Economics of Drag Strip Ownership (1 Viewer)

[clwill]

There were two divisionals of the six we ran this year that were very well attended. Woodburn and Spokane both had great crowds. In Spokane, it was hard to find a seat at times. The common denominator: both ran lots of radio ads, and were giving out discount coupons everywhere.

I don't know if the track operators made money, but they got lots of butts in seats.

 

[misterv]

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.

You are right...the theory doesn't fit drag racing because baseball is market driven and drag racing is not. Drag racing is a participant driven sport and requires an entirely different approach. The profitability of "test and tune" sessions is a prime example. The racers themselves are the profit center and ancillary revenue is directly correlated to car count.

Drawing the "casual" fan to a sport than isn't inherently "spectator friendly" is an exercise in futility. There are more variables in track profitability than can be discussed here but in most cases, it takes a fully-sponsored national event to realize a substantial ROI and most tracks will never see one. The basic appeal of drag racing is second to none, but a "spectator-friendly" format with which to drive a marketing operation is badly needed to maximize that advantage...otherwise it's just "business as usual".

 

[the zone]

Here is simple math, Not from any particular track, but from an observer who has been to many divisionals and knows a thing or two about common costs.

Divisional 12,000-15,000 to host
Insurance 1,000
Staff 10,000 (50 x 200 per) gate staff 6, security 5, safety 8, staging 4, tower/announcing 5, concessions 15, souvenir 2, beer 4, (remember NHRA brings around 5-8 people for a div race)

Purse TAD, TAFC, Comp, TS, TD, SC, SG, SS, St, SST, Bike,
75,000 max
Advertising 20,000

Total cost $120,000 + or - $20,000


Income
Gate fee 400 cars @ 150 per = $60,000

Crew 400 x 2.5 =1000 x 45.00 = $45,000

Spectators 4000 x 20 = $80,000 conservative
Concessions $5,000 (approx)
Beer $2,500 ?
Souvenirs $2,500 ?

Event sponsor $10,000-$20,000
Income 215,000 + or – 20,000
Not included are hydro, telephone taxes and misc costs amortized over the year.

Gross profit is 80-100k


A street legal event local once a week

Staff 20 X 60.00 = 1200
Insurance 200
Trophys 300
Lights power etc 500
Cost 2200

Income
200 cars @ 30 per 6000.
Spectators 1500 @ 5.00 each 7500 conservative
Concessions 2500 conservative
Income total 16,000-20,000

Profit 13,000-17,000 X 15 events for the year $200,000

I think there is money to be made.

The News at Boise, the Livingstones and Severance's at Woodburn are operations with at least 5-6 full time high paid employess.
Those two tracks are great models for probably 2 doxen divisional type tracks that host at least 6 major events a year.
(Mission is another one but it is a non profit track (no one makes a huge wage there. There are five full time type employees, but only the accountant makes a wage that is decent) all the money goes back to improvements.
They also rent the track out on week days and on non drag racing weekends. It is rented out for decent profit to a sports car club, Motorcross, road bikes and go carts

Dean

 

[Treeshaker]

You are right...the theory doesn't fit drag racing because baseball is market driven and drag racing is not. Drag racing is a participant driven sport and requires an entirely different approach. The profitability of "test and tune" sessions is a prime example. The racers themselves are the profit center and ancillary revenue is directly correlated to car count.

Drawing the "casual" fan to a sport than isn't inherently "spectator friendly" is an exercise in futility. There are more variables in track profitability than can be discussed here but in most cases, it takes a fully-sponsored national event to realize a substantial ROI and most tracks will never see one. The basic appeal of drag racing is second to none, but a "spectator-friendly" format with which to drive a marketing operation is badly needed to maximize that advantage...otherwise it's just "business as usual".

Baseball is a perfect example of the troubles drag racing has in filling the stands. Take our local single A team as an example. They played in a run down city park stadium and couldn't fill the seats available, which weren't many. Owner got together with city officials and built a new modern stadium and suddenly the same product on the field fills the stands (approx 5,000) every home game. I saw the same thing happen in Rancho Cucamonga CA in the early 90's. Fancy new stadium, sold out every night.

Drag race promoters spend a lot to get new fans to the track, but do very little to keep the ones that do show up coming back and bringing friends. Aaron Polburn asked in a column when did it become mandatory for every racer to have a large motorhome and trailer. The answer is when the racers wanted their wives, girlfriends, and/or family to come to the races with them. Those people don't enjoy sitting on old splintery bleachers, using port-a-johns, or eating out of a suspect concession stand.

