Dude, Where’s My NASCAR?

0:05Congratulations! You made the varsity podcast. My name is John Ourand and I'm Puck's sports correspondent and the host of this pod. And today I sit down with NASCAR Commissioner Steve Phelps. We found a quiet spot to talk in wine country just a day before his Toyota Safe Mart 350 race at the Sonoma Raceway. I was in Sonoma because Puck and NASCAR partnered on a live event around the race. Steve Phelps and I co-hosted a Saturday night dinner with a bunch of sports media folks the night before the race. NASCAR finds itself in a funny spot right now. It seems like all the buzz around motorsports is on F1 these days.

0:45After all, Formula One has a hit movie, a hype Netflix series, and is on the cusp of signing a new media deal in the United States. Sure, NASCAR is the biggest motorsports outfit in the United States, but you may be surprised at just how far ahead of the pack NASCAR is. F1, IndyCar, they aren't close to NASCAR in terms of viewership, sponsorship, at least not domestically. So we're going to get a chance to hear Steve talk about where his sport is at the moment and how it plans to grow. Steve's a really good guy, and I'm sure you're going to like this conversation. But before I get to Steve, today is Wednesday, July 16th, and here's what I'm watching.

1:27Last night was the All-Star Game, a celebration of Major League Baseball. And there really is a lot to celebrate this year, at least from a business sense. Revenue's up, attendance is up, TV viewership is up. The people in baseball, in the organization, they're pretty happy right now. But there are a couple of red flags on the horizon that baseball has to address. There is, of course, the media rights negotiation. I may be in the minority. I am in the minority. But I think MLB is in a really good position heading into 2028 when all its rights are up. Commissioner Rob Manfred still does have to convince big market clubs like the Yankees, Cubs, Mets, Red Sox, etc.

2:07to pool local media rights for extra inning styles package that I'm telling you media companies desperately want. And then there's the regular games. The viewership for the playoff, the possibility of owning October primetime with baseball playoff games should be enough of an incentive to keep many media companies involved. So I think from a media standpoint, baseball is OK. But there's another issue that looks even more dire for baseball, one that could affect the media rights negotiations. And that's the collective bargaining agreement between baseball and its players union that ends after next season.

2:45The two sides right now couldn't be further apart, and this week in Atlanta showed that the likelihood of a work stoppage appears to be stronger than ever. The main issue, stop me if you've heard this before, is with a salary cap. MLB wants one. The players union views it as the third rail. There really doesn't seem to be any compromise that can be had on this. The owners, they can point to just about every other league, the NFL, the NBA, the NHL. They all have salary caps and all of them are doing really well business wise. Personally, I find the games a lot less interesting when the Dodgers and their$338 million payroll play the Pirates and their$87 million payroll.

3:30That doesn't seem competitive to me. But in Atlanta yesterday, the union's executive director, Tony Clark, took to the mic and bashed the very idea of his salary cap. This is not about competitive balance, he said. It's institutionalized collusion. Look, I don't want to make too much of this. I know we're still more than a year away from anything happening, and a lot can happen in 12 months. But this really is a flashpoint, and both sides appear to be unmovable on it. Again, a lot can change in a year, but there really doesn't seem to be a compromise to be had on this one. So now let's get to Steve Phelps.

4:10I was sitting here in beautiful Sonoma with Steve Phelps, the new, newish. Are you still new commissioner? I think it's still new. Yeah, I think it's within a year, you're still new. Although your duties are still exactly the same, right? Pretty similar, but we kind of made a shift about a year and a half ago where a bunch of my responsibility went over to Steve O'Donnell, who is now the president of NASCAR, who was the chief operating officer before. But yeah, a lot of the same responsibilities, but I have been able to focus more on, you know, kind of long-term strategy, what we're doing from an international perspective.

4:45And just, I would say more opportunities to get FaceTime in places outside of the NASCAR community. And that's beneficial to us. You're talking about everything that you're focused on and you're just coming, you're right in the middle of the Warner Brothers Discovery. deal. They're carrying five races. You just got through Amazon Prime, which carried five races. Fox's season is over. We're getting ready to start the NBC season. Excuse me, the NBC season coming up. This is your new media deal. And of course, the CW is out there as well. Five different outlets carrying NASCAR races. You're now pretty much in this back half of it.

