Stretching the Racing Dollar

Dec 2, 2009

News of the current economic climate cannot be avoided. It is mentioned and discussed throughout media on television, radio and Internet. How will it impact the current state of racing? We checked in with a few aftermarket companies with close ties to racing, and we asked them what they’re seeing at the track. Here’s what they had to say.

Overall Trends

The overall trend all manufacturers cite, not surprisingly, is strict budget management.

Sean Crawford, marketing specialist for JE Pistons and Sportsman Racing Products (SRP) in Huntington Beach, Calif., notes that many racers are doing their best to make their dollars go further. “For example, some racers are choosing to increase the time between engine rebuilds to save money. This also increases the need for high-quality components the first time around. Poor-quality engine components will not last as long as a high-quality counterpart.”

Observing a similar dollar-stretching tactic, Jeff Anderson of Moser Engineering in Portland, Ind., says racers are tending to limit travel expenses and staying closer to home. “We are noticing from owner operators of smaller tracks that they are getting higher car counts. Racers still travel to some of the higher-profile events, but they are picking and choosing the events, especially if they are not near the top of the points in their division.”

Jackie Ressa of The Contingency Connection, which works with racetracks and manufacturers across the country, claims a current trend that has been in the news lately is the increase in use of discount coupons and discount promotions. This is something she knows about, as The Contingency Connection often acts as a middleman in the distribution of those coupons.

“Due to our current economic times and high fuel prices,” says Ressa, “people who never used coupons or certificates in the past are searching for and redeeming coupons in practically every industry, including groceries, restaurants, movies, etc. This trend certainly applies to the racing industry as well.

“The Contingency Connection is a race marketing program based on coupons and product certificates to help weekly racers pay their racing expenses. Our 18,000 racers per week and our 65 tracks/racing series are looking for every avenue possible to cover their racing expenses. Thus, an increase in certificate redemption is expected this fall and into 2009. Bottom line: We provide a turnkey contingency program and sponsor support. Racers buy the products of Contingency Connection sponsors that support their efforts, so this is good news for everyone involved.”

Another trend she has witnessed on the sponsor side of the racing industry is an increase in focus on grassroots racing efforts. “Sponsors have told me that they intend to reallocate ad budgets with a greater emphasis on event marketing, reaching end-user weekly racers. They intend to look at all elements of the marketing mix.”

Ressa continues, noting, “Race tracks are calling us and actively seeking programs for their racers to help maintain and build their pit gates. We actually have a waiting list of tracks wanting to get into our 2009 program. Even with the current economy, fuel prices and the growing cost of entertainment, the Contingency Connection is poised for growth in 2009 as we make it more affordable for racers to race and we provide tracks with sponsorship dollars to build their pit gate.”

Fuel & Economy

In regard to fuel prices and the economic climate, Flowmaster’s motorsports director, Dale Dotson, of the company located in Santa Rosa, Calif., says each factor has definitely had an impact on the guys behind the wheel.

“It hurts the racers’ pocketbooks to the point that they start racing closer to home and may not be able to buy those spare parts they would normally like to have on hand in case something breaks,” says Dotson.

Crawford concurs, “It is more difficult to run in a national racing series with the increased fuel cost. Many of the contingency payments we have made this year are for racers from a closer proximity to the racetrack.”

Jamie Adkins, director of customer service for PRW Industries, Inc., in Placentia, Calif., observes that the current economic downturn has affected the way companies in the performance and racing industry think and do business.

“Engines are still being built and races are still being raced; it is just a matter of how these are being done,” says Adkins. “You have many traditional high-end engine builders that traditionally build the $50,000 to $150,000 engines now starting to build a lot more of your $5,000 to $15,000-type engines. The buyers for those very high-end engines are just not spending that type of money, but they can and are willing to spend a little less for a good quality engine.”

He adds that many of today’s speed shops that are still going strong and have survived over the years have done many things to offset the walk-off in business that they used to get.

“They have strong web presence, run promotions, and they work with manufacturers and WDs on many other promotional events. In other words, they keep evolving. That’s not to say that some of the older speed shops that are struggling are doing things the wrong way, because they may have been in an area that was hard hit with layoffs or some other economic factor, but there are still a few thriving speed shops out there that keep going through good and bad,” says Adkins.

Racetracks Adjusting

With racers staying close to home, and racing less often with less expensive engines in less expensive series, how are racetracks adjusting to these shifts in the industry?

“Some Contingency Connection racetracks,” cites Ressa, “have adjusted to the current economic climate by reducing the number of events scheduled. This helps control expenses for both the track and racers.

She adds that other tracks are adjusting to the current climate by doing a better job at promoting the benefits of racing at their respective tracks.

“For example, CC tracks are more aggressively promoting their $100,000-plus Contingency Connection program and the six bonus programs that we offer to help maintain and build their pit gates. Racers have a choice in tracks, and the tracks that have added benefits like The CC and advertise added benefits are getting the higher car counts,” says Ressa.

In regard to racetrack marketing, Adkins says it comes down to promotions for getting people in the stands: The more people you have in the stands, normally, the higher car count you have in all avenues of motorsports.

Also, “Normally, higher car counts equal more people in the stands. Many tracks have weekly promotions: crash-up derby night, family nights, bring a pet day, etc. These are things that most other sports, like baseball, have been doing for over 100 years. I think over the past 10 years or so, racetrack owners have really caught on to this. Now they really have to focus on these types of events, because a family is still looking for something to do, only on a tighter budget. With the tighter budgets and the number of choices a family has, the tracks have to do a good job getting the word out: Promotion, promotion, promotion!”

