Economics of Drag Strip Ownership (3 Viewers)

[clwill]

This thread in the NASCAR forum got me thinking. Is anyone here familiar with the economics of owning a drag strip? It just seems that it's got to be a tough row to hoe as a drag strip owner.

First, there's the whole issue of the land -- just for the track (with a good shutdown area ) you need quite a big plot of land, but toss in pits, stands, parking, etc. and you're talking about a huge piece of dirt. Put that anywhere near a metropolitan area, and you are talking big bucks.

Then there's the operation. Depending on where you live, you probably have something like 25-35 weeks a year of weather (at most).

Most of the time you're doing weekly test and tunes -- where I find it hard to believe you're much more than breaking even. Just opening the doors, collecting tickets, prepping the track, staffing the line and booth, having safety folks around, I wonder if it even pays the bills.

Then maybe a good local race weekend once a month, where you might make a little dough. Probably four times the people working, but you get some shot at concessions, and maybe a reasonable gate. But most of the people are the racers, and they're saving money to put in the cars.

You get a divisional once a year with a chance to sock some away for improvements and rainy days. Probably make more money off the crowd than at a local race. This has to be your best chance to do well.

And if you're lucky, you might get one national event -- but you have to have parking, and seating, and pits, and security, and... for that kind of crowd. Just finding a place to park 20-30,000 people has to be a nightmare. Even with big ticket prices at a national event this seems like a hard game. Sure you might make some serious money, but you have to have a national event facility that is 1/100th used 99% of the time.

Add to that the pressures of insurance, lawsuits, upgrades, neighbors, traffic control, etc., etc. and it seems like this is a tough business. Guess it doesn't surprise me to see them closing, and makes me wonder how Bruton Smith is making it all work...

Anyone here know much about this? Anyone with personal experience?

 

[Jenn]

That's a good question, my dad ran one years and years ago. He used to bring in match races and stuff to bring in the crowds and it helped that he had his own funny car on site. He also had his family helping and child labor laws don't all apply to families

 

[Shaggy]

The only answer I can come up with is Sponsor $$ and you must be able to hold a Divisional size race at least 3 times a year...Most tracks dont even have a Nat event to draw from...Very good question none-the-less!

 

[Al smith]

why just the weekends? You can have races four or more days a week like they do at Atco and Raceway park. out side of that you can have swap meets, you can have import events, truck days, ford days, Chevy days , dodge days, auto show expos. mud bogs, tractor pulls, junior drag races, lawn mower races, cart races,

please don't play the violin telling me how bad the race track owners have it. it wont wash with me. The failures and poor boys only lack imagination, marketing skills, and business sense. The two tracks i posted about above have been doing well for many decades in a state with one of the highest densities, property values, and real estate taxes in the nation.

 

[Gary H]

High population density helps alot with the east coast tracks. West coast is a different story.

 

[PJ]

land cost isn;t much of an issue. There don't seem to have been too new tracks built over thet past 20 yrs.

It can be rough like any other business. But like others said you race more than just sat and sun. Wed test nights, friday street races, bring in the specialty races (super chevy and such) Food concessions plus tracks have race stores so they make cash that way. Sponorships to cover much of it. Unless its a major track I don't think anyone is gonna become Donald Trump but they can do alright

 

[Raconteur]

...You get a divisional once a year with a chance to sock some away for improvements and rainy days. Probably make more money off the crowd than at a local race. This has to be your best chance to do well.

Speaking with a West Coast track manager earlier this year, his track had just hosted a full Divisional event one week earlier. His comment about finances was, "I will be lucky if I broke even on that Divisional with nearly 400 racers and the purses, I'll make more on this (local one-day) Test-n-tune when I add up the entry fees, concessions, beer and parking..."

I am not sure that Divisionals are money makers for the tracks.

 

[Al smith]

Speaking with a West Coast track manager earlier this year, his track had just hosted a full Divisional event one week earlier. His comment about finances was, "I will be lucky if I broke even on that Divisional with nearly 400 racers and the purses, I'll make more on this (local one-day) Test-n-tune when I add up the entry fees, concessions, beer and parking..."

