NASCAR Economics 101: FOX, Others Forced To Make Cutbacks

Jen PrestonSenior Analyst IFebruary 13, 2009

You know the economy is bad when channels like ESPN and FOX Sports are being forced to back off their mighty high production costs. But that's exactly what they're doing.

Chairman and CEO of FOX Sports, David Hill, said "minute" cuts will come to every sport the channel covers—which includes baseball, NASCAR, and football—but they won't make these changes "obvious to the viewers."

ESPN laid off several workers earlier this month, and Sirius XM Satellite Radio is expected to file for Chapter 11 bankruptcy.

“Over the last several years, we were all sort of living oblivious to the perils of what we were to face and what we're facing now,” Dale Earnhardt, Jr. said. “We stopped paying attention to the little things, and it's sort of biting a bunch of people in the butt now.”

But the news isn't all bad. Sponsors are still pouring millions of dollars into advertisements during NASCAR races, including title sponsor Sprint NEXTEL, which is cutting back more than $1 billion in labor costs.

“In a very difficult sales environment, whether it's prime time television or sports, the NASCAR ad market for FOX in this environment is unbelievably healthy,” FOX Sports president Ed Goren said.

Last year, struggling auto makers Ford, General Motors, and Toyota, spent a combined $45.6 million in commercials alone.

Other companies like AT&T, Home Depot, and Pepsi, which have all announced layoffs, spent anywhere from $7.25 million to as much as $14.8 million. PepsiCo let more than 3,000 people go, and fourth quarter profits are still dropping for the soft drink company.

Despite how much sponsors are spending, teams are still struggling, and if they think NASCAR is going to help them...they're sadly mistaken.

“There's some things we can't help them with,” NASCAR president Mike Helton said. “We give them the recipe to help themselves and it's up to them to see how the pie comes out of the oven.”

Thanks to the Nielsen Media Research & the Sports Business Journal, Reuters UK, IndyStar and The Times Union for the quotes, advertisement amounts, and information used in this piece.