DAYTONA BEACH, Fla. -- Red Sox principal owner John Henry will reveal today that he's investing $50 million in the top team on the NASCAR racing circuit, Roush Racing. But has Henry, a legendary commodities trader, made the classic investment mistake of buying at the peak of the market?
NASCAR has grown in the past decade to become one of the premier sporting leagues in the country, with a loyal fan base in the millions that has attracted the biggest national brands as sponsors -- and most recently, automaker
"NASCAR has peaked in the last year or two, but I think John Henry could still do a good job of getting some revenue out of it year over year," said Jon Hickey , senior vice president of sports marketing at Boston ad agency Mullen .
For years, NASCAR had an image as a sport only a southerner could love, replete as it was with mostly white fans and drivers participating in races nearly all on tracks throughout the Southeast. Then the sport diversified, with tracks popping up north of the Mason-Dixon line and the fan base growing.
According to Nielsen Media Research data, nearly 5.4 million households tuned in to NASCAR races during last year's Nextel Cup season, up 43 percent from the just under 3.8 million who watched 10 years earlier. That boosted the sport's popularity with sponsors; in the past five years, the cost of a 30-second commercial during the Daytona 500 race, NASCAR's annual kickoff event, rose from $275,000 to $450,000 . In 2006, advertisers spent $42.3 million on the race.
But that happened as NASCAR's popularity declined, at least in terms of how many people were watching. Viewership peaked in 2005, when an average of 5.9 million households tuned in to every race. NASCAR officials acknowledge the drop, but are quick to point to other factors that suggest the sport is still in a growth phase.
"Our view is ratings fluctuate for any sports or entertainment property," said Andrew Giangola , a league spokesman. "It's important to look at the longer-term trends. If you look at NASCAR three, five, or 10 to 20 years, you'll see a sizeable increase," in the sport's audience, sponsorships, and overall fan base, he said.
Toyota's participation is an example of NASCAR's popularity, he said. The company will have seven of its Camry models, souped up, of course, in NASCAR races this year. "That's really been big news for the sport, draws a lot of excitement," Giangola said.
It may also be behind Roush Racing's need for a partner. Toyota will be by far the biggest automaker with a presence in NASCAR, and since Roush drivers drive only
What Henry expects from the deal remains to be seen. Neither he nor Jack Roush, who owns Roush Racing, were talking about the deal ahead of their planned disclosure this evening at the Daytona International Motor Speedway , site of the Daytona 500.
Hickey said one possibility is that Henry could draw revenue into his Fenway Sports Group , an entity that handles his sports ventures outside baseball. Because of Major League Baseball rules, any revenue drawn from sponsorships or media that come from outside the Red Sox's New England territory are divided among the rest of the teams in baseball. But a NASCAR deal could bring in cash outside of that structure that wouldn't have to be spread around.
"It's really a way to separate themselves from the Red Sox and say 'We do more than just monetize the Red Sox,' " he said.
Beyond that, NASCAR is still pushing to become more mainstream, particularly by drawing blacks, Hispanics, and people from outside the South to the sport. Mixing racing with the Red Sox, a New England team with several black and Hispanic stars, could be a boon to both the sport and Roush Racing's revenue.
In the meantime, enthusiasm for NASCAR outside the South was strong yesterday. Nearly a week before the Daytona 500, the speedway's infield overflowed with mobile homes bearing license plates from as far away at Ontario.
Jim Farrell , 50 , made the trek from Stafford, Conn. , to Daytona with his 20-year-old-daughter, Jayme, for the race and festivities. The Henry-Roush deal would help the sport gain fans, he said, but wouldn't make him a fan of Roush Racing. "I think any exposure like that helps, anytime you bring in big dollars," he said.
Keith Reed can be reached at firstname.lastname@example.org.