Struggling Nascar’s Plan to Get Back in Gear

Correction Appended: October 18, 2013

ESPN is a repository for all kinds of sports–baseball, football and basketball, not to mention billiards, X Games, cheerleading, Frisbee, even soccer. But as of 2015, it will no longer carry NASCAR, perhaps the most God-and-country of all American sports. It wasn’t that ESPN lost a bidding war with NBC, which bought the rights earlier this year for $4.4 billion to populate its new sports network. ESPN declined to bid at all, as did Atlanta-based Turner Broadcasting, a 30-year NASCAR partner. What was one of the hottest properties in U.S. sports a decade ago has become a loser for these networks as ratings fade and sponsors flee.

While other sports that took a beating during the recession have mostly rebounded, NASCAR is struggling to get back in gear. Persistent unemployment, a slow wage recovery and high gas prices have thinned raceway crowds like the hair on a 47-year-old–the average age of a stock-car-racing fan. Efforts to prevent horrific crashes that sometimes spray shredded metal into the stands have resulted in safer cars. But that has led to criticism that NASCAR races, which send 900-horsepower machines careening around tracks at 200 m.p.h., are growing monotonous.

As a result, ticket revenues are in their sixth straight year of decline. At the racetracks owned by Charlotte, N.C.–based Speedway Motorsports Inc., which hosts 13 Sprint Cup races, ticket revenue fell from $188 million in 2008 to $116 million last year. The FORTUNE 500 sponsors that once splashed their brands across race cars and tracks, meanwhile, have grown pickier, leaving drivers scrambling for sponsorship money. “We used to fight over dollars,” explains top driver Tony Stewart, who became a co-owner of Stewart-Haas Racing in the middle of the downturn. “Now we fight over pennies.”

NASCAR is hardly the only iconic American institution left reeling by the lingering economic downturn and demographic shifts. The decline of traditional households, a growing Hispanic population and tightfisted consumers have challenged companies from Walmart to Best Buy. Media and entertainment firms are grappling with millennials, whose buying habits are changing the way everything from condensed soup to romantic comedies get marketed.

In many ways NASCAR finds itself becoming a sports analogue of the Republican Party: solidly popular in red states but with a declining base that skews old, white, Southern–and in NASCAR’s case down-market. The question now is whether it’s too late to attract the younger, more diverse audience NASCAR needs to grow. “Our business model, which was cruising in a great place, overnight got a real rattle,” admits Brian France, the company’s chairman and CEO and the grandson of NASCAR co-founder Bill France. “We were trying to figure out what things we should have been doing in the first place.”

NASCAR is neither a traditional company nor a sports league. The France Family Group owns the NASCAR circuit, which runs a 36-race season from February to November. (Bill France took the races from the beach at Daytona in the 1950s to organized mayhem at the tracks.) France’s sister, Lesa France Kennedy, runs the family-controlled International Speedway Corp., which owns 13 tracks. Independent companies like Speedway–controlled by France-family rival Bruton Smith–operate the others.

There are powerful team owners like Rick Hendrick, a billionaire auto dealer; star drivers like Dale Earnhardt Jr.; TV-rights holders Fox and NBC; sponsors including 3M and Mars Inc., as well as General Motors, Ford and Toyota. (Chrysler pulled its Dodge cars last year; it isn’t planning a return.) “It looks like we still have a very stable business model,” says France, alluding to NASCAR’s $820 million in estimated annual revenue–much of which is secured through television deals.

And yet France has put the entire business under review. New cars this year, dubbed Gen-6, are intended to restore the paint-trading, side-by-side racing that marked NASCAR’s peak and at the same time more closely resemble cars in the showroom. Racetracks like Daytona are being downsized and retrofitted with plusher accommodations. Most important, under the so-called NASCAR Drive for Diversity program, the sport is nurturing a multicultural group of charismatic drivers like Darrell Wallace Jr., who it hopes can become its Tiger Woods or Jeremy Lin.

To woo Latinos, NASCAR co-produced the telenovela Arranque De Pasión, featuring stock-car drivers, with Univision in April. (The show, which chronicles the rise of an iron-willed female driver, Ela, features plenty of longing looks across the raceway.) “It’s important for us to meet [Hispanic viewers] where they are,” says NASCAR marketing boss Steve Phelps. “To create programs that will make them feel welcome.”

But retooling NASCAR is not going to be easy. Consider the 10-race Chase for the Cup championship series, now under way, which was marred when crew chiefs for Michael Waltrip Racing (MWR) were caught ordering two drivers to tank a race to help a third. NASCAR fined MWR heavily, and driver Martin Truex got tossed. NAPA Auto Parts also withdrew its $15 million sponsorship of the team. For a sport determined to make its races more exciting and competitive, having guys being told to take a dive doesn’t help.

