The Economics Of Drag Racing – Across the United States, drag strips are closing at an alarming rate, and with far-reaching consequences. Here, industry insiders weigh in on what can be done to stem the tide and get these places back on solid ground.
For a sport that competes in straight lines, drag racing has certainly had to negotiate some fast turns and treacherous crashes in recent years.
The Economics Of Drag Racing
The most visible problem for drag racing today is the wave of track closures across the nation. Many of these were large established runways serving major metropolitan areas. The Auto Club Dragway in Fontana, California — the last public quarter-mile drag strip in So Cal — never reopened after the pandemic closed. Houston Raceway Park in Baytown, Texas, closed for good after 35 years following the NHRA Spring Nationals in April. Palm Beach International Raceway in Florida also held its last drag race in April. Atlanta, Phoenix and Memphis have all lost drag strips in the last year or have signaled local businesses will close soon. The Northeast racing community is still reeling from the Englishtown drag strip in New Jersey closing in 2018.
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The implications of these closures are ominous. Drag racing has long been the most accessible, grassroots form of motorsports. Anyone can take their daily driver to a test night and tune and put their car on the track without expensive equipment or a special racing license. It’s one of the few sports where someone in their 60s can compete against 20-somethings and still have an expectation of winning.
“You go to all these races and there’s something for everyone. It doesn’t matter what kind of car you have, they have sports, they have pro, they have super pro, bracket racing,” said Steve Williams, former head of engineering and current head of business development at K&N, Riverside. , California, and a longtime NHRA competitor himself.
“If we lose this local, small, grassroots hero track, where kids go out with their parents and siblings, what happens is we lose the next generation that might be interested in racing. Drag racing indexes higher than any other motorsport. Why? Because it’s easily accessible,” Williams said.
“Drag racing is like midget and sprint car racing — it’s the basis and foundation of all motorsports in the United States,” observed Chris Bovis of Hart Marx Advisors, San Rafael, Calif., mergers specialists. and acquisitions in the automotive industry. “Having it under threat or having it in a declining situation is not good for any enthusiast in the United States. It is a problem that must be addressed with creative solutions.”
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Losing a local trail can have effects that reach far beyond the immediate community. “It’s devastating,” Williams said. “It would be a bit like, for people who are into fishing, boating, and jet skiing, what happens if all of a sudden, you just drain the lake and you have nowhere else to go? And the next lake is four o’clock. Would you take the kids and drive for four hours? “Well, I’ll do something else.” And sell your boat and be disappointed. Or pack up the kids and move. I’m telling you, we’re losing runners in Southern California because they have no place to run. With some of them, the car just sits in the garage, or they sell their cars.”
The loss of legitimate and legal venues for racing could also lead to an increase in street racing, which would endanger lives and further damage the reputation of the performance industry.
There is no reason why drag strips are closing in the country after decades in business. “In the cases we’ve looked at, each racetrack owner has dealt with particular issues,” said Daniel Ingber, vice president, Government and Legal Affairs for SEMA, Diamond Bar, California. “In many cases, the economics of motorsports just don’t work anymore. This may be the result of the drop in attendance, especially during COVID-19, combined with the increase in land values that create incentives to sell to developers, as often once rural or exurban racetracks are located in what is now a suburb. Suburban expansion may also bring with it more noise complaints.”
Jim Hughes owns Tucson Dragway in Tucson, Arizona, and sees the factors that challenge drag strips from the ground level. “We believe there are a few factors that could close drag strips,” he said. “Lack of participation and support, for one. We have seen the increase in the cost of goods cause push from the runners. Racing fuel, diesel, repair costs on trucks and trailers – everything seems to be increasing in the Our economy. Racers seem to be having trouble getting replacement parts in a reasonable amount of time. Another problem is that property values are so high and in demand for other places like shopping centers, etc “investors and owners who see business opportunities should find it difficult to refuse”.
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While each case is really different, according to our sources, the value of the land is the factor with an overwhelming influence in the closing of the tracks. “I think a lot of it is inflated real estate. I don’t know the reason for that, but we’re just seeing absolutely ridiculous land values,” said Kurt Johnson of Total Venue Concepts, Petersburg, Indiana, a company that specializes in the preparation of the tracks and specialized track maintenance equipment.
Southern California — the birthplace of organized drag racing — lost its last public quarter-mile drag strip when the Auto Club Dragway in Fontana failed to reopen after pandemic closures. Public running in the area is now limited to a small number of eight-mile tracks.
“If you’re an owner of a track and thinking about another year to possibly be at risk, and maybe not make as much money, or you can sell the land that you bought for $200,000 for $8.5 million, it’s a deal attractive,” said Bovis. . “As much as you love drag racing, it’s hard to ignore those economics. It’s hard to make a lot of money, hard to make a good and consistently growing business out of a drag racing venue, combined with maybe now for the first time again have some other options to cash in.”
In a time of high inflation, broken supply chains, and economic uncertainty, money around the world is chasing hard assets like real estate. However, there is more behind the scenes than raw land value. Drag strips are an attractive target for acquisition for another reason: grandfathered infrastructure.
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Keith Haney owns the Summit Racing Equipment Mid-West Drag Racing Series and, with his business partner Todd Martin, Osage Casino Tulsa Raceway Park in Tulsa, Oklahoma. As a track co-owner and series owner, he sees the challenges drag strips face from all angles.
“When you start looking at the profit margins at the racetracks, the economy obviously hits the people who go to the racetrack first. With the increase in the prices of the necessities that everyone needs every day, it limits the it’s free money to go to racetracks,” Haney said.
“And the land is very high,” he added. “You have these big corporate groups coming in and saying, ‘Okay, we’ll give you three or four times the earnings on your land.’ Or maybe it’s 10 times more profitable.
“Look at it from the perspective of a person who owns the land, owns the utility,” Haney continued. “Say a piece of property is worth $2 million. These corporate groups can give you $8 million because the infrastructure that’s on the race track bypasses a lot of corporate ribbon, or city ribbon, whatever you want to call it. builders do not need certain permits to put up a building because the infrastructure is already there and has been there. They can pay outrageous prices because they do not have to spend money on bureaucracy and have to go through all these guidelines, insert lines of sewers, etc., because they are big. And then they add. Well, they don’t have the bureaucracy that they will build again.”
Drag Racing Events
The number of drag strips can be contracted, but the motorsports industry is nothing if not innovative and resourceful. It is entirely possible to stop the bleeding, so to speak, and part of the solution involves finding additional uses for the property that bring in stable income that is not dependent on the up-and-down nature of the racing schedule. A track owner with a more profitable business is less tempted by buyout offers. Our sources had many ideas on how to use the track infrastructure for additional income.
“Thinking about the property in a total sense — you don’t just have the drag strip asset, but you have a huge parking lot, you have a lot of space, you have established entry and exit plans that you can use for a lot of different things — it’s really smart,”