new drivers getting a fair shake, there would be a straightforward solution. The Cup series today has 36 official races. France says he is reluctant to expand the number because drivers need time off.

Fair enough. Nascar could mandate that each driver be limited to 36 official races a year, but still sanction, say, 45 Nextel Cup races. That would be a 25 percent expansion in the number of races and potential entries - and new drivers would have a greater opportunity to win.

Nascar output would expand to new tracks and new regions of the country. Higher output and service to new areas would improve consumer satisfaction. It would be a victory for fans, for drivers, for independent track owners and for the economies of new regions. The only loser would be the France family.

Andrew Zimbalist is the Robert A. WoodsProfessor of Economics at Smith College and the author of "In the Best Interests of Baseball? The Revolutionary Reign of Bud Selig," to be published in March by Wiley.

 

[Eagle1]

Americrown (the catering company that sells food at most Nascar tracks

Is a company under the ISC Corp umbrella and it serves food at ISC tracks.
Funny how the author drags that out like it's a totally seperate entity.

Nascar is earning a bundle by being the monopoly sanctioning agency,

Duhhhh!! ALL sanctioning bodies would be considered a " monopoly sanctioning agency" by the way he uses the term. That's exactly what they do, they control their series by making the rules, awarding the races, negotiating the tracks to race at etc. etc.

it also owns a share of Action Performance (the dominant motor car memorabilia company

Dominant, but not only and he fails to mention the other large shareholder of that company is also their big competitor.

Kentucky Speedway, has been trying to get a Cup race for the past five years.

Also fails to mention that they were told BEFORE they built they would NOT get a CUP date, or the fact that NASCAR is not just the Cup series and has 2 other top tier series which they DO race at KY.

They may also begin to demand that races be transferred to the more modern and longer tracks that are not owned by the speedway corporation

So even IF NASCAR did not own a single track, there are still only 36 races per year. That would mean EVERY new track across the country could sue and claim their track is superior to another and demand a date. And this makes good sense?

I guess the author just has no real concept of what a sanctioning body does, or the fact that (as popular as NASCAR may be) it is still a privatly owned business. And privatly owned business are not democrocies, they ARE in fact dictatorships.

The author also fails to mention, (or possibly fails to understand) that while NASCAR is probably the most notable and certainly the most popular within the US, there are many other auto racing sanctioning bodies. Each and every one of them are a dictatorship, making and enforcing the rules, setting the schedule, assigning races to tracks and denying races to others, and some of these other sanctioning bodies own some of the tracks they race on.
In fact I wonder why he doesn't talk out his butt about the IRL and Tony George? He certainly controls and dictates what goes on with the IRL. The fact the IRL's most famous race, (I dare say one of the most famous worldwide) is the Indy 500 is it not? Well Tony George OWNS IMS!! Why isn't he calling foul over that and suggesting a monopoly and that other tracks should get a fair chance at holding that race? Ridiculas thought? I agree, but it is no more ridiculas than this entire article.

Fair enough. Nascar could mandate that each driver be limited to 36 official races a year, but still sanction, say, 45 Nextel Cup races. That would be a 25 percent expansion in the number of races and potential entries - and new drivers would have a greater opportunity to win.

This man is a professor? My God, no wonder there are so many ignorant people running around.

Nascar output would expand to new tracks and new regions of the country. Higher output and service to new areas would improve consumer satisfaction. It would be a victory for fans, for drivers, for independent track owners and for the economies of new regions.

And this isn't what NASCAR is doing with their realignment?
But yet he suggests KY should get a date while it's located in an area that within 6 hours drive their are several races already.

The Roush and Hendricks teams, for instance, could come together and boycott certain Nextel Cup events if the drivers and teams are not offered a larger share of the spoils. Worse still, they could threaten to form a new racing circuit.

Ah yes, this is always good for a sport, just ask the open wheel guys.

I guess while being a professor of economics he fails to understand what it would take to start a series that could even come close to competing with NASCAR on any level.
So "IF" these owners decided to pull out and start their own series, do you think the drivers they employ would automatically go with them, or would they get new rides in NASCAR? I'm betting the latter. So who then would they have drive those 9 cars? If some or all of the 9 drivers in question became available don't you think there would be a rush adding teams to accomodate them within the ranks of NASCAR? I do.
Anyone remember Hershal Walker? Or the WFL? I do, and with that I think I rest my case on this. LOL
Owners come, and owners go and NASCAR hasn't fallen apart yet.
Some think the Mfg's would rush to go with a new series, but I beg to differ, why should they? What most people refuse to understand (even with the clear facts before them) is the Mfg's have worked for almost 20 years to get NASCAR to do what it is finally doing, using a genaric car that they can put any label on. They are the ones that have kept crying for help, for parity with the other Mfg's and finally got the common template.

 

[boB]

Hey Eagle,

This professor sorta proves my old man's point about education, doesn't he?

Dad used to tell me that if you educate an idiot, all you end up with is an educated idiot.

So many folks base their opinions on their own perceptions of reality instead of the factual reality and then refuse to accept their own misconceptions.