Then there’s the difficulty of recalibrating NASCAR’s image. Last spring, Smith’s Speedway sold the naming rights for the Texas 500 to the national gun lobby, and the race was rebranded as the NRA 500. In the aftermath of the Dec. 14, 2012, mass shooting at Sandy Hook Elementary School in Newtown, Conn., it looked to some as if NASCAR was choosing sides, even though earlier in the year it sponsored a car that honored the tragedy’s victims. In the controversy’s aftermath, France said NASCAR might bar such politically charged sponsorships in the future. But overnight, the sport was dragged into a polarizing political fight at a time when it was trying to reach out to a broader fan base.

Driving Diversity

There were no African-American drivers in the Daytona 500, NASCAR’s biggest race. Nor are there any in the top-tier Sprint Cup series of 36 races. Meanwhile, the best known Latino driver, Juan Pablo Montoya, is leaving the sport and returning to Indy car racing next year. (Indy racing is NASCAR’s high-tech, open-cockpit rival.) When NASCAR invited rapper 50 Cent to the Daytona 500 in February, he looked around the track and tweeted, “Damn I don’t see no black people here lol.” He later deleted the message.

To see an African American at the wheel, 50 Cent would have to go to NASCAR’s minor league, the Camping World Truck Series, where Wallace is the best hope of NASCAR’s diversity program. (There are two women in the program and several Latinos, including Daniel Suárez and Sergio Pena.) “We have not had a breakout,” says France of NASCAR’s inability to produce a star who is not Caucasian. “But we are really close with the most talented African-American driver I have seen in a long time.”

Wallace, who grew up in North Carolina and is known as Bubba, is barely 20 years old but carries the load without too much apparent stress. “It means a lot and it’s a lot of weight, so I try to do the best I can,” he says. “But I have to put it behind me and focus on racing.” Last year, his father told the Orlando Sentinel that fans and event promoters had used racial epithets around him in the past, but Wallace seems to shrug these incidents off. He was invited to the 2012 BET Awards and walked the red carpet. “Nobody knew who I was,” he laughs.

The biggest obstacle to a more diverse sport isn’t necessarily race or gender; it’s money. NASCAR’s creation myth is built around the trials of hardscrabble moonshiners driving souped-up cars to evade the tax man. In reality, stock-car racing may be the most elite sport in America. To get into the game, all a teenager needs is about $100,000. “When you start at 15, you either have to be really good [and get sponsored] or have a lot of money,” explains Wallace. (His parents were wealthy enough to stake him in the lower rungs until he got signed by Joe Gibbs Racing.) The financial meltdown only amplified the problem. When race teams had to make budget cuts, funding for development–NASCAR’s best hope for attracting a more diverse group of drivers–took a hit.

Too bad, given that Danica Patrick turned this year’s Daytona 500 into the Danica 500 when she won the pole position, driving her slime green GoDaddy.com Chevy around the track’s 31-degree banked oval faster than all the boys. Patrick is a NASCAR diversity dream, a charismatic 99-lb. woman who can absolutely boss a 3,400-lb. stock car. She finished eighth in the race but caused a television-ratings spike. “You are going to see more and more girls getting into the sport,” says Bill Race, business manager for driver Greg Biffle. “Unfortunately, if 100,000 kids are qualified and ready to race, they just don’t have the money to bring to the table.”

NASCAR’s diversity ambitions are genuine–who wouldn’t want to appeal to more customers?–but its cultural totems still trail its broader aspirations. At Daytona, two flags fluttered in the wind. One was the Stars and Stripes, the other the Confederacy’s Stainless Banner, plus a sign that read, in part, Obama can kiss my ass. Most nonwhites at the race were track employees. This is a sport that, despite its best efforts, may still be whiter than ice hockey.

Playing It Out

“I’ve never had a boring race,” says Tony Stewart, the star driver nicknamed Smoke for his skill behind the wheel. We’re standing inside his No. 14 car hauler at Pocono Raceway two days before the GoBowling.com 400. Stewart’s perspective is a little different from most NASCAR fans in that he spends Sundays going about 200 m.p.h., making the occasional left turn. He has driven everything from Indy cars to dirt-track karts (he broke his leg driving one a few days after he spoke to TIME, ending his season) and has won NASCAR’s championship twice. “It’s not boring if you are sitting in the seat,” he says.

