WILMETTE, Ill. — The ongoing COVID-19 pandemic has had a tremendous negative impact on the international economy, and the sports industry has been among the hardest hit.
As the country begins to open four months after the initial shutdown, the costs have been massive to motorsports. While this crisis began with many unknowns, the path forward appears to be more defined.
All sectors of the motorsports industry were affected, from the top-tier professional series to local short tracks.
Industry leaders and stakeholders monitored the shutdown at the national, state and local levels. They formed associations and coalitions to educate and inform officials about the importance of racing.
They assisted tracks and series in developing and complying with policies and procedures to offer a safe environment upon reopening.
The shutdown occurred during the early portion of the racing calendar. Most series and tracks had not gotten into full operational mode. Depending on their location, many were just beginning the season.
The losses for sports from the pandemic were estimated at $12 billion. This was comprised of professional sports (45%), collegiate athletics (30%), sports tourism (20%) and other (5%).
Annually, sports is a $100 billion business that employs more than 3 million people.
Overall, motorsports probably incurred a negative impact of approximately $250 million to $300 million during the shutdown.
The largest source for lost money comes from admissions and concessions related revenue. Each large race generates about $10 to $15 million from these categories.
There is no definite date when tracks will be able to operate at full capacity. Different areas of the country have different restrictions and its likely most tracks will operate with crowd limits in place throughout the season.
Most venues have an excess amount of traditional grandstand seating along with hillside and pit areas that make social distancing a little easier.
Broadcast media contracts are key financial drivers of the motorsports industry engine. The primary goal for NASCAR and other sanctioning organizations was to run all of the races in order to receive contractually obligated income.
NASCAR reacted early and that strategy worked to its advantage. Getting the key stakeholders on the same page was critical. They were flexible and creative in designing a schedule and working with broadcast partners. Working with governmental officials and staying close to home markets paid huge dividends.
Most professional sports are getting back underway to finish interrupted seasons or starting a shortened year. Each had its own set of characteristics (owners, players, unions, venues, broadcast contracts, etc.,) which needed to be addressed. Detailed planning, operational logistics and health care procedures take time to execute.
Tracks probably missed about 20 percent of their season. Most local short-track races will not be able to be rescheduled since the rest of the calendar is full. Running midweek or back-to-back shows does not make economic sense in most cases.
Businesses that support racing may not be able to make up for lost time. Tire companies, fuel suppliers and chassis and engine builders were affected by a shorter season and lower car counts.
Food vendors and beverage distributors did not have fans to visit their trackside concession stands. Insurance underwriters and marketing agencies had fewer events to service.
Hospitality related revenue from fans will be slow to rebound. Hotels and restaurants that relied on race weekends will have to wait for next year and campgrounds sit empty.
Spectator behavior is mixed. Lifestyles are not the same due to health concerns. Fans will return but at what level is unknown. It will take time.
Motorsports is on the right track with its return. Most series and tracks are on target to return to a normal timeline to complete the year.
Making adjustments and developing strategies is where the motorsports industry excels.