But, I guess that's just the way of life, maybe?

Great to find the forum back online though...

 

[buckaroo]

boB, Eagle, you guys like myself, are no youngsters and long time fans of this great sport. We've seen the growth, some good and some bad. We've heard the arguments about this and that and it's all the same. Someone just doesn't like one thing or another and blame it on NASCAR. And, to many, NASCAR only represents one thing in this world...Cup racing. All other races that are sanctioned by NASCAR simply isn't NASCAR but other racing. Sheesh.

What this really is is simply envy. However, with what happened at Texas, I'm thinking that many believe that the squeaky wheel gets the oil and thus, if they complain loud enough, they will get a date or two. However, it might take an enterprising person to sue NASCAR before they get that date or two.

When I lived in the Quad Cities along the Mississippi River (Iowa/Illinois) ten years ago, there was a big push to build a track for NASCAR in the area. The people there would only give the okay if NASCAR would promise a date, something they wouldn't do. So, the track was never built, saving those citizens millions of dollars of money. Smart, smart, smart. The only people, repeat ONLY people who can build a track without a promise and can be guarenteed a date are those who are in control of NASCAR, i.e. the France family. Fair? Maybe, maybe not, but they own the sanctioning body and have the last say.

All of this boils down to once again, envy or just plain jealousy. When a company/family becomes successful, people go after them for a piece of the pie. Just as Microsoft is not a monopoly, neither is NASCAR.

 

[bumpzter]

^^^ Eagle, boB, buck. I love your posts.

 

[Eagle1]

One other thing that dawned on me this afternoon while I was working outside was that all these aqusations of NASCAR being a monopoly is really just confussion over the fact they ARE a dictatorship. Therefore they have control over everything pertaining to NASCAR, but that is legal. As stated before, every privatly owned and opporated business in this country is run by dictatorship. But there is a giant difference between dictatorship and being a monopoly.

You know I also think it funny that people view the Ferko case as a success.

Mr. Ferko had absolutly nothing to do with the settlement of the case. SMI didn't bring the case, nor did they want it creating a lot of bad blood between NASCAR and them. NASCAR and SMI came up with an agreement to settle the case. It was settled in a way that had ALWAYS been available to SMI from the beginning, #1 move a date from one of their existing tracks, (which I wouldn't want to do ) OR purchase a track that had a Cup date and move the date to TMS. So SMI bought a track that only had 1 date for over 100 million dollars moved the date to TMS so now Ferko had to drop the suit. As Mr. Ferko said, all he got was his lawyers fees, no other settlement. I'll bet the payment to his lawyers even came from SMI. SMI wasn't happy with the suit, it endangered their relationship with NASCAR. Bruton Smith is a very schrewed businessman, isn't it logical to assume that "IF" those charges were in fact true and NASCAR opporated illegally he would've pushed the suit all the way through the court system and broken up NASCAR so he could take over big parts of it? Bruton certainly has enough money to put up one heck of a fight. He had threatened in the past to create a competing series to NASCAR. NASCAR knew and Bruton knew that was nothing but a nusience lawsuit and it wasn't winable, so because it was brought on by a shareholder to SMI, it cost them over 100 million to get it settled.

 

[Magnethead]

Brutons rich alright- It's formally submitting a big to buy out the NHRA here pretty soon, if not already.

 

[boB]

Didn't O.Bruton Smith at one time own a sanctioning body that some fellow named Bill France belonged to and raced with?

I'd have to do a bit of checking on this, but there seems to be some foggy memory of something about that.

 

[majestyx]

boB, here's a bit of an article that was printed in our local paper. (Can't point you to a link online as it's in archive and it costs $$ to get to, so I just typed it from the newspaper article)

In 1950, Bill France Sr. ran a little operation called National Association for Stock Car Racing. It was not the multibillion-dollar conglomerate it is today. It was just a bunch of good ol' boys racing cars wherever they could.
Nascar was a business not unlike Smith's back then, promoting races on dirt tracks.
"He called and wanted to go out and have dinner," Smith says of France Sr. "This was just before I was drafted. He came and proposed that we merge."
That was in November, and by February 1951, Smith was being sworn in. He volunteered as a paratrooper but never made it outside the United States.
"Of course, I remember sitting on an old army bunk and listening toa race on Sunday and thinking, 'If I had been smart, maybe I would have merged," Smith recalls.
He stops short of what ifs "because I have been busy soing other things."

 

[Mopardh9]

My take on why Smith didn't fight Nascar ......Nascar had more money than he did, pretty simple. He could not stand up to them, think about how powerful they are now. Smith is a good business man, but by Nascar standards he is just another fish in the Pond. I don't know if anyone of you have looked into what happened at Pikes Peak Speedway, but it is closed now ....permanently and i can't find any info online about what exactly happened and what is going to happen to the track in the future. I have been to many races at Pikes Peak, it is a great 1 mile facility. I can't help but think that it was closed down so a new track could be built in Denver. The politics of racing are just like any other business, there are some good , some dirty, and some you just can't figure out !