5:33Give me your overall thoughts about, because I'm relatively certain you're going to say it's doing well. Tell me what surprised you though. What sort of metrics came out from this that you weren't really expecting? Yeah, I think I will start with, you know, just kind of chronological. I'll start with fox so fox had four races on big fox and 10 races on fs1 last year they had significantly more i think we had four more broadcast windows and then i believe there were 10 windows on fs1 so the split was almost 50 50. And so to go to four and 10, I thought the numbers frankly would go down because the universe size is just smaller, obviously with cable than broadcast.

6:24But the average number that we did for their, for the 14 races was 3.1, which is, and change, which is exactly what it was last year. So that was a surprise. We actually thought the numbers would have taken a step back. They did not. And that's despite, you know, weather at Daytona again. So my expectations for next year is the Fox numbers will actually climb. Unfortunately for us, weather plays a part. Yeah. It's always so hard to go from year to year in a NASCAR race because what was delayed and, you know. Particularly with the broadcast races, right. And particularly the Daytona 500. Now we had weather last year at the Daytona 500 as well.

7:07With that said, my expectation for next year is they will grow. I think I was surprised pleasantly with the entire Amazon Prime, you know, five races. I thought they did a spectacular job from a production standpoint. They tried some new things in the broadcast that hadn't been done before. One thing called the, it was kind of looking at the fuel consumption and they're using AI to really calculate what was happening there. And it played out in one of their races where they said the 24 car, which is driven by William Byron, that he was going to run out of fuel, which is exactly what happened. And then the eventual winner, Denny Hamlin, they predicted would not, he was going to be on the razor's edge.

7:57I mean, to me, that's always innovating. I think that's really what NASCAR has done. Like when Fox came into the sport 20 years ago, they innovated, they did things differently. Um, and I think we're seeing that from Amazon. And I think now Warner brothers discovery is doing some of the same things, right? So they have, um, they've got the 40 in car cameras that they have for the entire season, which is new and very cool, a unique product that's on Macs. Then they have a, a alt cast that they're doing on true TV. And then they have the race that's on, on, on TNT. And so the aggregation of those different things, serving different audiences, I think is really cool.

8:37Um, and so I wouldn't say I was surprised about that. Um, but I think they've done a really good job as well. And listen, NBC does a terrific job. Um, they're a, they've been a great partner and, you know, we're excited to move into that part of the season as well. I think the other surprise - Before you get to, I think because of the other surprise, you're going to talk about the CW. Before you get to the CW, which we will talk about because some of the numbers that I've seen from the CW have been really, really terrific for NASCAR. Let's go to Amazon. Overall numbers of people that we're watching are down, at least from broadcast races.

9:18the demos are up. Do you consider that a trade-off or do you expect the overall numbers to increase? How do you view that aspect of it? Yeah, I think, listen, John, we knew that the Amazon numbers relative to broadcast were going to be down. So if you look at it, I think they were roughly where cable is, maybe slightly higher than where cable was. To me, that's a win because I think there was some doubt that NASCAR fans would migrate to Amazon Prime. I think that we've proven that they can and they did. And our expectation is like what happened with the NFL. The NFL numbers year one on Amazon to year three on Amazon, they're up like 30 or 35 percent.

10:04So for us, if we're able to track that same ways, that's a huge win for us. And, you know, overall, our media deal, you know, having a combination of broadcast cable and streaming or in, you know, kind of Turner's position, streaming and cable, two cables. That was important for us as we kind of the uncertainty that's in the media market now, what's going to happen with cable TV. So it was important for us to go with a pure streamer. I think we picked the right pure streamer in Amazon Prime. And then you have on the backside for our Xfinity race, which is our, you know, kind of our second series, which races typically on Saturdays.

