Bankruptcy

NASCAR Could Be Victim Of Financial Problems Of Big Three Automakers

By Scott Riddle

I have not commented much on the possible Bankruptcies of the Big Three Automakers, simply because articles can be found every day, but Fox News has an article on the financial hit NASCAR will take. Since NASCAR is a major presence in the South, and in recent years, nationwide, it could ave a huge trickle down impact on jobs.  As the article notes, in addition to the loss of money from the manufacturers, sponsors have pulled out (even though NASCAR fans have the highest loyalty to sponsors of all sports).

NASCAR Faces a Bumpy Road Ahead If Big Three Automakers Go Down.

General Motors is cutting back on sponsorships; Sears dropped its 13-year running title sponsorship deal for the NASCAR Craftsman Truck series; and AAA and the Army have left altogether.

In an attempt to cut costs across the board the sport recently banned off-season testing, in which teams use official NASCAR racetracks to test or tweak vehicles or for practice. It's expected to save each team $1 million, but it has also cost about 1,000 garage workers their jobs.

Venues, teams and the sport itself are competing against each other for the same sponsorships. Lower profile racing teams worry they won't have the funds to enter next season; higher profile teams are merging to share resources.

"NASCAR in general is at risk with a broad bankruptcy in the industry, and I think [not bailing out the Big Three] would just frankly take out NASCAR," said Dr. David E. Cole, chairman of the Center for Automotive Research, a nonprofit group that studies the industry.

"But assuming there's some sort type of bridge loan to the Big Three and we'll get stability in the credit markets, I think NASCAR will live and at least two of the Big Three will continue to participate."

"NASCAR has a very significant stake in these talks to develop some form of a bridge loan," Cole said.

Somehow, experts say, NASCAR will survive. If the bailout comes through, industry experts say the sponsorship money will still flow into the sport, just more slowly. But if it doesn't come through, they say, the sport could be set back by 30 years....

Full post as published by Georgia Bankruptcy Blog on December 02, 2008 (boomark / email).