There is money to be made in any endeavor in life, including race track ownership. But you have to have a solid business plan, and then a lot of dedication and hard work to fullfil the business plan. To me, facilities need to be at the head of a race track's business plan.

 

[misterv]

Here is simple math, Not from any particular track, but from an observer who has been to many divisionals and knows a thing or two about common costs.

Divisional 12,000-15,000 to host
Insurance 1,000
Staff 10,000 (50 x 200 per) gate staff 6, security 5, safety 8, staging 4, tower/announcing 5, concessions 15, souvenir 2, beer 4, (remember NHRA brings around 5-8 people for a div race)

Purse TAD, TAFC, Comp, TS, TD, SC, SG, SS, St, SST, Bike,
75,000 max
Advertising 20,000

Total cost $120,000 + or - $20,000


Income
Gate fee 400 cars @ 150 per = $60,000

Crew 400 x 2.5 =1000 x 45.00 = $45,000

Spectators 4000 x 20 = $80,000 conservative
Concessions $5,000 (approx)
Beer $2,500 ?
Souvenirs $2,500 ?

Event sponsor $10,000-$20,000
Income 215,000 + or – 20,000
Not included are hydro, telephone taxes and misc costs amortized over the year.

Gross profit is 80-100k


A street legal event local once a week

Staff 20 X 60.00 = 1200
Insurance 200
Trophys 300
Lights power etc 500
Cost 2200

Income
200 cars @ 30 per 6000.
Spectators 1500 @ 5.00 each 7500 conservative
Concessions 2500 conservative
Income total 16,000-20,000

Profit 13,000-17,000 X 15 events for the year $200,000

I think there is money to be made.

The News at Boise, the Livingstones and Severance's at Woodburn are operations with at least 5-6 full time high paid employess.
Those two tracks are great models for probably 2 doxen divisional type tracks that host at least 6 major events a year.
(Mission is another one but it is a non profit track (no one makes a huge wage there. There are five full time type employees, but only the accountant makes a wage that is decent) all the money goes back to improvements.
They also rent the track out on week days and on non drag racing weekends. It is rented out for decent profit to a sports car club, Motorcross, road bikes and go carts

Dean

Thanks Dean for your candid explantion on track economics. I've managed tracks and operated a "top-sportsman" event series for several years so like you, I have a bit of first-hand experience as well. Like any other business, there are tracks that turn a profit and others...I know of many...that barely break even. They continue to operate and we are all thankful for that but where will the money come from for major improvements like an upgraded timing tower, new grandstands, track repair/resurfacing, improved concession and restroom facilities etc. The factors that come into play are here are infinite but the health and welfare of the racers and the sport itself must be given consideration in any discussion of track economics.

The numerous tracks around the country that fall into this catagory are at the greatest risk during hard economic periods and though we are beginning to see evidence of economic recovery, will they all survive? Will some finally give in to the real estate developer or be forced to raise race-card fees? Is my concern real or imagined? I'm not sure but I wonder if track ownership can ever generate real wealth, and if we will ever see the day when local drag strips routinely enjoy SRO crowds like they did "back in the day".

 

[Larry]

Well Memphis is resurrected and I think St Louis will be back so those are good signs.
Most of the small rural tracks don't have much overhead and that's how they will survive !

I go often to the track on low count days and say it's to support the track who supports my racing habit.

This year me and my son will have two and maybe three cars ready to race !
Our tracks charge $10 on non compatition test and tune days and only $ 5 bucks for a Tech Card ! Ladies are free on Sunday .

I was a volenteer a our local track when I was in High School in N Mex and exposure any way you can get folks to the track will pay dividends !
Drag Racing is still the largest Grass Roots Motorsports ! Thank God !

 

[misterv]

Well Memphis is resurrected and I think St Louis will be back so those are good signs.
Most of the small rural tracks don't have much overhead and that's how they will survive !

I go often to the track on low count days and say it's to support the track who supports my racing habit.

This year me and my son will have two and maybe three cars ready to race !
Our tracks charge $10 on non compatition test and tune days and only $ 5 bucks for a Tech Card ! Ladies are free on Sunday .

I was a volenteer a our local track when I was in High School in N Mex and exposure any way you can get folks to the track will pay dividends !
Drag Racing is still the largest Grass Roots Motorsports ! Thank God !