10:47You know, those numbers, they're as strong as F1 numbers. And those numbers year over year on the CW versus where they are with Fox and NBC, they're up 20%. And so we've been thrilled with what the CW has done and the numbers that they have. And I think, listen, I think people would be hugely surprised at just the simple statement of those numbers are better than or the same as F1 numbers. That surprises people. It doesn't surprise me. You know, our cup numbers are nearly three times what, you know, what F1 does. And I'm not here to dog F1 at all. But I think it surprises people that the breadth of what NASCAR has, even just with its three national series, right?

11:38Our Cup Series, which is our top series, our Xfinity Series, and then our Truck Series. Those numbers in aggregate are significant numbers and by themselves that they're significant numbers. So, you know, back to the original question, you know, were we pleased? Yeah, I mean, the numbers to your point, John, the numbers in the audience itself skewed about six years younger. Is that important for us? Yeah, it's important for us. And if those numbers continue to climb and by the way, continue to get younger, it's a win for the sport. Why did you go to the CW at the time? When they came to you with a pitch to carry the Xfinity races, is there an expectation that they're going to be growing their sport?

12:22Or do you feel that NASCAR, those races, especially for NASCAR fans, are destination viewing? I think they're destination viewing for sure. You know, why did we go there? If you consider, you know, NBC and Fox, they both had Cup Series races, right? Essentially, they split the season in two, right? Two halves. Fox in the first half, NBC in the second half. And then you look at, you know, they both had Xfinity for the first half and the second half. Right. So companion races, if you will, with roughly the same production value, roughly the same talent. But if you think about it, and one series is three times larger than the next, right?

13:06Cup about three times larger than Xfinity. You're just not going to get the same amount of what it means and the importance. We knew going to an all broadcast schedule, which is what the CW is, and the fact that, hey, you're going to put your own fresh spin on it. And it's really important for the CW, right? It is their number one sport and they're using it as an anchor property in order to grow what they're getting from a distribution standpoint and the relationships that they have. NASCAR is, they're making a huge bet on NASCAR and it's working. And the cool thing for us is we built this gleaming new production facility and we're doing the production for them.

13:54And I think that's another important proof point for us that, hey, can you make it work? Yeah, we can make it work. And the way people view that broadcast from a fan perspective is really positive. So there are lots of different wins here from a media perspective. So yes, you knew I was going to tell you that I'm thrilled with how things are going. Can they get better? Yeah. And my expectation is they ultimately will as we move to next year. But I think, listen, if you're going to look at the universe, which we did, and the number of races that came off broadcast, you are starting at a level set of down probably 13 or 14 percent.

14:36That's what your starting point is, right? So anything above minus 13 and 14 for the overall season, I'm going to consider as a win. and the opportunity for us to have this balance across broadcast cable and streaming is an important thing for our sport. Steve, not my toughest opening question there. Are you thrilled? All right. So we'll call that a softball. I'm sure there are others that are not. Well, I'm going to try. I'm going to try. You mentioned one thing about producing these races. And every time I talk to broadcast executives about Netflix or even Apple or any of these streamers, they always say they don't have a production capability.

15:17You know, they can't produce it in its own right. Was it worth it to you to build, or why was it worth it to you to build these production facilities as opposed to just going out and hiring freelancers that already knew how to do it? You know, I think for us, we look at that new productions facility and the$60 million that we spent on it as money really well spent because it does two different things, right? It does live event production, which we will do in NASCAR, like we do for the CW. There's a bunch that we do below the line, if you will. So non-talent that we'll do for other media partners.

15:58And so that's important, but there's a whole nother component to it, which is really content and delivering content to both existing fans, as well as potential fans. And it's important for us to meet that fan or potential fan where they are. So that might be with Netflix. That might be with Amazon Prime. That might be through YouTube, any number of other things. And so that's what we're doing. And we combine that with what we're doing from a data perspective, with our data warehouse, understanding who our fans are, and then giving them the content they want. Right. I know that you're a Chase Elliott fan.

