Cover Story “One of the stories that’s hard to get across in Raleigh is that this industry is bigger than just NASCAR. We’ve identified 45 marketing companies that market motorsports. I’ve got about 220 companies in the state that I consider motor-sports manufacturers and suppliers.” -- Ed McLean, N.C. Motorsports Association
Lowe's Motor Speedway (above) generates more than $255 million for the Charlotte region each year.
New Economic Engine NASCAR's accelerating growth blows away officials  who are working to steer even more racing dollars here

By Kevin Brafford

Any lingering questions about the business appeal of stock car racing were answered this summer when NASCAR, after only five months of looking, signed a new title sponsor for its premier series. Nextel agreed to pay $750 million over the next 10 years as the title sponsor of what will be called the NASCAR Nextel Cup Series Those are some pretty big dollars in an economic climate when saving, not spending, is considered paramount to profitability.

Reston, Va.-Nextel operates in an extremely competitive, high-tech industry. Aligning itself with NASCAR gives it the opportunity to market itself to 75 million race fans on televised events that attract audiences second only to the NFL. As for brand-loyalty, NASCAR is No. 1. A recent study found that given the choice of two products of equal cost, 72 percent of stock car fans would nearly always or frequently pick a brand they associate with NASCAR over one they do not; further, 46 percent say they’d buy a brand even if it costs up to 10 percent more.

“We saw an opportunity unlike any other that we would ever be presented with,” says Tim Donahue, Nextel’s president and CEO. “It’s like we’re joining one of the largest, most passionate families in America.”

One passionate member of that family is Ed McLean, who established the N.C. Motorsports Association 13 months ago. He has spent most of the past year accumulating a list of motorsports-related companies in the state while meeting with former governors and state Commerce Department officials in an attempt to raise $100,000 for a never-before-done economic impact study.

McLean notes that more than 40 NASCAR teams operate out of Cabarrus, Iredell and Mecklenburg counties. He notes that a Lowe’s Motor Speedway study revealed that the Concord superspeedway generated more than $400 million in 1999 alone. But he also notes that there’s more to motorsports in the state than NASCAR.

“One of the stories that’s hard to get across in Raleigh is that this industry is bigger than just NASCAR,” McLean says. “We have 18 drag strips in this state. You’ve got weekly racing in places like Hickory, Orange County and Winston-Salem.

“Then you have all of the other racing-related businesses that most people don’t think about. We’ve identified 45 marketing companies that market motorsports. I’ve got about 220 companies in the state that I consider motor- sports manufacturers and suppliers.”


Burning Rubber and Ad Dollars

In 1970, R.J. Reynolds Tobacco Co. learned that cigarette advertising was about to be banned from TV, freeing up a sizeable chunk of the company’s estimated $150 million ad budget. NASCAR, which was looking for an infusion of cash and a wider fan base, was a welcome receiver in a meeting engineered by Wilkes County native and legendary moonshiner and car owner Junior Johnson.

The marriage, which began a year later, couldn’t have been more perfect. The points championship was renamed the Winston Cup after the company’s most popular brand, and with so many tracks within a reasonable driving distance of its Winston-Salem headquarters — at that time, races were regularly run in Concord, Rockingham, North Wilkesboro and Hickory — entertaining clients was cost-effective.

Aided largely by the arrival of ESPN as a national television partner, the sport began growing at a remarkable rate in the 1980s and into the 1990s, spawning new speedways in the Northeast and Midwest and outgrowing the smaller N.C. tracks such as Hickory and North Wilkesboro. As the sport grew, so did RJR’s corporate support. In 1985, it conceived The Winston, billed as a non-points all-star race and contested annually in Concord the week prior to the Coca-Cola 600 in May.

“Racing’s such a great TV sport,” says Jerry Gappens, vice president of public relations for Lowe’s Motor Speedway. “It used to be that only the Daytona 500 was broadcast nationally. When other races began getting televised, that brought stock car racing to the nation.”

Lowe’s Motor Speedway president Humpy Wheeler, one of the sport’s visionaries, kept adding seats, luxury suites and even condominiums to his 1.5-mile oval. Today, it’s considered one of the sport’s premier facilities — three times a year, more than 160,000 fans pour in on average.

Other tracks did their best to keep up. North Carolina Speedway in Rockingham underwent a series of upgrades to its 1-mile track that eventually boosted its seating capacity to 60,113. Areas with tracks bordering North Carolina followed suit.

RJR had no desire to get out of racing, but the national tobacco settlement limited its options. So it was with much reluctance — but to the surprise of no one — that RJR approached NASCAR in February and said it wouldn’t mind getting out of a five-year, $200 million extension it had signed last year. Racing sponsorship was no longer affordable, and, according to Ned Leary, president of RJR’s Sports Marketing Enterprises, the company expects to dole out more than $2 billion in tobacco lawsuit settlements this year alone.