Motorsports With Growth Potential

As we look at the current state of racing, we would be naive not to note that some types of racing are more cost-friendly than others. Which motorsports are these and which have the most potential for growth?

In the opinion of Flowmaster’s Dotson, it’s off-road racing, “For a couple reasons, one, because of the booming popularity of the CORR off-road organization over the past two years. And second, the relatively inexpensive start-up costs as compared to other forms of motorsports and racing. A lot of families already own motorcycles, ATVs, trucks, etc., and those can all be modified to race.”

The strong growth potential for off-road racing is a view shared by PRW’s Adkins. Noting that his company has products for most types of racing (including the marine market, dirt track market, drag racing, off-road, circle track), he says, “One area I see growing is the off-road market. It seems to be getting more and more fans to their venues, and once they become fans, they become fanatics. It is a very fast and exciting sport that seems to attract a young and diverse audience.”

JE Pistons manufactures forged pistons for almost any 4-stroke racing engine application. This includes automotive, powersports, marine and more, says Crawford. Viewing these markets, he adds, “With the increase in gas prices, the motorcycle street market may grow as more people switch from cars to bikes. There are still many opportunities for growth in the automotive markets, but they are not as obvious.”

Ressa points out, “Our program includes oval (dirt and asphalt), drag, import, motorcycle and diesel events. We also offer special events including off-road races, car shows, banquets, etc.”

With that vantage point to view the racing industry from, she adds, “In regards to comparing profitability of one form of racing over the other, The CC currently has 45 oval tracks and 20 drag strips. Basic numbers indicate that the oval track side is more profitable. However, our drag tracks have added events and diversified their schedules to include sport compact events, diesel, motorcycle and car shows. It is hard to say which is more profitable. Both are growing, just in different ways.”

As to which has the most potential, Ressa says, “I believe that both oval track racing and drag track racing at the lower dollar, grassroots level offers the greatest growth potential. Racers at this level seem to find a way to race-no matter what. These racers do not need huge racing budgets to run, and the tracks do not need big sponsor money to attract these classes.”

Moser Engineering is another company that works with drag racing, circle track and many different off-road racing series, and he concurs. “Drag racing and circle track still tend to be the main growth industries even with the economic downturn.”

Make the Most of Motorsports In Your Area

Taking a look at the racing across the country with the most potential for growth is always a good idea. However, it’s just as important to keep sight of the neighborhood and make the most of what is already available to your performance business.

“Sponsor the local race organization or pay for signage at local tracks. Remember, out of sight, out of mind,” says Dotson, who adds, it’s key to get involved and be seen at events and tracks in your area.

Crawford concurs, “Get involved at a local level. Become a sponsor of the local tracks and series. Racers will support those who support them.”

He adds that offering a variety of price points is always a good idea, but particularly in a rough economic climate. “JE Pistons has created a new piston line that provides racers with a professional-quality piston kit at sportsman pricing. The new line is called SRP Professional, and these new pistons are the perfect solution for the racer who needs to reduce their budget, but still demands quality components.”

Ressa recommends that performance businesses have a presence at any popular sports in their area. “More emphasis on event marketing and a little less in-general advertising will make the difference in these tough economic times. You need to be where your customers are, it is that simple.”

Adkins adds, “Local motorsport venues should do cross-promotions with their local sports. If high school football is big in the venue’s area, some kind of cross-promotion with the local high school football team would be a good idea. Local celebrity races are always a good way to get fans out also.”

Anderson agrees with that sentiment, and says shops must become involved in the local scenes. He suggests offering incentives for local organizations and tracks and to supply some promotional materials.

“They can give you a lot of bang for the buck,” says Anderson. “If they in turn do not help promote your company, then align yourself with the ones that do.”

He adds that these local facilities can also be used for customer feedback of current products and testing new products and promotional materials.

Weathering Tough Times

As your performance business weathers these tough times, Dotson says it is key to get out and see what types of racing are going on in your area, and talk to your customers and see what their product needs are for each of those specific types of racing.

“Once you assess your customers’ needs, get the product on the shelf and get as much product knowledge as possible from the various manufacturers about their products,” says Dotson.

Anderson says it is a must to help your current customers to truly understand your product and help them to be profitable. “If you can help them make a greater profit then you will afford yourself a better chance to be more profitable. You can build and develop those relationships locally and then expand from there. As big as our industry may seem today, it is a tight-knit circle of organizations. It really is a small world and you can learn and expand by taking care of your inner circle first, and then expand through networking with established clients. Networking really is still one of the best ways to gain market share. Only by delivering a satisfactory experience to the customer can you have a chance of developing that network base.”

Diversity is also a helpful strategy during tough times, and it is a strategy highly valued by Adkins.

“I think diversity is the key in the performance business, just like any other business to weather the economic storm. Speed shops and distributors need to take advantage of what a manufacturer has put on the table for promotions. Even though that promotion may be a little out of their realm, normally the promotion is profitable and it helps turn inventory. Also, companies need to think out of the box. The way you have always done business may not be working today or tomorrow.”

Diversity and promotion are two of the best ways to take on good or bad economic times. When things turn around, don’t abandon the ideas that got your business or racetrack through those hard times because they are still going to drive business.