I am not sure that Divisionals are money makers for the tracks.

divisional racers in toters usually bring their own food and drinks.
since you still have parking, concessions, beer, why don't they have per carload spectator tickets? you know local drive in restaurants don't make money by charging a fee for cruise nights. they make money from the food these cruisers and the casual spectators buy who stop in to look at the cars.

 

[jackass]

divisional racers in toters usually bring their own food and drinks.
since you still have parking, concessions, beer, why don't they have per carload spectator tickets? you know local drive in restaurants don't make money by charging a fee for cruise nights. they make money from the food these cruisers and the casual spectators buy who stop in to look at the cars.

PLus .. you have to bring on more staff for the weekend.. extra emergency crews..more track prep from down time...etc... you name it....

Billy

 

[Greg]

I can speak from experience on this subject. Let me just apologize ahead of time if this is somewhat of a jumble and incoherent. I'm dead tired and really need to get some sleep.

There are a few factors that come in to play. First, your location is a big deal. You need to have a good population to draw from, because you aren't going to get the same people every weekend, so you need enough people within the area that as you draw from a few here, a few there, you end up averaging out a decent number of spectators, and specators are what pay the bills.

Test-N-Tune night: These nights are when tracks can really earn some serious bank. You figure most of them get around 100-200 cars on average, with no payout, and the insurance for these nights is actually cheaper. You may have $700-$1,000 in labor, about $200 in insurance, around $200 in VHT and methanol, $175 in electricity, and $40 in water. Let's say you have 500 spectators at $5, and then it's $10 to race, you should gross anywhere from $3,500-$5,000 between gate fees and tech fees, plus somewhere around $1,000 to $1,500 in concessions, so just add those up and take out your expenses. You should be able to get about 30 of these events a year, depending on weather.

For most "average" tracks, test-n-tune nights are when you can actually profit the most. You can take in a ton of money on big money bracket races, divisionals, and big heads-up events, but you have a ton of outlay between payouts, marketing, labor, insurance and supplies. Insurance for an actual event is going to run around $600-$800. Divisionals and national events are much much more expensive. I've heard insurance for a national event is around $15,000 (however, I've also heard IHRA tracks will net around $300k for a national event and NHRA tracks net around $1 million).

One thing to also keep in mind about expenses is, unless you have a mortgage on the business, there aren't many fixed expenses. They are all in proportion to how much you race. Some bigger tracks have full time staff, but for the smaller tracks, you're only going to have labor, major utility usage, and supply usage when you race. So you just have to make sure when you race that you make the most of each event so that it can at least cover it's own expenses.

If you are running a bracket event you have to be able to draw enough cars to make it worth while. Anything less than 30 cars in each class, and you are going to be lucky to break even. Heads up events are going to run you between $4,000 and $10,000 depending on what type of show you are putting on. What I'm talking about in regards to heads up events are like Pro Mods, Outlaw Pro Stock, Fuel Altereds, etc. So you have to bring in a lot of specators to make something like that work. It's not that you can't make money at those events, it's just that, depending on the event, you don't start making money until you have about 800 people through the gate. 800 people doesn't sound like a lot, but it's much more than you think, and it can be hard to pull them in depending on the location and your marketing. A lot of times people perceive a crowd to be much larger than it is. If you go to a race, and you think "man there must be 3,000 people here", chances are there's probably only half that amount. I don't know what it is, but it can fool you. So just because it appears that a track has a ton of people there, doesn't necessarily make it a gold mine.

A track can be very profitable if run right, and I actually think when the economy is tough, there's no reason for a track to really suffer in my opinion. This should be the time when they thrive the most. People may be more limited in their money, but if you are charging more at the gate than what a husband and wife can go out to dinner and a movie for, then you are probably going to lose their business. The biggest mistake I've seen track owners do recently is go up on prices at the gate. When the economy is struggling, raising your gate fee is the WORST decision you can make in my opinion. If you are putting on an event, it costs you no more money to have 1,000 people out there, as it does to have 100 people. You still have the same money going out on labor, insurance and supplies. So what do you have to do to get 1,000 people? I don't care if you have to let them in for free. The more people you have, the more people will be there to race their cars (and pay tech fees), the more people will be there to buy your food. The more people will be there to tell their friends about what a great time they had at your track, and bring them out with them the next time.

I'm exhausted right now or I could go on and on.

