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USAC WAS AROUND $7000.00 VS 40% OF THE GATE IN THE 60 & 70S
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Thanks for the number Duke. Based upon the $7,000 purse in 1970 it should be $38,896.31 in 2008 Dollars. We are running for nearly 1/2 of that figure.
Now as most of you that have read my posts know, I am a capitalist first and foremost. There are 5 major parties (Promoters, Fans, Racers, Sanctioning Body and Sponsors) involved with each racing event. If all parties act in their own, best interests they will do as follows:
The promoters should try to pay as little as possible for the product (purse) and charge their customers (gate admission) as much as they can in order to maximize their profit. They must balance the price charged and money paid with how many admissions they will sell and how many cars they will attract. For example a promoter could charge $100 at the gate and attract 100 wealthy, diehard fans for a local show giving him $10,000 in gross receipts. The same promoter could charge $10 and get 1,000 fans giving him that same $10,000.
The fans can decide if they want to pay the price of admission to the promoter or derive their entertainment elsewhere. If they only have to pay $10 and they feel at the end of the night they derived the more value than if they went to a movie, they will continue to spend $10 until they find an alternative which provides them with more bang for the buck. If they spend $100 they will expect something very special in return or they will not come back.
The racers can decide if they want to run for the purse offered by the promoter or race somewhere else. The racers need an incentive in order to get them to travel from their home base. Last year the Fox Brothers and Stanbrough stayed in Indiana while many other teams traveled to PA. They swept 3 or 4 decent paying races and made more money than the USAC teams could hope if they swept the PA tour. But the USAC teams traveled due to the combined incentives of championship points, high profile series and sponsorship commitments.
The Sanctioning Body’s roll is to provide a uniform superior product and charge a higher price for this product so that racers have an incentive to run under the sanction. The problem comes in when the same racers that are the stars of the sanction run at local shows. The promoter doesn’t believe he needs to pay more for the sanctioned show and the fans don’t want to pay more at the gate because they can watch the stars many weeks at the local shows.
The Sponsors are generally business people that make a decision to spend advertising money in order to increase the market for their product. The big sponsors try to calculate the effect of their investment on the sales of their product. In other words if they are spending $10,000 sponsoring a racecar and increasing their net profit by $1,000 but spending $5,000 on an internet advertisement and increasing their net profit by $2,000 where is that $10,000 racing sponsorship going to go next year?
So summing all this up: In order for USAC to be successful, they must provide enough economic incentives to put together a core group of elite teams/drivers, that the fans cannot see on a regular basis (creating demand for their product) so that each race brings a capacity crowd. The economic incentives can be in the combined form of purse money, path of advancement to major series, advertising exposure (to help attract major sponsors) and championship payouts. To see if this model works for sprintcars in the real world please look to USAC in the ‘50s and ‘60s and WoOs in the ‘80s and ‘90s. They will not be able to flip a switch and create this overnight but rather through a series of gradual and sometimes painful steps. The main thing is to set goals and do things to achieve the goals while dropping things preventing achievement of the goals.
Rob Hoffman