16:37I will feed you Chase Elliott opportunities, right? We are not going to hit you with a ticket message unless we're going to go to your race market, right? You live in Kansas. The race is coming to Kansas. Hey, I've sent you a bunch of really cool things about the driver that you like or the sport that you love. And oh, by the way, the race is coming to your town. Would you like to buy a ticket? And so all of those things are important as we look at that distribution of content. And the key word for me is distribution. So we did good content before. It wasn't great. So now we're doing great content and then we're distributing it far more.

17:18So it's more content and better content. And we're just going to continue to keep growing on that. Let me take a quick break. Come back. You've referenced F1 a couple of times. I want to talk to you about F1 IndyCard, just some of the competitors that are out there.

17:41so f1 of course uh is uh by the time this runs we'll have either signed a deal with apple or it looks like they're they're they're heading over to apple as part of a deal big movie that came out drive survive everybody talks about indycar just started with fox fox is putting it on big fox they're pairing a lot of races uh with with nascar in terms of moving forward Are they competitors to NASCAR? How do you view these other racing leagues? Are they more competitors to you than, say, you know, the NBA or college football or other sports that are out there? I don't think so. In fact, I would say they're actually less.

18:20They're not as competitive. They're they're they're in a different subset, I would say, than different sports. And the reason why I say that is, if you go back five, six years, I think motorsports was really struggling, right? We were in a long decline, slow, steady decline for about a decade. F1 wasn't doing very well. IndyCar wasn't doing very well. Since 2019, that has changed. And we celebrate F1's success as we celebrate IndyCar's success on Fox this year. It's a positive thing if motorsports is growing. If you consider that we're the top of the heap of motorsports domestically, and we are by a wide margin, it's a good thing that people are in people's consideration set.

19:13And that's all we can hope for, frankly. We want to make sure that we are part of their consideration set. Now, our audience is an F1's audience. The crossover is really only 6%. IndyCar is probably in the mid 20s. You know, they're a different brand than we are right there. They're this almost unattainable brand, right? It's all about restricted asset access. It's about, you know, kind of this premium brand that is. is just incredibly different from ours. Ours is all about accessibility. Accessibility from the grid itself going down on the ball field and have our fans have access to that, to watch concert, to watch driver introductions.

20:00Many of them are on the grid itself where the cars before it starts. So you have a prayer, you have a national anthem, you have a flyover, you're standing on pit road, right? And where the cars are. And then our officials ask everyone to leave the driver strap into the cars and they're off and racing. You just don't have that at F1. It's not, you just don't have anything that looks in anything like that. And I think the other part of accessibility really is about the cost to attend a race. Like going to an F1 race is incredibly expensive for us. You know, you can get tickets for 30, 40,$50. Um, typically parking is free.

20:42Um, you know, for our two lower series, kids 12 and under are free with an adult purchase ticket. Um, you can bring a cooler fill of your favorite beverages. Many of our fans will bring beer, um, or, or I'll do a NASCAR plug or Bush light, um, which is on Ross Chastain's car. So that is, It's just different. And it doesn't mean that one is better than the other. It just means they're different, different audiences, different accessibility. So we lean into the Americana that we are. And that's important. You know, we are, we have a blue car. People would consider us to have a blue collar fan. What I think we've done over the past, again, five years or so is most of our new fans are either female, they're young or they're people of color.

21:36And that surprises people. So when you go to races now, they're not a bunch of people who look like me, old and white. Do we have old and white? Yeah, of course we do, because I'm there. But other than that, to see all these faces, whether they're competitors, pit crews, families that are coming that are fans, it's a very different look than it used to be. And I'm actually very proud of that because we want it to represent America. We want it to represent what the population looks like. And if we're able to do that, it just broadens the horizons of who your fan base both is and can be. You know, we had Dale Jr.

22:18on this pod a couple of weeks ago, and he went to the F1 race in Miami. And I was like, what's the difference between F1 and NASCAR? And he seemed wistful. He was like, boy, the buzz around F1 and sort of like the highlight, like you said, sort of the Tiffany aspect of F1 was great. But then he talked about just, you know, the camping around the, I mean, your weekends are true weekends where people get there on Friday and stay through Sunday and they camp at the racetrack, which, and he didn't want to lose that at all. No, I think it's, it's, it is unique to us for sure. I mean, people come and camp for, you know, five days and camping's a huge part of NASCAR.

