The spreading financial gloom that envelops Wall Street has hit that most Main Street of American sports: NASCAR.
The popular race circuit has expanded beyond its redneck roots in the Deep South to capture fat profits and a huge TV audience throughout North America. But now it has turned into another high-profile victim of the global financial crisis and a rapidly slowing economy.
Some of the most illustrious names in the sport, including Dale Earnhardt Jr. and Michael Waltrip, have suddenly lost a slew of big-time sponsors as struggling auto makers, flailing financial firms and retrenching oil companies decide they have better things to do with their shrinking capital than spend up to $25-million (U. S.) annually to sponsor a team.
NASCAR races are supposed to have 43 cars. But fields are certain to be smaller next year.
“There’s maybe 26 teams that have sponsorship for next year, and five or six that have partial,” Mr. Waltrip told Bloomberg News.
It is the latest example of the heavy toll taken by the credit crisis and widening global slowdown on the one area that used to be all but immune to hard times: spectator sports.
As money for deals dries up, stadium financing charges soar, expenses climb and major corporate sponsors disappear, the sports gravy train is definitely sputtering.
“It’s a tough situation,” said Sal Galatioto, a New York investment banker who specializes in sports financing and franchise valuations. “Everyone is looking at this now and thinking if it continues for a while, it’s an impact thing. It’s too early to really say what kind of effect it’s going to have. Obviously, in the short run, it’s not good.”
The sports operators most at risk are those that have done heavy debt financing for acquisitions or stadiums, as well as those that lack steady, large income streams from national TV deals and revenue producers such as long-term lease agreements on luxury suites.
Particularly vulnerable are the smaller-market teams that depend heavily on gate revenue and a handful of corporate backers.
| 
|