NASCAR was already facing headwinds when Brian Z. France, its chief executive and chairman, was pulled over in Sag Harbor, New York, Sunday night.
France was arrested on charges of drunken driving and drug possession, adding leadership instability to the challenges facing stock car racing, including attendance woes, declining television ratings and opaque finances that potential investors who could help the sport find difficult to discern.
France, 56, quickly announced he would take an indefinite leave of absence. His uncle, Jim France, will take over his responsibilities.
NASCAR has a substance abuse policy that applies to the “misuse” of alcohol and prescription drugs. It is unclear if this policy applies to executives, or whether the family-controlled sport will penalize its chief executive.
In May, Reuters reported that the France family was quietly exploring the idea of selling NASCAR.
During a radio interview after the report, France said: “Rumors are always interesting, but they’re seldom right. The France family is locked and loaded in its dedication to NASCAR.”
He did not deny the existence of exploratory discussions, however.
Selling a stake in NASCAR would be complicated. The France family doesn’t disclose the exact ownership stake of each family member.
Financial advisers in sports who have been associated with the France family have described a structure in which Jim France once owned 50 percent of NASCAR, while Brian France and Lesa Kennedy, Brian’s sister, each owned 25 percent. However, Brian France may have sold his shares. Court records from his 2007 separation from his ex-wife didn’t list any NASCAR shares as assets.
According to a number of sports, business and media executives consulted for this article, none of whom would agree to speak on the record because of the sensitivity of Brian France’s arrest, buying NASCAR would not make a lot of sense for a private equity firm, in part because there are no easy solutions to NASCAR’s problems.
A buyer looking to boost its value and sell in a few years — the usual playbook for private equity — would have difficulty. The next owner of NASCAR will have to play the long game of developing the next generation of fans.
NASCAR’s fortunes have been falling for a decade. In 2007, the three public companies that own most of the tracks where NASCAR Cup Series races are held reported $467.4 million in admissions revenue. In 2017, the same companies reported just $215.1 million in admissions revenue, a 54 percent decline.
NASCAR’s television ratings have followed the same trend, and are down by about half since 2005. The rating for the sport’s marquee race, the Daytona 500, continues to fall. The age of the average NASCAR viewer is 58, and the fan base is skewing older faster than that of any other sport.
These difficulties are not unique to NASCAR. Every sport is challenged by younger fans who are not inclined to spend hours in a stadium or in front of their TVs. Ratings across television have been falling for a decade. Sports is not immune. College football and baseball have suffered large attendance drops, and the NFL’s television ratings are down 19 percent in just the past two years.
But a potential buyer of NASCAR would receive only its rule book and media rights, not tracks or teams. International Speedway Corp., known as ISC, owns 13 tracks and the Motor Racing Network. It is a publicly traded company. The France family owns a controlling stake, but it is separate from the NASCAR stake. Experts say a potential buyer for NASCAR would likely want to buy control of ISC as well.
Even that would not guarantee success. For years stock car racing has struggled to develop star drivers as fan favorites like Tony Stewart, Jeff Gordon and especially Dale Earnhardt Jr. retired.
Sunday night in Watkins Glen, New York, an heir might have emerged. Chase Elliott, the 22-year-old son of the NASCAR Hall of Famer Bill Elliott, won a Cup Series race for the first time.
A few hours after Elliott’s win, France — who did not attend the race — was being pulled over on the other side of the state by the police.
NASCAR has been family-owned since Bill France Sr. founded the organization in 1948 and control has mostly been passed down to the third generation, with Bill Jr.'s son Brian running NASCAR and daughter Lesa Kennedy running ISC. Kennedy’s son, Ben Kennedy, recently gave up his driving career to take over NASCAR’s truck series.
Experts say a media company, rather than a private equity firm, might be a more likely purchaser, as it could be a solution for a company looking for more control over its content in anticipation of competition from tech giants like Facebook, Apple and Amazon. Liberty Media last year purchased Formula One. NBC and Fox currently pay about $820 million annually to telecast NASCAR in a deal that runs through 2024.
NASCAR has a number of positive attributes, according to financial analysts. It may be a family business, but the organization has professional marketing and sales teams that are widely respected.
Its media rights also retain value. Besides the main NASCAR Cup Series, NASCAR has other lower-tier racing series, such as the Xfinity Series and Camping World Truck Series, providing hundreds of hours of content. Its schedule also runs in the summer, when there is a dearth of competitive sports.
Now it just has to find its way out of this difficult summer.