 

[Ma Green]

Another way for tracks to make extra money is by selling sign space around the track. Aside from the actual sign cost, that's all gravy money. Of course getting local companies for race sponsorships is essential as well.

One can also rent out the track during the week for police agencies to practice on, or various activities. Since the shut off is up-hill and the return road winds down through the trees at our local track, they rent it out every Thursday for a bicycle club to race on.

Divisional events are notorius losers, even though there may 500 entrants. Because of the amount NHRA takes off the top and the purse for all the classes, it's almost impossible to make big dollars. Special events, maybe one a month, can make you well. Fuel match races at tracks that aren't used to seeing fuel cars will bring lots of folks. Done wisely, you can find shows to book that will make you big bucks and keep you going all year.

As previously said, done properly, a track can make money......the key is having a good promoter who is willing to work with people. Or, in the case of Bill Doner, who I worked for many years ago, be a little crazy!

 

[Paul]

why just the weekends? You can have races four or more days a week like they do at Atco and Raceway park. out side of that you can have swap meets, you can have import events, truck days, ford days, Chevy days , dodge days, auto show expos. mud bogs, tractor pulls, junior drag races, lawn mower races, cart races,

When I was younger, Atco use (still might) to have Friday night street night where you could race anything you wanted. I remember buying a new Dodge Ram and taking it to Atco the following night to race it. As you have noted, tracks have many ways of generating revenue. I wonder if the owners of RT. 66 did a post project review of the economic assumptions used when the track was proposed vs. the actual margins/costs which have occurred at the track since it opened, I would love to know the IRR and NPV.

 

[Al smith]

Divisional events are notorius losers, even though there may 500 entrants. Because of the amount NHRA takes off the top and the purse for all the classes, it's almost impossible to make big dollars. !

Does NHRA take off the top even the spectator gate and concessions when a parallel event or entertainment is offered? like fireworks and / or a booked in match race during the divisional? If thats the case i can see why theres deliberate non promotion of divisionals. In one case here in the north east years ago they didn't even open the food concessions. No sense working up a event the proceeds of which Glendora will pick right out of your back pocket.

 

[Bob]

Does NHRA take off the top even the spectator gate and concessions when a parallel event or entertainment is offered? like fireworks and / or a booked in match race during the divisional? If thats the case i can see why theres deliberate non promotion of divisionals. In one case here in the north east years ago they didn't even open the food concessions. No sense working up a event the proceeds of which Glendora will pick right out of your back pocket.

Divisional events are a flat rate for all of them.

 

[rocketman]

Speaking with a West Coast track manager earlier this year, his track had just hosted a full Divisional event one week earlier. His comment about finances was, "I will be lucky if I broke even on that Divisional with nearly 400 racers and the purses, I'll make more on this (local one-day) Test-n-tune when I add up the entry fees, concessions, beer and parking..."

I am not sure that Divisionals are money makers for the tracks.

I've heard that before and I don't know how they don't make money.

 

["Dr. Dirt"]

This thread in the NASCAR forum got me thinking. Is anyone here familiar with the economics of owning a drag strip? It just seems that it's got to be a tough row to hoe as a drag strip owner.
Permit me to answer from my local perspective.
First, there's the whole issue of the land -- just for the track (with a good shutdown area ) you need quite a big plot of land, but toss in pits, stands, parking, etc. and you're talking about a huge piece of dirt. Put that anywhere near a metropolitan area, and you are talking big bucks.
Here in Arizona the land is outrageous in price so our facilities such as Bee Line Dragway (long gone) and Fireturd Raceway are located on Indian Reservations where lease arrangements were in place at a much reduced land cost. Speedworld Motorplex is located on State Trust Land where it's on a long-term lease shared by multiple other venues such as moto-x R/C racers, etc. This greatly reduces the initial expense so capital is only needed for facility improvements, staff and marketing.
Then there's the operation. Depending on where you live, you probably have something like 25-35 weeks a year of weather (at most).
We ran our little dragster last Friday night and our weather here provides 50+ weeks of racing a year-sometimes more!

Most of the time you're doing weekly test and tunes -- where I find it hard to believe you're much more than breaking even. Just opening the doors, collecting tickets, prepping the track, staffing the line and booth, having safety folks around, I wonder if it even pays the bills.
Actually, our local racers pretty much pay for the track and it's overhead. NHRA divisional events are really tough to break even with and feature events require a great deal of expensive marketing and exposure that without a series sponsor for such, again you have a really tough time breaking even.