Nextel saw a chance to take NASCAR places it couldn’t go before — such as into the subconscious of teenagers and children — while broadening its marketing base. “Nextel will be reaching out to everybody,” says Derek Chen, international business development manager for the automotive industry for the N.C. Department of Commerce. “People have no idea how big this is going to be.”

Perhaps there is a clue. The ceremony announcing the NASCAR-Nextel marriage was staged at the NASDAQ stock exchange at Times Square in New York City.


Growing Beyond North Carolina

NASCAR’s most recent growth spurt, on the surface, hasn’t been all good for North Carolina. It was announced earlier this summer that Rockingham, home to two Winston Cup races a year since 1966, would lose its fall date starting next year.

The loss means an estimated $25 million economic hit to Richmond County, says Chris Browning, vice president and general manager of North Carolina Speedway. “Obviously, this is a huge loss,” he says, “but to be perfectly honest it’s not one that we didn’t expect.”

One reason NASCAR cites for taking the November race from “The Rock” — and in giving a second race to a track east of Los Angeles on Labor Day weekend — is that the facility failed to sell out.

“All of the tracks were adding seats when we were adding seats,” says Browning. “Then the economy softened a little bit, and then it softened a lot. Add that to the fact that we’re in a saturated market, and it makes it a tough sell. Think about it: There are more than a million seats available for Winston Cup racing within a 4 1/2-hour radius of us.”

For more than three decades the fall race was held in mid-October. But as NASCAR expanded its schedule to its present 38 races, Rockingham’s date was gradually pushed back to November, when weather again is iffy. (The final Pop Secret 400 will be this Nov. 9.)

“If races were determined just based on the product, we’d be fine,” Browning maintains. “We have a modern, up-to-date facility with a rich tradition. It’s like I’ve said all along, we’re a victim of our sport’s own success.”

Browning says the speedway is already making inroads toward securing a better date for its remaining Cup race. “It’s too late to get anything done for 2004,” he says, “but we want to sit down with NASCAR at some time and talk about our future. We’ve lost something, so we’d like to gain something in return.”

A March or April date would be ideal, Browning says.“One of our main revenue streams is hospitality,” he says, “and following Daytona, where everybody in racing is going to entertain clients, is difficult. It’s anti-climatic in a big way.”

In the meantime, track officials will look for other uses for the facility. “We did a beach music concert last year that went pretty well,”  Browning says.


Cementing Relationships

With RJR’s exit from racing, Lowe’s Motor Speedway’s hold on the all-star race beyond next year is in question.

Along those lines, a $650,000 marketing effort was unveiled in May, aimed not at selling race tickets but at selling the region’s relationship with racing. Newspaper, radio and TV ads have been bought, touting the slogan “There’s No Place Like Home,” all in response to NASCAR’s talk of a year ago about moving the race from LMS.

More than a dozen local companies and groups — among them Bank of America, Duke Energy, Jefferson Pilot, Lowe’s Home Improvement stores and the Cabarrus County Convention and Visitor’s Bureau — signed on as sponsors, together contributing about $500,000. The speedway ponied up the remaining $150,000.

The all-star race is lucrative in that it keeps race fans in the region for up to 10 days, and thus hotel rooms, restaurants and shopping malls filled. Fans arrive just prior to what’s been known as The Winston, then stay around through the Memorial Day weekend for the Coca-Cola 600.

“It’s been an ideal situation for all parties,” says Gappens, the speedway’s vice president of public relations.

Lynn Minges, executive director of the N.C. Division of Tourism, Film & Sports Development, testifies that fervent race fans do travel from long distances in amazing numbers. At the invitation of Ed McLean of the N.C. Motorsports Association, Minges took in The Winston this past May. McLean drove her around in a golf cart, where she took in all of the sights for the first time.

“I had been to the track before, but never for a race,” Minges says. “It was pretty overwhelming to see the masses of people who had traveled from so far away and who stay for the week. In my mind I thought folks came in and left. But you see rows of motorhomes from places like Minnesota, Michigan, Illinois, Indiana, Florida, Ohio — the list of license plates goes on and on. And these are new tourism dollars that are being brought into our state that we wouldn’t get otherwise.”

During the press conference announcing Nextel’s arrival into NASCAR, it was confirmed that there will be an all-star race next year, with the two principals co-sponsoring it. As this issue of North Carolina magazine was going to press, no one would confirm the track, but speculation is strong that it will remain at LMS at least through 2004.

“I don’t see how it could possibly be anywhere else next season,” says Wheeler, president of LMS and its parent company, Speedway Motorsports Inc. “Logistically, you need at least a year of lead time to do it right. We have had two very successful races the past two years that would be hard for anyone to match.”

