Kagan Study Shows Nascar Revenues to Accelerate Into High Gear

1 May 2000

CARMEL, Calif.--May 1, 2000--Fueled by a new six-year, $2.25 bil. TV rights contract, the National Association for Stock Car Auto Racing (NASCAR) will by 2001 speed past the National Hockey League and become the fourth highest grossing pro sports league in the nation, according to THE BUSINESS OF AUTO RACING(TM), the latest professional sports study published by Paul Kagan Associates, Inc.
Over the next seven years, total NASCAR revenue could accelerate to nearly $3.5 bil. -- a 145% increase from the $1.4 bil. the sport generated last year, according to the study by the Carmel-based media and sports business research firm.



               Pro Sports Industry Revenue Projections
           (Ranked by Projected Revenues, 2006, in $ mil.)

Total Revenues      1999      2000      2001      2006     CAGR(a)
NFL                4,119     4,463     4,768     6,524       7%
MLB                2,533     2,738     3,119     4,030       7%
NBA                2,656     2,751     2,852     3,838       5%
NASCAR             1,398     1,561     1,911     3,423      14%
NHL                1,528     1,591     1,657     2,129       5%
(a) Compound Annual Growth Rate

    "NASCAR revenues will grow at least twice as fast as those for the NFL, MLB, NBA and NHL in the next seven years," said Kagan Sports Analyst Hadrian Shaw.
    The growth potential of NASCAR in anticipation of its new TV contract is one of the many key issues covered in Kagan's THE BUSINESS OF AUTO RACING(TM), the most comprehensive study of motor sports operations and economics available. The 257-page study analyzes the business fundamentals of NASCAR, Championship Auto Racing Teams and the Indy Racing League from every angle, including driver winnings, team start-up costs, media contracts, sponsorship deals, track revenues and attendance.
    The average Winston Cup event attracts more than 190,000 fans -- about as many customers as an NBA team sees in 11 games. The average MLB team would need seven games to match such attendance and an NFL team would need three games. Furthermore, NASCAR's audience is growing at a faster pace than the competition.
    "NASCAR's Winston Cup has seen per-race attendance jump 21% from five years ago, forcing track owners to build more seats," Shaw said. "Meanwhile, the NBA and NHL have been operating at about 90% capacity, while baseball is drawing crowds below its pre-strike levels. The NFL has had marginal attendance growth and remains near its peak."
    The new NASCAR TV rights package inked last November with NBC/Turner and FOX was in response to rising television ratings for its Winston Cup events, which are now better than the regular season marks for every pro sport except football. The contract, set to begin in 2001, rivals baseball's current annual rate and is triple the size of the deal the NHL signed with ABC in August 1998.
    "FOX and NBC will use NASCAR to complement its other sports programming, knowing the NASCAR audience isn't the same as for the NFL, NBA or MLB," Shaw said. "It's a different demographic."
    Still, NASCAR's presence in the TV lineup could have an impact on Major League Baseball as it looks to negotiate a new television contract after this season.
    "Major League Baseball is expecting to seriously boost rights fees," Shaw said. "But two of its likely bidders -- FOX and NBC -- will have leverage over baseball if NASCAR ratings continue to rise and MLBs continue to drop. Also on the networks' side is that baseball could need a new collective bargaining agreement as early as next season -- and the prospect of another strike looms."

    About Kagan

    Paul Kagan Associates, Inc. this year begins its fourth decade of service to the sports, media, communications and financial communities. Publisher of more than five dozen annual reference reports and 39 newsletters, PKA is the leading independent media and sports investment research firm in the world.
    PKA publishes the monthly MEDIA SPORTS BUSINESS and KAGAN EUROPEAN SPORTS newsletters and a series of authoritative databooks on individual pro sports, including THE BUSINESS OF BASKETBALL(TM), THE BUSINESS OF BASEBALL(TM), THE BUSINESS OF FOOTBALL(TM) and THE BUSINESS OF HOCKEY(TM). Kagan affiliates have conducted annual sports business conferences since 1981 and have done more than $100 bil. of media and sports valuations over the years.
    THE BUSINESS OF AUTO RACING(TM) can be ordered from PKA for $995. To order or for more information about this and other Kagan products and consulting and valuations services, please call 831/624-1536; Fax 831/624-5882; email: info@kagan.com; or visit our Web site at: http://www.kagan.com.