23:03And so at the Daytona 500, you'll have 30 ,000 people camping and you'll have a similar number at Talladega and you'll have, you know, 20 ,000 plus at Pocono. It's an important aspect. And you make lifelong friends when you're camping next to someone because they'll reserve the same camping spot next to the same people who are reserving the same camping spot. And it's just that's how they spend their vacations, going to NASCAR races. And the sense of community that exists there truly is unlike any other sport in the world, in my opinion. Let me take another quick break. I have a couple more softballs for you, Steve.

23:55all right this is uh truly a softball but i am interested in in this one uh one of the reasons that i am so high on nascar is that uh you are really active in uh with private equity private equity is is taking a special interest in investing in your sport what are they seeing What's the potential, what are they going to be able to get out of this? Sure. Well, let's start with this is I think it's important to understand why they're coming to the sport, which is what your question is. But what is the mechanism they are to take ownership in the sport? And that's really at the team level, not at the governing body level.

24:38So they're investing in teams. So what are they investing in? They're investing in things called charters. Charters are not franchises. They allow for a guaranteed starting spot. They allow for a fixed amount of money that they know they're going to get that goes across all teams and a variable amount of money they get by racing and where they finish in those races. And they get kind of a say and a stake in the governance of the sport. So we will listen to what they have to say. That's what a charter is. It's nothing more than that. That's not an equity position in NASCAR. And I think that's an important distinction.

25:16So why are they coming? I think they're coming. And then you look at the charter values over the past five years, they've gone up by a factor of 15. And so is private equity helping to drive the cost of the enterprise value of those charters? Yes, they are. Listen, private equity doesn't get into things to lose money, right? They don't get in it to have enterprise value go down. They get in it because they think it's a good investment. They are very savvy buyers. And so they are seeing growth in the sport. They're seeing what they believe is going to be continued growth in the sport. And they believe that the enterprise value of these charters is going to continue to increase.

26:02And why do they think that? For starters, we had charter extensions last year that essentially there was a seven year deal that we've done with the race teams with another seven years on top of that. We would negotiate whatever the dollars will be as part of that. And then a good faith negotiation past that 14 year period. And so the amount of money that NASCAR provided as part of these charters extensions, really, it went up significantly. So every dollar that we got incremental to the media deal went to our race teams, every single dollar, plus money that came out of NASCAR's pockets and the track's pockets to give to the race teams.

26:46And we did that to try to make sure that there was a balance there where race teams were profitable. Profitable race teams put on better racing. So back to your original question with private equity. So private equity is coming in and they're providing what I believe are three things to the race teams. They're providing expertise that the race teams don't have. Expertise in what? I think a lot of different areas, right? So whether it's data, whether it's like a lot of these private equity folks that are coming into NASCAR, they own part ownership of NFL franchises or NBA franchise or NHL or Major League Soccer.

27:20So they're bringing different ideas to those race teams. They're providing capital, right? That is a good thing for the owner of these particular charters. And in many cases, they're bringing sponsorship. I think that's an important thing. If we are going to continue to grow, and I believe we will, it's by thinking differently, right? Which is what we've tried to do. It's about being bold and innovative in everything we do, whether it's schedule or it's data or it's the vehicles themselves, or our media partners. All those things are different for us and we need to continue to drive the change that will lead to more and more growth.

28:04You referenced specifically that PE is getting into charters and not NASCAR. You are seeing the Big Ten is looking at PE, the Big 12, certain college conferences. Is that a no-go area or are you open to? I think, listen, I won't get into a lot of it, but we are privately held by the France family. The France family started NASCAR Bill France Senior, Big Bill, 77 years ago. We're not interested in selling. We're thrilled that PE is coming in for the race teams. But, you know, it's certainly not something that we are entertaining at this point. And then you referenced Charter, of course. You've been going through that big legal suit with Denny Hamlin, Michael Jordan.