With 3 races left in the NHRA Mello Yellow Drag Racing Series Countdown to the Championship (their playoff system), Robert Hight is atop the leader board (50-points ahead of J.R. Todd). Aside from being a 2x champion driver, Hight serves as the President of John Force Racing (the team he races for). Robert was recently in New York and JohnWallStreet had the chance to sit with him to discuss how drag racing became a billion-dollar business, why NHRA has one of the youngest fan bases in sports and the importance of car sponsorships.
JWS: Drag racing has become a billion-dollar industry. Where is the money coming from?
Robert: It’s really driven through sponsorships and attendance. Fans have to come to the races and then we need them to tune in on TV. It (the sport’s economics) really changed when Fox Sports took over (the television contract in 2015) and our viewership grew by more than 70%, because you need eyeballs on your sport (to generate the big sponsorship dollars).
JWS: NHRA has one of the youngest fan bases among all sports properties. Why is that?
Robert: It fits the new generation. They (the fans) don’t have to sit in the stands and watch cars go round and round for 3-4 hours. There’s some racing, you go back in the pits – there’s some entertainment back there – watch some more racing; it just fits the attention span of today’s youth.
JWS: Is the NHRA business model so reliant on sponsorship that if a team were to lose a major sponsor, they would be forced to fold-up shop?
Robert: It costs $4 million to run a single NHRA Funny Car for a full season. We could not compete if we lost a sponsor, the hope would be to find a new one. Our organization signs long-term deals (to avoid that fate). We don’t sign year-to-year deals, it’s a 3-year minimum.
JWS: Nearly all NASCAR tracks are publicly owned. Is that the same with NHRA drag strips?
Robert: No, most of them are private – a lot of family owned tracks, but Bruton Smith owns quite a few of our events and honestly, they are the best events we go to. Beautiful tracks, beautiful facilities, very well run.
Howie Long-Short: Robert’s primary sponsor is Advance Auto Parts (AAP). Back in August, the company reported Q2 earnings. Sales (see: brakes, batteries & Spring related categories) rose +2.8% YoY (to $2.33 billion) with comparable stores growing sales +2.8% (nearly twice the +1.5% max projected for FY18), as EPS climbed +24.6% YoY (to $1.97). AAP also announced its board had approved a $600 million share repurchase program to replace the $500 million program ($415 million remained) approved back in ’12. Shares are +12.6% since earnings were reported in mid-August and are +54% YTD. They’ll open at $163.17 later this morning (10.11.18).
Fan Marino: Bruton Smith is the founder and CEO of Speedway Motorsports, a publicly traded company (TRK) that owns 9 racing venues (that hold NASCAR, IndyCar and NHRA events); Atlanta Motor Speedway, Bristol Motor Speedway, Charlotte Motor Speedway, Kentucky Speedway, Las Vegas Motor Speedway, New Hampshire Motor Speedway, Sonoma Raceway, Texas Motor Speedway and North Wilkesboro Speedway. Back in early August, the company reported Q2 total revenues had declined -2.4% (to $4.2 million) as the company “experienced poor weather during almost all of the events it held during the quarter.” TRK shares will open at $16.64 on Thursday (10.11.18), just north of their 52-week low.
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