Stewart, 42, is also NASCAR’s resident iconoclast, almost gleefully challenging accepted wisdom, which in this case is that NASCAR’s races aren’t attracting younger audiences because they’ve lost their edge. And if you stand along the pit road and watch race cars flash by in a rush of noise and color, you’d have to agree with him. It’s a thrilling experience–at first. Watching lap after lap after lap, with very little happening between the competitors, you come to understand the issue.

The complaint is that the dangerous, bad-boy style of hotfooting that marked NASCAR’s ascendency and made great story lines out of drivers like Stewart, Carl Edwards and Brad Keselowski has devolved into corporate-billboard racing. Indeed, a few dominant teams win the vast majority of the races. Three teams have won 70% of those held this year, for example. There are 43 drivers who start each race, but half of them don’t have a prayer. They can’t match the money that a billionaire team owner like Hendrick can spend on technology, testing and personnel. At a late September Chase race in Dover, Del., Hendrick’s cars finished 1-2-3. The race was won by the No. 48 car driven by Jimmie Johnson, who has claimed five championships in seven years for Hendrick Motorsports.

For years, NASCAR has tried to create a car that is both safe to run and exciting to watch while facing the paradox that some fans like the crashes that come with tight racing. After the death of Dale Earnhardt in 2001, the sport poured money into safety, finally producing what it called the Car of Tomorrow (COT) in 2007. The COT was undeniably safer. But as a race car, the bigger, boxier vehicle created a lot of turbulence in its wake. It might as well have been dubbed a DOG–it was like turning a Corvette into a minivan, or so the fans’ lament went.

The new Gen-6 car is even safer, but to some extent, the technology has overtaken the drivers. The aerodynamics of the three models available to teams are so similar–and so sensitive–that maneuvering them is difficult. “As the technology gets more involved, it’s tighter and tighter. It’s hard to get an advantage,” Stewart explains. After her Daytona run, Patrick bemoaned her inability to pass: “I was thinking in the car: how am I going to do this? I didn’t know what to do exactly.” The results were apparent at a recent race in Indianapolis, which was harshly criticized as a single-file parade.

Television is dealing with the same problems by trying to adjust the picture. “The presentation needs to be cool,” says Fox Sports co-president Eric Shanks. “We’re trying hard to present NASCAR, to make it look more like a video game.” High-definition television, oddly enough, can make a race appear slower, says Shanks. So Fox has been experimenting with slowing shutter speeds, which creates a blurring effect to convey the velocity better. “We’re actually, probably, trying to go back a generation: to make it look faster, more dangerous,” he says.

NASCAR also took back control of its digital rights, including its website, from Turner Sports and redeveloped its social-media platform to keep younger fans engaged. Meanwhile at the track, some races have been shortened. “We’ve got to look at, What does the fan want?” says Roger Penske, founder of Penske Racing and head of the $19 billion–plus Penske Corp. “If you’ve driven 200 miles to come to the race, you might want it to go on all day. If you’re watching on TV, shorter might be better. There is some conflict that has to be resolved.”

The drivers, who can easily earn more than $10 million annually, have adapted to the new environment. “Yes the economy obviously held us down,” says Carl Edwards, who drives the No. 99 car. His main sponsors are UPS and industrial supplier Fastenal. “But the other thing is that people are using technology to be entertained differently, to gather information differently. The attention span of the viewer is lower, so we give more value to everyone involved.” That means more autograph sessions for fans, more glad-handing for sponsors–and lower appearance fees.

Some of the sport’s harsher critics say that NASCAR’s leadership still doesn’t get it. To conclude, well into the 21st century, that you need to get younger and more diverse isn’t the mark of an innovative multibillion-dollar company that anticipates changing consumer tastes. Even with a diminishing fan base, though, networks still need NASCAR’s programming. That’s why NBC ponied up billions to win the television rights for the next 10 years.

Stewart, who takes no prisoners on the track, is willing to play it out. Earlier this year, he got NASCAR to run its Camping World Trucks Series on the small dirt track that he owns in Ohio rather than on a huge raceway. “NASCAR was really trying to think out of the NASCAR box,” says Stewart. “This sport was ruled with an iron fist for a long time. The equation worked for a long time.” Now France says NASCAR is serious about transforming itself. “We are gearing up to be a much more innovative sport,” he promises. It may have taken a while for NASCAR to embrace new technology and reach out to wider audiences, but this is, after all, a sport that became wildly successful in the first place by going around in circles.

A previous version of this article misstated the name of Pocono Raceway and misidentified a race and its location. The race, held at a track owned by Tony Stewart, was part of the NASCAR Camping World Trucks Series and was held in Ohio. We also misstated the number of women in NASCAR’s Drive for Diversity program; the correct number is two for 2013.