I think you are correct Larry, regarding the low overhead at rural tracks and that is reassuring...the "grass roots" of the sport is its heart and soul. A large piece of land with a strip of pavement and timing equipment will always get the job done so no worries there. Still, one must consider the cost of expensive improvements from time-to-time. Doesn't that require an infusion of capital from other sources? It is depressing to see the rickety old grandstands, antiquated timing towers and time-worn facilities at so many tracks and your comment "get folks to the track will pay dividends" is the answer IMO. The question then is, how do we accomplish that? What needs to happen so tracks can generate more revenue, more sponsorship and more exposure and drag racing not only survives, but prospers?

 

[Ma Green]

I believe the success or failure of your race tracks greatly depends on how creative you are with obtaining race/track sponsors and with your advertising. Also, engaging your racers...making them feel like they have a stake in the track as well.

Another huge part is the continuity of your schedule from year to year. The spectators know that a certain race will always be close to this same date and they plan for it. That's one of the reasons Boise and Woodburn are so successful....they've been doing the same things for many, many years.

Then you have a track owner like we do here in So Oregon, who is never here. In fact there's no race office or track presence in town. He doesn't even live here. He does nothing to improve the track, except what he is forced to do by NHRA to stage the points meet, and had no clue how to do any advertising. He's used up virtually every sponsor in town, claims he has no money, and wonders why he doesn't get any butts in the seats. Yet, even though he's been offered $$ to give up his lease, he still maintains "it's my track and I'm keeping it". If you can figure out why, please let me know. No one around here can understand it.

OK, off my soapbox.

 

[misterv]

I believe the success or failure of your race tracks greatly depends on how creative you are with obtaining race/track sponsors and with your advertising. Also, engaging your racers...making them feel like they have a stake in the track as well.

Another huge part is the continuity of your schedule from year to year. The spectators know that a certain race will always be close to this same date and they plan for it. That's one of the reasons Boise and Woodburn are so successful....they've been doing the same things for many, many years.

Then you have a track owner like we do here in So Oregon, who is never here. In fact there's no race office or track presence in town. He doesn't even live here. He does nothing to improve the track, except what he is forced to do by NHRA to stage the points meet, and had no clue how to do any advertising. He's used up virtually every sponsor in town, claims he has no money, and wonders why he doesn't get any butts in the seats. Yet, even though he's been offered $$ to give up his lease, he still maintains "it's my track and I'm keeping it". If you can figure out why, please let me know. No one around here can understand it.

OK, off my soapbox.

I have known a track owner, who shall remain nameless, for decades and because his track is the only one in a 100plus mile radius he can get away with being pretty rough on the racers. They put up with his nonsense because it is better than trailering to neighboring states to race. That might just apply to your track owner in So Oregon...he gets away with it because he can. The racers need their local track and the owner needs the car count, so "the beat goes on". The racers are at the owner's mercy and those that run on tracks with a considerate owner and a quality staff are very fortunate.

As for the advertising and sponsorship, the key lies in "cost per impression" and except for a precious few tracks, there just isn't enough market share to attract much interest let alone generate significant revenues. If that is to change, the sport must find a way to be more market/spectator driven and have a marketing executive on staff or at least on commission.

You are absolutely "right on" about the uniform scheduling. People are creatures of habit..."customers buy holes, they don't buy drills". No matter what entertainment product you are selling, consistancy in event schedules and start times plays a key role in the "attendance equation".

And please don't get off your "soapbox". The folks that created and support the sport of drag racing need to be heard more often.

 

[BigDaddyB]

I live in the Los Angeles area and I would guest right about now would be good time to survey a god spot in the greater metro LA area. I think it would make someone some cubic money. The city is in the toliet and if the right plan came along to insure to income to the city you could have money maker. Pomona and Fontana are too far, another Lions Drag Strip would bdo just fine.

 

[d'kid]

Come on Bruce...

Los Ventura Diego is One city... has a thousand oaks, holly wood, a big bear, palms with spring. It's not until you go over the grapevine, that you leave LA.

SoCal may be the "birthplace" of this thing of ours... but we ain't wanted anymore, saw the writing on the wall by early '80... sorry to burst your bubble, but I can't see where to 'build it so they will come'...

and you just hit the biggest reason I left the OC 30 years ago.

d'kid

 

[BigDaddyB]

Come on Bruce...

Los Ventura Diego is One city... has a thousand oaks, holly wood, a big bear, palms with spring. It's not until you go over the grapevine, that you leave LA.

