WILMETTE, Ill. — As the new year begins, the motorsports industry reflects on the past 12 months and looks toward the future. This month, we examine how this business sector plans to move ahead.
The prior year for motorsports was one for the record books.
There were new events that produced spectacular racing in front of large crowds. Deal making continued with new companies entering the marketplace. Sponsorship is key but teams responded by utilizing a partnership approach focusing on collaborative solutions.
There were areas where activity was subdued. Staffing was managed with a focus on the realities of the economic environment.
Overall, car counts and driver participation remained steady. The passion from the core fan base is solid and enthusiastic.
There is recognition of the challenges ahead and the need for solutions to the problems facing the various segments of motorsports. Rapid growth and sky-high forecasts cannot last forever because they shouldn’t. Just as fast qualifying times do not guarantee taking the checkered flag.
The announcement of NASCAR’s new media deals sets a solid foundation for that segment of the sport. Key revenue streams including media and sponsorships are largely contracted. Ticketing has stabilized and reduced seating capacity has produced sellouts.
Fan behavior is fluid, while media consumption and engagement can be fleeting. The transformation from broadcast to cable to streaming has accelerated cord cutting among consumers.
Higher interest rates have impacted the borrowing capacity of teams and tracks as they renovated and expanded their facilities.
Sports is its own asset class, and its scarcity for opportunities is unique.
There has been a strong bull market for teams, series and events, and investor interest has not slowed. However, rising valuations cannot continue unchecked.
The areas that hold promise are high-end hospitality, sports betting and real estate.
The key question: Do the underlying business economics make sense?
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This story appeared in the Jan 3, 2024 edition of the SPEED SPORT Insider.