Gappens takes the point further. “Go beyond the 150,000 people we had here in May,” he says. “If you look at all that Nextel has on its plate just to get ready for 2004, you’d think that they would look at this as having one fewer thing to worry about. And besides, I can’t imagine NASCAR wanting to move another event out of North Carolina in the same calendar year after what happened in Rockingham.”


Keeping the Engine Humming

When Charlotte and Concord leaders turned up the offense in an attempt to maintain LMS’s place in NASCAR, it was about more than preserving a third race. It was about preserving a huge economic engine that quietly helps drive the region.

Concord Regional Airport was built in 1994 in part to answer a growing demand among race teams looking for fast access into and out of town. With more than 89,000 takeoffs and landings last year, it has grown into one of the busiest general aviation airports in the United States. An estimated $13.3 million expansion program is under way, the centerpiece of which is a 1,900-foot runway extension that will enhance all economic development, NASCAR included.

Not far from the airport is a two-story, 61,000-square-foot facility for NASCAR research and development that opened this spring with Concord-based CM Black Construction as the general contractor. NASCAR has announced plans to invest more than $100 million during the next decade in R&D — the facility is designed specifically to develop improved safety measures for its race cars, trucks and tracks.

Just down the road is UNC Charlotte’s Lee College of Engineering, which created a motorsports and automotive engineering program in 1998, one year after Rowan-Cabarrus Community College launched the state’s first motorsports management technology program. UNCC’s offering has developed more than $2.25 million in external research and program development related to vehicle technologies. Nineteen faculty members aid the educational efforts of more than 100 undergraduate students enrolled in the motorsports concentration. “There is so much business going on related to motorsports in the Charlotte region that it almost boggles the mind,” says McLean of the N.C. Motorsports Association. “I’ve even been amazed by it all.”

Among the companies is Aero Dyn Wind Tunnel LLC of Mooresville, the region’s first full-scale wind tunnel, a testing tool vital to race teams. Conceived, designed and built by Gary Eaker, a former aerodynamicist at General Motors and Hendrick Motorsports, the tunnel has the potential to lure millions of dollars that race teams previously have spent at testing facilities out of state.

The 160-foot tunnel rests inside a nondescript building adjacent to a microbrewery. Twenty-two 100-horsepower fans suck air at up to 130 miles per hour over race team test cars. And in a move that exceeds the capabilities of conventional wind tunnels, rollers are employed to rotate a car’s tires to simulate track conditions. “It takes research and development to win races,” says Eaker, whose hourly fees are 35 percent below the industry average, thus enabling low-budget teams to more easily afford his services. “As long as the money keeps rising, the effort to win will increase proportionally.”

Keeping race industry businesses in the state might not be easy. The loss of the all-star race is one potential huge blow and could add momentum to an effort that is under way in Nashville, Tenn., where Dover Motorsports Inc. spent $145 million to build a new speedway that opened two years ago.

Similarly, eyebrows have been raised by happenings just down the interstate in Greenville, S.C., where Clemson University is joining forces with BMW to construct a world-class automotive and motorsports engineering complex. With financial aid from the state, it could include a $50 million wind tunnel, crash-test laboratories and numerous research facilities at the proposed campus, according to the Charlotte Observer.

The campus’s chief focus would be generating engineers for the luxury auto maker’s burgeoning Greer plant, but the state has been actively recruiting U.S. and British motorsports companies, nearly two-thirds of which currently operate between the Charlotte area and Atlanta on Interstate 85.

A third potential player is the Hampton Roads region on the southern Virginia coast. The recently formed Hampton Motorsports Technology Alliance is a partnership between NASA’s Langley Research Center, Old Dominion University and local automobile companies. NASA’s wind tunnel was the most accessible — and thus preferred — choice of NASCAR teams in the 1990s, even after Congress cut funding in the middle of the decade and the university took over its operations.

The new alliance was formed to lure motorsports teams to move to its region, and is touting Hampton Roads as the “motorsports technology capital of North America.”

Further, Greenville and Hampton also are competing with Mooresville to court the Motorsports Industry Association, a trade group that represents an estimated 4,000 motorsports companies headquartered in a region of the United Kingdom dubbed “Motorsports Valley.” Fast February all three cities showcased their offerings to a trade delegation scouting potential U.S. sites.

“Motorsports is a huge draw for tourism in that it brings in so many dollars from out of state,” says McLean. “What’s not as clearly visible, though, is all that’s related to it. It didn’t use to be an industry, but it certainly is now. When something grows right under your nose, I don’t think you see it as much as you would if it was in your neighbor’s backyard. That’s what’s happened here.”


