The top spectator sport in America isn’t baseball, basketball, hockey or even football: It’s NASCAR.
According to a recent Forbes article, one in three U.S. adults, or 75 million people, is a NASCAR fan. NASCAR races are among the most-attended sporting events in the United States. The largest tracks can accommodate more than 190,000 people in the stands and infield, whereas NFL stadiums, for example, only hold an average of 60,000 to 80,000 people. And while football does have NASCAR beat when it comes to being the most-watched television sport, the auto racing organization rolls in at an impressive second.
At the recent Wharton Leadership Conference, NASCAR chairman and CEO Brian Z. France shared some of these numbers and talked about the leadership challenges of driving a multi-billion dollar sports and entertainment behemoth.
One of the unique things about NASCAR is that for all its size and success, it is, and has always been, a family-owned business. France, who became chairman and CEO in 2003, is the grandson of NASCAR’s founder, the late William H.G. “Big Bill” France, and the son of the former president and chairman-CEO, the late William C. “Bill Jr.” France. “An interesting thing about a family business is that you will say things to a family member you would never say to anybody outside,” France said. “So you’ve got to temper it down and have really, really good ground rules and rules of the road.”
He added that simply being part of the France family did not guarantee him or any relative a seat at the table. “We try to match up someone’s talent with the opportunity, and be honest enough to say sometimes, ‘You may just need to be a shareholder — there isn’t a place for you,'” he noted. “Having the kind of courage to do that with your family isn’t always easy.”
“An interesting thing about a family business is that you will say things to a family member you would never say to anybody outside.”
He credited the longevity of the NASCAR business, which was founded in 1947 and 1948, partly to successfully “balancing the passive owners’ interests with the operators.'” He said the failure to do this is the reason most family-owned companies do not survive past the second generation. “We have amazing governance throughout all of our businesses that doesn’t allow family members to sail in and speak up when they’re not involved in the business,” France stated.
The Car that Nobody Liked
An advantage of being part of a family-owned business, France said, is that “it takes a little pressure off,” in that it allows him to “take some risks” and “take [a] longer view” in NASCAR’s business strategy. In most sports initiatives, he added, the CEO is answerable to key owners in the league. But in France’s case, “I don’t have to [get buy-in from] 32 different people to set priorities and set the agenda. That’s obviously very helpful.” Along with the ability to take more risks comes more allowance for trial and error, he noted.
Yet accountability is essential, France said. One of the leadership missteps he acknowledged involved the launch of a new car model a few years ago. Some of the drivers complained vocally about the automobile’s quality — publicly and on national TV.
“We rolled out a car that nobody liked,” France noted. “[We had] lots of good reasons — safety and some other things…. But nevertheless, it didn’t work properly.” France added that he failed to get the necessary buy-in from stakeholders. “That was a great mistake for me, to not have done the work to get … the kinds of inputs that were needed.”
Groups that he said he should have solicited feedback from included car manufacturers, such as Chevrolet, Ford and Toyota, which France characterized as “playing a huge role in our sport.” The new car did not look like the vehicles that were in the companies’ showrooms, which is a factor important to the automakers.
But after several drivers openly made negative comments, France told them, “Hey fellas, this is like owning a restaurant and saying to people, ‘Come on in, but you know, the food is not going to be very good.'” He instituted a policy that going forward, drivers who attacked a product would incur a significant fine. “Even though I made the mistake of not getting enough buy-in, I obviously couldn’t accept [their behavior],” he noted.
“We rolled out a car that nobody liked. [We had] lots of good reasons — safety and some other things…. But nevertheless, it didn’t work properly.”
The lesson that France took from the experience was that it’s important to get everyone aligned up front, even if takes a battle. “People have their own interests; some people don’t agree with you, and you have to spend the time to wear them down or at least make sure they’re on board.”
