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BLAKE: Franchise Players
Written by: Ben Blake   http://www.racer.com
03/21/2007
Richmond, Va.
 
Franchising could offer the owners behind the teams a deserved degree of stability.  View more NASCAR photos in the Garage Pass gallery HERE. (LAT photo) ยป More Photos

This year's overcrowded Nextel Cup entry lists, with a half-dozen name drivers, name sponsors and well-dressed teams turned away at the door each week, has raised questions among the press about the wisdom of NASCAR's top-35 policy.

For the most part, I like the top-35 policy, one exception being its use at the Daytona 500 (more on this later). It's a small, considered step, I think, in the direction of franchising of teams, which is long overdue.

The realities of NASCAR, the business, probably prevent the sort of constitutional franchising that formulates the major sports leagues. In those cases, an owner or ownership group is granted a franchise for a designated territory. As long as that group operates according to league rules, it keeps the franchise as long as it wants it. It can, with league approval, sell the franchise to another individual or group, or even in certain cases relocate the franchise.

What this does, of course, is place a value on the team/franchise. That value tends to rise along with public confidence in the league. In baseball, for instance, the St. Louis Cardinals gained 16 percent in value 2005-2006, to $429m. The New York Mets rose 20 percent to $604m. The New York Yankees, worth (according to Forbes) $859m in 2003, are up to $1.1b today.

Now, franchising is a very complex matter, and, depending on how franchising is constituted – especially when imposed on top of a working business model – could open doors NASCAR does not care to have opened, such as in labor relations. Still, many owners have long argued that some sort of franchise system would stabilize the value of what they, individually, have built through decades of blood, sweat and tears.

What did Bud Moore have when the bottom finally fell out of his sponsorship? Nothing, except perhaps the dime-on-a-dollar he got in auctioning some of his equipment. What did Ricky Rudd have, or Bill Elliott, or Brett Bodine, all of whom terminated operations around 2000, with little to show for it.

What then would Richard Childress have, or Ray Evernham, or DEI, if their primary backers (sponsors, investors, etc.) pulled the plug? Childress literally has put a lifetime into his racing, from a one-man operation in the early 1960s to his current powerhouse; what happens if he decides to retire, or becomes incapacitated?

(The recent Roush Racing/Fenway Sports Group transaction (creating a $100m entity in Roush/Fenway) is a very interesting departure, in that Roush appears to have turned somewhat away from the uncertainty of sponsor backing and toward a marketing partnership capable of creating its own financial opportunities.)

What a franchise would do would be to allow an owner, when he decides to leave the sport or otherwise cash out, to have what amounts to an exclusive membership in NASCAR, the value of which is partly tied to the success of NASCAR. He (or she) then could sell the franchise to any new owner who wants to play the game, at a value set by the market.

One suggestion for NASCAR-type franchising has been to set the number of franchises at below a full field, say, 35. That still allows for newcomers and privateers to take a shot at the big game without having to come up with the minimum franchise price, which would be, say, $5m. Of course, to buy in at the top – at the Roush, Hendrick or RCR level – would require a price satisfactory to the current owner, which could be as high as $150m, although value numbers are not routinely given out.

The top-35 guarantee, then, gives at least a shred of security to the owners who put in the money, time and labor to make all the races, all the shows. At the same time, it does not freeze in or freeze out. Owners must keep their heads above 35th place on the points list to receive the guarantee. Those who cannot are back in the Galapagos with Darwin and the finches.

Now, as for Daytona. One thing I don't care much for is the basing of the the guarantee in the first five races of each season on the prior year's
points standings. The Daytona 500 is supposed to be The Daytona 500, a somehow-singular, stand-above event.

In older days before the top-35 guarantee, qualifying at Daytona meant something. The past few years, it's been just another validation of last year's owner points, with 35 points already locked away. Sound a little similar to Tony George's "25 of 33" apparatus for the Indy 500 in the early years of the IRL.

The way I see it, throw away the prior year's points and let the fellows have at it. The best teams are going to qualify anyway, so there's not much danger in losing a popular name in time trials and the heats.

But put some meaning back in it. Let everyone show up at Daytona with zero points, do two rounds of trials, then race for all the marbles in Thursday's heats – 43 grid spots, 43 cars, and tough luck for the rest of you.

The finish of the Daytona 500 determines the points list to be used the next week at California, or wherever the second race happens to be, and we pick up with current-year points and begin with the top-35 guarantee. Even if you miss the 500, you're not cooked yet. Run well enough at the following few races and you're right back in it.

That would make it worthwhile to be at the Beach for two weeks. That surely would be more interesting than spending five days wondering who poured purple rocket fuel in whose engine, eh?



Catch up on the latest Formula 1 developments each month in RACER. Check out our look at how Kimi Raikkonen settled in at Ferrari over the winter in our April issue, on sale now!


* In all the commotion and chatter around the imminent issue of NASCAR's Car Of Tomorrow, one theme continues to pop up – that NASCAR, which now is basically in the car manufacturing business (what with common templates and CoT) has subverted the desire of the participating factories to use racing to sell cars.

Whoever created the mythical slogan "win on Sunday, sell on Monday" should be shot, and anyone who repeats it by voice or in print should be publicly humiliated and then hung. It's never been true, even in the beginning.

The Hudson company, which won all the races from 1951 through 1953, failed, merged with Nash, and eventually became part of American Motors, with the badge fading from view by the late 1950s. Chrysler sold no more 300s in the middle 1950s just because Kiekhaefer's cars won everything. How many winged Superbirds and Torinos left dealer lots in 1969 and 1970?

How about more recently? Chevrolet's Monte Carlo, for example has sold steadily around 70,000 units each year, regardless of the popularity and success of Dale Jr., Jeff Gordon and Jimmie Johnson. And it's hard to imagine anyone buying a Ford Taurus because of its racy feel and reputation.

No, the factories, Detroit and otherwise, are in the NASCAR game largely because they can't afford not to be. Racing is like a cologne or a necktie: It's the final touch of style that makes a motor company appear well-dressed. And in a business where image is everything, it's worth the extra expense. Ask even the Hudson fellows: The marketing budget is always the last to go.

Toyota's strategy is a little different. It intends to use NASCAR, the American bulwark of racing, to show that it, too, is an American company. Again, though, it doesn't need to win or lose (although it helps to make a race now and then) to signify to true Americans that its products are as U.S.-friendly as the Model T.

Still, it's about image, not sales, nor even about product on the track. If NASCAR customers will accept a 1997 Taurus disguised as a Monte Carlo, Charger or Camry, it more than likely with accept CoT with the same badges.

It's not about the product. It's all about the brand.