More Than Gear Heads


The 220 companies that McLean cites as doing motorsports-related business cast a wide net. Some would quickly come to mind, such as marketing companies and souvenir and clothing apparel manufacturers. Others, to a layman, appear to come out of left field. To wit:

BSCI, based in Mooresville, makes roll-bar padding specifically for race cars. The company is owned by Rep. Karen Ray, a Republican first-term member of the state House of Representatives who serves Catawba and Iredell counties. The Rays used to supply foam rubber for furniture companies, then began making roll-bar padding a little more than a decade ago. While NASCAR teams represent the bulk of their business, more than 25 percent of their profits come from outside the United States via Formula-1 teams, a popular European open-wheel racing series.

Tex Racing Enterprises is located in Ether, about 40 minutes south of Asheboro. Owner Tex Powell has a near monopoly on building transmissions for Winston Cup, Busch Series and Craftsman Truck Series teams, according to Derek Chen of the N.C. Department of Commerce. Further, Tex Racing employees some 40 workers and exports about 20 percent of its product to race team worldwide.

Roehrig Engineering, headquartered in High Point, manufactures what’s apparently the filet mignon of shock absorber-testing machines. Its product measures the rebound effect of shocks and its readings are so precise that most NASCAR teams utilize its services. “It was a bunch of guys that were engineers,” Chen says, “and they were able to customize what they did for racing. They’ve got a first-class product.”

So does John McKenzie, whose company’s success is perhaps the most intriguing in that it seems so simplistic. McKenzie founded Motorsports Designs, a vinyl decal screen-printing company, out of his High Point home in 1982. “I was selling tax and law books in eight counties for a company out of Chicago — that was my day job,” he says. “At night I was moonlighting by myself doing some screen printing.”

He had been introduced to stock cars at age 6 when his father took him to see a race at Bowman-Gray Stadium in Winston-Salem. Twenty-seven years later, he was still transfixed by the sport, and when car owner Richard Childress of nearby Welcome convinced Piedmont Airlines to sponsor his Winston Cup car, McKenzie sensed an opportunity.

“At that time most of the screen-printing companies were only set up for large-volume orders, so the decals on race cars were being handpainted. That was expensive, plus it was hard to find someone to do it,” he says. “So I went to Richard and asked him to give us a chance.”

Childress did. The first decals were traced, produced and hung to dry on a clothesline. Childress was impressed with McKenzie’s ability to replicate Piedmont’s red and blue colors, plus decals provided a brighter, cleaner look. Before year’s end, McKenzie was contracted by 20 race teams, and “within two years, we had 100 percent of the field.”

As TV became an integral part of NASCAR’s growth, so did the importance of the car’s look. “Part of what makes Winston Cup racing so appealing on TV is the multi-colored cars,” he says. “We took the cars looking like ‘Saturday night specials’ to corporate America. Sponsors like seeing their logos bright and shiny.”

Today, Motorsports Designs has more than 35 employees and derives 29 percent of its profits from a commercial division (it provides decals for 9,000 Thomas Built school buses annually). The company shares the NASCAR marketplace with several other vinyl graphics producers, but still is recognized as its industry leader.

Not only is the work more abundant, it’s more innovative. The newest trend is a race car sans paint. “More and more teams are having us come in and detail the entire car in vinyl,” McKenzie says. “The turn-key operation now takes us about 12 hours per car. From bumper to bumper, it’s all vinyl.”


Growing Friendships

It was only a couple of decades ago that many teams on NASCAR’s top circuit consisted of fewer than 10 full-time employees. Today, each of the sport’s five largest teams — all based in either Cabarrus, Iredell or Mecklenburg counties — have staffs of more than 100, among them degreed engineers and divisions for merchandizing, marketing and manufacturing. Even so-called small teams employ more than 40.

“It’s an inherently capitalistic sport, not a franchise system” says Derek Chen, the Department of Commerce’s manager for the automotive industry. “There’s a certain intensity and fervor within the teams — they’re working 14-hour days to gain a split-second advantage. That competition is good for the sport, and it creates an excitement that makes you want to be a part of it.”

Lynn Minges says the N.C. Division of Tourism, Film & Sports Development wants to be a bigger part of it. “We worked with ‘Good Morning America’ last year on a feature about motorsports in North Carolina,” she says. “We have dialogue within our office and the speedways in this state that we’ve never had.

“Growing our relationship is good for both sides,” she continues. “They’re race folks, not tourism folks, so there are things we can do to help them, which in turn helps all of us. We’re working to help them package their product, to increase awareness and attention not only to the race tracks, but to the race team shops and other businesses. All of this brings tourism dollars to the state.”

Exactly how many won’t be known until an economic impact study is conducted, which McLean hopes will be sometime next year. “We know it’s big, big business,” he says. “We just don’t know how big.”

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