Economics of Drag Strip Ownership (2 Viewers)

[Al smith]

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?

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[Greg]

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?

Bruton is an investor, so he knows he's not going to make a return on his investment right away, but he knows in time there's a good chance it will or else he wouldn't do it (or at least I couldn't even fathom he would do it). As I mentioned before, I've known a couple of people that own NHRA tracks that run national events. Both of them said they clear around a million on a national event. Infact, that was one of the key elements where a track went from NHRA to IHRA, and their IHRA event only cleared about 1/3 what an NHRA event did. Basically this owner told the board, we are going back to NHRA or I'm out. The owner of another track told me that they could shut down after their national event, and only raced the rest of the year to give the local guys a decent track.

 

["Dr. Dirt"]

Well, if national events weren't profitable to the track owner, Charlie Allen would never have one! That's a fact!

 

[clwill]

As I mentioned before, I've known a couple of people that own NHRA tracks that run national events. Both of them said they clear around a million on a national event.

OK, but you can't payoff a facility like that on a million a year. Gotta be at least 10x that... I guess it's got to be in there somewhere, 'cause Bruton is no dummy.

 

[Greg]

OK, but you can't payoff a facility like that on a million a year. Gotta be at least 10x that... I guess it's got to be in there somewhere, 'cause Bruton is no dummy.

The tracks that I was talking about don't get anywhere near the crowd they had at NC this year.

 

[Thrill]

in reference to divsionals, they make money or the tracks/nhra wouldn't have them.

they probably aren't the biggest profit center of the year and they take some effort. but, they are profitable or I can guarantee you the entry fees would go up until they were.

one track operator told me they profited about $20,000 from their IHRA divisional. IHRA divisionals are 'two in one' so you get twice the entry fee revenue.

scheduling, effort, track conditions and facility all play into how well a track will do at a divisional.

as far as crowds go at divisionals, well, i've talked at length about this many times. given the current model, the track can pretty much just schedule the event, and at very least break even off the entry fee/crew pass revenue. they don't have to risk a dime advertising it. they give up the spectator revenue to give up the risk.

i certainly think the alcohol cars are entertaining, but the eliminations aren't presented in a very fan friendly format. some are, but most divisionals, if you run first round at noon, second round at three and the finals at six if you're lucky.

the divisional is definitely a participant race these days. many of the tracks don't like the alcohol cars because most of them don't pay entry and get a certain amount of crew passes. so the entire alcohol purse is somewhere around $15k, which cuts into the track's entry fee money.

i've said it before, the current divisional system is broke. the prestige and being able to run on a relatively local scale is what brings the racers back. if gives the entry level teams a better shot at qualifying and developing as well.

 

[Nunz]

Will, I know you'll agree with this. I understand not bothering to risk ad money for divisionals, but then again, no risk, no reward. If I had a bunch of 250+ mph cars coming to my track, I would certainly try to use them as a draw to get some seats filled. I think the alky & a/f cars are a wild show, it's a shame they are not promoted much more than they are.

 

[Andy]

It's probably not as much as you think. I'm basing my numbers off what I know it costs to maintain and operate at a world class racetrack (Budds Creek):

Electricity - $9,000-$14,000/month.

Normal Maintenance - $900,000/year

Now, that's just those few numbers I've gotten. Keep in mind that electricity is much higher in Maryland than it is in most other parts because electricity companies aren't regulated and can jack up the prices to whatever they want.

MIR also has a jet dryer and just recently added in new concession stands and bathrooms. MIR's facilities are probably the best I have seen anywhere.

It'd be unfair to comment and use numbers from this year for profit because of all the washouts this season.

 

[Andy]

in reference to divsionals, they make money or the tracks/nhra wouldn't have them.

they probably aren't the biggest profit center of the year and they take some effort. but, they are profitable or I can guarantee you the entry fees would go up until they were.

one track operator told me they profited about $20,000 from their IHRA divisional. IHRA divisionals are 'two in one' so you get twice the entry fee revenue.

scheduling, effort, track conditions and facility all play into how well a track will do at a divisional.

as far as crowds go at divisionals, well, i've talked at length about this many times. given the current model, the track can pretty much just schedule the event, and at very least break even off the entry fee/crew pass revenue. they don't have to risk a dime advertising it. they give up the spectator revenue to give up the risk.

i certainly think the alcohol cars are entertaining, but the eliminations aren't presented in a very fan friendly format. some are, but most divisionals, if you run first round at noon, second round at three and the finals at six if you're lucky.

the divisional is definitely a participant race these days. many of the tracks don't like the alcohol cars because most of them don't pay entry and get a certain amount of crew passes. so the entire alcohol purse is somewhere around $15k, which cuts into the track's entry fee money.

i've said it before, the current divisional system is broke. the prestige and being able to run on a relatively local scale is what brings the racers back. if gives the entry level teams a better shot at qualifying and developing as well.

Most of the people that show up to the IHRA Divisionals are friends or family. During the Patriots Division race, I think they managed to get about half of the General Admission seats filled so that's a crowd of 2,600-3,000. At $20, for lets say 2,800 friends and family alone, that's a good $56,000 right there and that's for a race that hasn't been promoted right there.

