As the NASCAR season ends today, the likelihood of widespread layoffs has sent a shudder through the Charlotte region, home to roughly 90 percent of race teams.
Cuts already have come at some shops, and more could lose jobs in the weeks ahead. While the total number of layoffs is hard to pinpoint, estimates run from 500 to 1,000 or more.
As NASCAR gained prominence and was heralded as America's fastest-growing sport, the Charlotte region proudly touted its strong racing ties. More than 400 motorsports-related companies are based in the area, business recruiters say. A 2005 UNC Charlotte study placed that employment at almost 20,000, and estimated the industry's economic impact at more than $4.5billion a year.
In recent days, though, the prospect of job cuts has caused anxiety in the region and cast a pall over the season finale in Homestead, Fla., where team owners and drivers say their sport, like many other industries, has been dragged down by the economy.
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“It's nothing we can control. I don't know if anybody can control it,” said Richard Petty, a seven-time Cup series champion with 200 career victories. “We'll have to tighten our belts just like anybody else. You won't see a single team that doesn't do it.”
That tightening, some say, is a correction for hiring that pushed organizations to their highest staffing levels as teams sought expertise to remain competitive. Signs of a slowdown have littered the season. Attendance dipped at many races and was down on average about 10 percent, thanks in part to the summer's high gas prices. To offset those costs, track owners dangled incentives such as lower ticket prices and – at Lowe's Motor Speedway in Concord – an all-you-can-eat section.
Sponsorships also began to sputter, most notably with General Motors announcing in July it would slash its NASCAR spending. The struggling automaker has contracts with 12 of the 22 tracks that host Cup races but isn't renewing with at least two venues – New Hampshire and Bristol, Tenn., both owned by Concord-based Speedway Motorsports.
Lowe's Motor Speedway, also a Speedway Motorsports track, will keep its name after the home improvement retailer agreed to extend its naming rights to 2010. But the new deal is for only one year, a far cry from the original 10-year deal that was set to expire next year.
Chris Ahearn, a Lowe's spokeswoman, said the company wasn't comfortable with a multiyear deal, which made more sense in the late 1990s when Lowe's was expanding as a nationwide retailer.
Now, she said, “we're evaluating all our expenses. It's a little bit of a different time right now.”
Among race teams, it's unclear if the turnover in corporate sponsors will lead to fewer cars in the field for the 2009 season-opener, the Daytona 500.
A full Sprint Cup field is 43 cars, and right now 34 Cup teams either have or are close to getting enough sponsorship money to run full schedules next year. Another six teams plan to run a full schedule but still must find enough backing to have a reasonable chance to finish the season.
Even fuzzier are the Nationwide and Truck series, lower-level circuits that held races without full fields this season and are expected to do the same in 2009.
In any case, many of the hoods at NASCAR races likely will look different, some sports marketers say, and cars could have three or four main sponsors instead of one big one.
As for jobs, some teams already have started cutting. At Dale Earnhardt Inc., 116 employees were told Wednesday that they no longer would have jobs in the team's merger with Chip Ganassi Racing with Felix Sabates.
Hendrick Motorsports let go 12 of its more than 500 employees this month, despite its four Cup drivers including the most popular, Dale Earnhardt Jr., and this year's likely champion, Jimmie Johnson. In addition, Roush Fenway Racing – where driver Carl Edwards is in second-place going into the final race – laid off a number of employees last week.
Those likely won't be the last cuts, said Andrew Zimbalist, a sports economist at Smith College in Massachusetts. Because NASCAR depends more than other sports on sponsorships – which give teams more than 70 percent of their revenue – the tightening of corporate budgets means “some difficult times ahead,” he said.
“I suspect that NASCAR will be more negatively impacted by the downturn than any of the other major sports,” Zimbalist said.
A hiring ‘correction'
The job cuts come after many teams went on a wave of hiring in recent years – from adding specialists to preparing for the “Car of Tomorrow,” a new car style intended to improve safety and competition.
“They had staffed up significantly the last two years,” said Mike Boykin, a Charlotte-based vice president of GMR Marketing, a sports and entertainment marketing agency. “A lot more testing. A lot more of everything.”
Petty agreed that teams reveled in the recent NASCAR boom, echoing a lament of homeowners who borrowed too much money and then went through foreclosure in the current housing crisis.
“We've all overspent,” he said. “We all had it so good we just kept going forward without saying, ‘What it if goes bad?'”
Given the intense competition, teams naturally look for any edge and can end up overstaffed as they try to keep up with other crews, said Darrell Waltrip, a three-time Cup Series champion and former team owner.
“What happens to every race team – it happened to me – is you hire specialists,” said Waltrip, now an analyst for Fox Sports' NASCAR broadcasts. “Pretty soon he comes to you and says, ‘You're killing me! I can't do this by myself.'
“So you hire him a helper. Then the helper comes and says, ‘He's working me to death.' So you hire him a helper. Pretty soon you have helpers for helpers for helpers.”
As a result, the number of people working at race teams was at an all-time high before this year's cuts, said Jeff Burton, a driver in his 15th Cup season. “I would imagine more people have been employed within the teams in the last three years than any other point in our history,” Burton said.
Even NASCAR's most popular driver said his operation has been overstaffed. As many as 100 people have worked at JR Motorsports, said Earnhardt, who fields one full-time and one part-time team in the Nationwide Series.
“That's too many for two Nationwide teams,” Earnhardt Jr. said. “I read somewhere that this was kind of like a correction more so than a recession, that we were all kind of living beyond our means.”
Now, he said, “it seems like it's all kind of coming back down to earth.”
Adjusting for the future
Yet even a correction means people losing jobs.
“We think about this as a sport,” Burton said, “… But to the people involved in this sport, this is the way they pay their mortgages, and this is the way they pay their car loans and send their children to school and pay their bills.”
NASCAR's decision Friday to suspend testing for the Sprint Cup, Nationwide and Truck series teams next season could mean more layoffs beyond the sponsorship crunch and race team mergers. Teams that don't move testing to other tracks could start scaling back those operations after today's race, said Andy Papathanassiou, executive director of the N.C. Motorsports Association, a trade group.
“If you expect that things are going to be tight in the future,” he said, “you prepare for that today.”
The current swoon is the worst Papathanassiou has seen in his 17 years in motorsports, but he said some job losses may be offset by other factors. A new dragway at Lowe's Motor Speedway could attract drag-racing teams to the region, he said, and NASCAR teams still seeking sponsors may try to keep part of their crews intact so companies can see what they would get for their investment.
“You've gotta have something around to show a sponsor,” he said.
Driver and TV commentator Kenny Wallace said he remembered another tough time about 10 years ago when the Cup series saw fewer cars entered for races. Some teams, Wallace said, would “start and park,” not finishing the race because they didn't have money.
In 2009, Wallace said, teams with tight budgets should consider running fewer, better races instead of entering as many points races as possible. “You have to adjust to the economic times,” he said. “Just figure out how to stay in the game, because the tide will turn.”
Meanwhile, one driver might benefit from the looming layoffs. Two-time Cup champion Tony Stewart is leaving Joe Gibbs Racing after 10 seasons to become owner of a two-car team. He and Ryan Newman will drive the Stewart-Haas Racing cars in 2009.
While many employees of the current Haas CNC Racing won't be retained, Stewart is hiring workers for the new team's two cars. Job cuts at other teams mean Stewart will have a bigger talent pool from which to pluck experienced employees.
Said Stewart: “It's kind of like going to a buffet.”