Then maybe a good local race weekend once a month, where you might make a little dough. Probably four times the people working, but you get some shot at concessions, and maybe a reasonable gate. But most of the people are the racers, and they're saving money to put in the cars.
The Wednesday night street drags as well as the Friday night and Saturday events usually out earn feature races. They are just necessary evils without corporate sponsorship to insure profits.

You get a divisional once a year with a chance to sock some away for improvements and rainy days. Probably make more money off the crowd than at a local race. This has to be your best chance to do well.
As Bob Orme stated, divisional events are flat rate and seldom profitable.

And if you're lucky, you might get one national event -- but you have to have parking, and seating, and pits, and security, and... for that kind of crowd. Just finding a place to park 20-30,000 people has to be a nightmare. Even with big ticket prices at a national event this seems like a hard game. Sure you might make some serious money, but you have to have a national event facility that is 1/100th used 99% of the time.
There is more politics here than meets the eye so I'll just remind you how it will first profit the NHRA before you'll see any although these are an excellent way to gain exposure for your weekly income.

Add to that the pressures of insurance, lawsuits, upgrades, neighbors, traffic control, etc., etc. and it seems like this is a tough business. Guess it doesn't surprise me to see them closing, and makes me wonder how Bruton Smith is making it all work...
Praying that your signed disclaimers signed upon entrance and the printed disclaimers on the ticket will hold legal water is often done.

Anyone here know much about this? Anyone with personal experience?

I do. I'm the paying customer everywhere I go! Whether we are racing or just spectators, they all depend upon me.

Lastly, as has been mentioned, we also sponsor our local Speedworld Motorplex with a 16' x 8' billboard sign. It gets great exposure as it is at the starting line and included in literally hundreds of photos, videos and even lots of different "Pinks" shows. After three years, we are still looking for our first customer from it however. Oh well, it's an opportunity to support our track, right? We love that place!

 

[Joker]

Its very hard to operate a track. There is only a few in the country that actually make good profit. Thats one reason the local Saturday night bracket shows are non-existent anymore in some places b/c it costs the track too much to have them. And they do lost money on divisionals. I've heard from a local owner here they either make a little or lose a little. The goal is to break even. The problem is even when they give away free tickets fans just dont show up for divisionals. If they have a NHRA national event then that will carry them for the year basically. I've also heard now that the tracks who have ADRL events are doing very well also but regular racing costs them.

 

[Thrill]

As Greg mentioned, a good test n tune night can make or break a track. It's low cost, no payout, so it doesn't take many people through the gate to be profitable.

Location and how many other tracks are in your area makes a big difference. If you're familiar with Russell Crowe's explanation of game theory in "A Beautiful Mind." Basically if 3 guys go for the same girl, nobody wins usually.
If there are multiple tracks in the area all scheduling on top of each other, it's going to be hard for everyone to win.

If a track is the only track around for a few hundred miles, it's going to be a lot easier to be profitable. Especially if there is a decent sized city or two in the area. You have the place to race if they want to, so they have to spend their money with you.

 

[Smiley]

divisional racers in toters usually bring their own food and drinks.
since you still have parking, concessions, beer, why don't they have per carload spectator tickets? you know local drive in restaurants don't make money by charging a fee for cruise nights. they make money from the food these cruisers and the casual spectators buy who stop in to look at the cars.

Maple Grove does a $20 per carload deal Saturday night of the Divisional, they have a fairly good fireworks show to go along with it.. Last time I was there there was a 100% chance of rain and the stands were pretty full. I'm sure they have to make some money off that deal.

 

[clwill]

Well, I've learned a lot so far from this thread, thanks for all the contributors.

Looking around at my local T&T, it looked to me like a good way to lose money. I see all those folks working and 50-80 cars and thought "wow, this has to be painful". I fell into the old trap that size of crowd == size of profit.

And I see how a divisional can be a tough one too. All the racers not only "runnin' what they brung" but "eatin' what they brung" too. And not a lot of crowd.

So why is Bruton Smith building these state-of-the-art tracks? How long does it take a beauty like the one in NC take to turn a profit? Is he paying that off doing T&Ts?