Plus entry fees. I'm not sure what the entry fees were for the IHRA Divisional, but for the bracket races they're usually about $120 (estimate on the low end). We normally get (on an below-average Wednesday night race) anywhere between 150-300 entries. That's a good $50,000 right there. Plus add in the number of fans who come to those. I'd say at least 500 come to those races.

 

[Thrill]

I don't have as much of a first hand view of running a small track like greg did, but I was heavily involved in a bid by my dad and others to buy a track down here a little over two years ago. Without digging out my notes, I want to say it was going to cost around $3,300 to open the gates on any given race day by the time you figured power, insurance and the minimal staffing, other hard expenses, etc.

The problem we have here in Houston is there are so many tracks around, and two of them being really good tracks, HRP and HMP.

HMP is a little short on shutdown, but can accomodate Pro Mods on up pretty well. A PM can stop better than an alky car due to suspension; it's not as prone to bounce like a solid car.

In addition to HRP and HMP, you have Evadale which is about an hour and a half east of Houston in the Beaumont area, you have Pine Valley and Rusk which are 2 and 2.5 hrs to the northeast of town in the Lufkin area, Angleton which is an hour south, Sealy which is an hour west, and San Antonio which is 3 hrs west. Navasota is reopening, which is about 1.5 hrs northwest. At one time a few years ago, all of these tracks were running active programs in the area.

IMO, if all the tracks around could work together on a bracket series, it might just work. That said, getting that many track owners to work together, which have probably stepped on each others toes once or twice before, is a difficult task.

Aside from bracket racing, this many tracks really ups the competition; raises the bar. While a marginal track may be extremely profitable in one area, in a high competition area, it's returns will onlly be 'marginal' at best; more than likely generate losses on the balance sheet. Distance and quality of the track are major factors in where a 'local' racer will race. If the track is bumpy or has a reputation for being 'bad' or marginal, the racer may seek other options. Angleton has gotten real bumpy over the years, and you don't see many hard tail dragsters run there because of the bumps. So now the track conditions just cut a potential segment of racers from running at your track.

The lack of seating also limits the track and potentially puts it in a no-mans land to speak in terms of big shows. You can have the best resturaunt in the world, but if you only have 5 tables, you're only going to make so much on your busiest night. Many times when a track is being built, the cashflow outlay that is required to get adequate grand stands constructed is considered too big, and smaller or less expensive options are sought. Meanwhile the upwards profit potential is being severely limited as well.

The more you can cater to 'momma' the better. Momma is going to have to go sit on a toilet, and it had better be clean if she is going to come back. You can put a drain on the floor, or better yet have a designated wood line and it wouldn't bother most guys.

When it gets down to it, the economics are tough. If you're in the right area, profit may be easy. Or you can be in an area where it's just tough no matter what you do.

Then there is the rain, which can ruin the best laid plans of mice and men...

I hope to manage or own a track one of these days before I'm through, so check back with me in a few years....

 

[rocketman]

Under Obama Economics when there is even less discretionary income, I wonder how many tracks will close then? Even the owner of the Miami Dolphins is trying to sell before the end of the year.

 

[none]

Under Obama Economics when there is even less discretionary income, I wonder how many tracks will close then? Even the owner of the Miami Dolphins is trying to sell before the end of the year.

You'd better sell all your racing equipment while it's still worth something and RUN FOR THE BORDER !!
"THE SKY IS FALLING......THE SKY IS FALLING".............

 

[none]

Any new thoughts on this ?

 

[mick]

i would think the basic premise is you're dealing with customers that annually
are fairly successful with plenty of disposable income; all they want to do
is hand you their money to race their car.........treat them fairly, do not
get greedy and set your expenses according to racer/spectator count.

 

[Baron]

My thoughts:
Will Hanna is exactly right - comfort level for Momma (and the small kids) is important and, usually, overlooked - the Divisional series is broken. Lucas is the title sponsor. They need help from a presenting sponsor the role of which is to drive the fan attendance. I believe the NHRA should have a focused effort to find such a sponsor nationally to support their member tracks.
I would add that I have been concerned for some time that the business model has devolved into one in which the racers pay for everything. That cannot be sustained. We racers are the show. A number of non-participant fans is needed to sustain this sport.
Cheers,
Ed
Rocky Mountain Superchargers

 

[Toejam]

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'm curious how much NHRA Charges these tracks to hold a Div. race?? And people wonder why so many Div. races have little if any crowds, the Track owners are so broke from putting on the race, they have little to advertize with!

 

[none]

I think the NHRA Divisionals are trying to be too many things to too many peoople. And it's hard to cram it all into three days and give everone enough runs.
There are a lot of changes I'd want to make but I know NHRA wouldn't go along with them !

 

[mick]

in the winston days they offered one free ticket for 2-pack smoke purchase
at the BIR div. race - wanna say there were more spectators that showed
back then but can't prove it.........it was a deal even if you didn't smoke;
sell the smokes and come out money ahead - can't imagine the track backed
this promotion? seemed like an nhra/winston promotion?.......always
wondered if the track was somehow compensated?

 

[Speed1288]

Didn't Norwalk sell out a divisional by giving away a ticket with a national even purchase or something?

 

[flapjack]

I've been reading some economic theory of sports attendance. That stuff makes my head spin. They use baseball as a model for their theory, and that just does not fit drag racing.