SoCal may be the "birthplace" of this thing of ours... but we ain't wanted anymore, saw the writing on the wall by early '80... sorry to burst your bubble, but I can't see where to 'build it so they will come'...

and you just hit the biggest reason I left the OC 30 years ago.

d'kid

You know Karl I'm at the lite at the end of the tunnel seems like Spokane Raceway will be place to race. Cali just disown the only thing that made it worth putting up with the bs in the greater LA Area.

 

[misterv]

Come on Bruce...

Los Ventura Diego is One city... has a thousand oaks, holly wood, a big bear, palms with spring. It's not until you go over the grapevine, that you leave LA.

SoCal may be the "birthplace" of this thing of ours... but we ain't wanted anymore, saw the writing on the wall by early '80... sorry to burst your bubble, but I can't see where to 'build it so they will come'...

and you just hit the biggest reason I left the OC 30 years ago.

d'kid

Drag racers must be well aware that the general public pays little attention to what happens in their sport...it is a very much a closed fraternity. Building and even preserving strips in proximity to metropolitan areas will rarely get much support in a local referendum. Too many tracks have been lost over the years and those that remain must be staunchly defended.

It is my opinion that our sport needs to generate greater exposure in the public sector that will lead to the creation of new revenue streams, attract sponsorship and build the sport from within. That process needs to begin now. "Business as usual" doesn't do much to benefit the racers and it isn't making track owners rich either. How 'bout we come up with some new ideas here...I have a few if anyone is interested.

 

[BigDaddyB]

Drag racers must be well aware that the general public pays little attention to what happens in their sport...it is a very much a closed fraternity. Building and even preserving strips in proximity to metropolitan areas will rarely get much support in a local referendum. Too many tracks have been lost over the years and those that remain must be staunchly defended.

It is my opinion that our sport needs to generate greater exposure in the public sector that will lead to the creation of new revenue streams, attract sponsorship and build the sport from within. That process needs to begin now. "Business as usual" doesn't do much to benefit the racers and it isn't making track owners rich either. How 'bout we come up with some new ideas here...I have a few if anyone is interested.

Mike it seems as though you have a clue let's hear what you got

 

[misterv]

Mike it seems as though you have a clue let's hear what you got

Thanks for asking Bruce. I should preface my remarks by stating that my only objective here is to share my expertise for the benefit of those who care deeply about the sport of drag racing. I've managed drag strips, developed a series of drag-racing events and created a 35-page website on the subject. Along the way there isn't a track operations job that I haven't performed, including track preparation. That valuable "hands on" experience qualified me in every facet of the sport and provided the foundation of the "outside-the-box" thinking which eventually emerged.

My experience in drag-racing operations then, is only part of the equation. I was never a "hard core" drag racer like my brother, who years ago was traveling to events around the country while I worked as a sports-marketing executive in "mainstream" professional sports. Only when a local racer with a 4.5 second Lumina asked for my help in marketing his racing operation many years later did drag-racing become my passion. Marketing a series of "quick 16" events for the local drag strip followed and my perspective from both inside and outside the sport of drag racing eventually evolved to become the cornerstone of a "turn key" racing/marketing concept.

Far too extensive to detail here, suffice it to say that by adopting these concepts and strategies in some form drag racing can and will generate the same exposure and revenue streams enjoyed by every other professional sport on the planet. After a half decade of drag racing...how can that be? A basic format change is all that is needed to transform the inherent thrills of drag racing into spectator-friendly entertainment. Once achieved it is then a simple matter to develop the market-driven support mechanisms required to generate exposure, attendance, sponsorship, etc. and capitalize on the revenue streams that must logically follow. Remarkably this strategy comes without significant financial cost or time commitment, is adaptable to any class race vehicle and fits easily into any standing race schedule. Track operators can integrate the format into current operations with minimal risk and add support efforts apace with program growth...no stress required. While racers and track personnel might be a little uncomfortable with a very different way of doing things at first, the racers embrace the format once they realize the program was designed in their interest and its significant benefits are long term. Thanks again for asking...that's the short answer so throw me a few comments/questions and we'll get this "show on the road".

 

[misterv]

Isn't anyone interested in learning how to create a marketable drag racing operation? I have all the answers vis-a-vis building profits, sponsorship and exposure and will gladly provide them and my time to anyone in the sport that wants to know why NASCAR, MLB, NFL, WWF, NBA, etc. etc. can do and drag racing can't. I really do love the sport and care deeply about it's welfare and future prosperity.