Not His Grandfather’s NASCAR
For NASCAR and for professional sports in general, rights-selling is key, said France. (One can see the level of dollars in play from headlines such as Forbes’ from July 2013: “NBC Nabs NASCAR TV Rights for $4.4 Billion.”) In addition to television rights, there are merchandising rights and sponsor categories. France noted that NASCAR sells more sponsorships than anybody in sports, “and the reason is that it’s your [i.e., the brand’s] team. It’s the Coca-Cola Chevrolet, or the DuPont Ford, or whatever. And the driver represents your company.”
But while rights are still extremely important, said France, there was a sea-change about 10 years ago when it became crucial for major sports leagues to be exceptional marketers as well. “They’ve hired classically trained marketers from packaged goods categories; all kinds of talent is coming into our industry.” Marketing is critical as sports compete for fans, France noted, adding that while “fighting for share of audience on any given weekend is an amazingly difficult thing,” NASCAR does have common partners in television and elsewhere. Thus, it is in the organization’s best interest to make sure the entire sports industry is healthy, while still getting its fair share of fans, he stated.
One type of fan that France said is essential to develop is millennials (those born from approximately 1980-2000). He called this effort the number-one focus of NASCAR’s strategy. To that end, NASCAR has boosted its digital presence in recent years, including the 2013 re-acquisition of its digital rights from Turner Sports. The company has also launched a partnership with Twitter and created an official iPhone app. France said 100 employees manage NASCAR.com, and the organization’s drivers are highly encouraged to have a strong social media presence.
“I don’t have to tell anybody in this room how much behavior is changing, how much consumption is changing, in all kinds of contexts,” he said. “Sports are no different. Engaging with millennial fans [involves figuring out] how they can use their devices as part of the game, or the race, in some clever way.”
France added that every sports league is both excited and nervous about digital opportunities, and concerned about how to make them work best for their sport. For example, the NFL, he said, is working with “Big Data” experts to understand how game telecasts might be managed differently, and what fans want to see that they cannot see today. Some commissioners, though, are resisting the push toward digital content, according to France. “They say, ‘I don’t want people coming in to watch my basketball game and [be hunched over a smartphone the whole time]. We don’t think that’s right. It’s going to happen — it is happening — and you better figure out how to give them something to [tie] that device with some portion of the game to make it relevant for them.
“Engaging with millennial fans [involves figuring out] how they can use their devices as part of the game, or the race, in some clever way.”
“And, you had better have social areas that are not just concession stands or merchandising areas,” he added. He described how Daytona’s current $400 million retrofit includes a plan for 11 football-field-sized social media areas. (“My uncle calls them sports bars,” he joked.)
France said that auto racing has some unique features that make it particularly adaptable to digital interaction. “We’re fortunate because of all the telemetry … that goes on in a race: radio conversations between the team and the driver, and mechanical things.” An audience member asked if fans would eventually be able to listen in on real-time communication between the teams and drivers. France replied, “Yes, and some of it is here now, but a lot more is on the way.”
Fans may eventually be able to get visuals from trackside, in addition to audio, France noted. “There will be a day when, while you’re on your device, we will take you inside the race car and you will see what Jeff Gordon is seeing — his gauges, what he’s up against in a strategy.” Wouldn’t there be push-back from the drivers about having cameras in the cockpit? “Sure there will,” said France. “The balance is really privacy against interacting with the fans. Some [drivers] do it better than others. And let’s face it: Some are scared of making a mistake online. But at the end of the day, we have to push ahead with what we think is important.”
The Greening of NASCAR
NASCAR’s green efforts, like its digital innovations, are another of its 21st-century initiatives. According to the company’s website, NASCAR has the largest recycling and environmental sustainability programs among all U.S. sports, including the world’s biggest solar-powered sports facility and a tree-planting program that offsets the emissions produced by on-track racing. France also noted that today, NASCAR’s cars run on a fuel blended with 15% ethanol.
“I know it may be a surprise to some of the people in this room that an organization that burns fossil fuels could be leading a green initiative, but we are,” France said. “And we’re doing more in the green space than any other sport.”
He was asked if he could envision NASCAR switching to electric cars. “Well, we are a great validator of green technologies,” France noted. “But obviously we don’t want to lose that rumble sound.”