Business of Speed
The Money Behind the Motorsports Industry
By: Tim Frost
Date: February 1, 2019
Sports tourism is a significant business that contributes a great deal to the motorsports industry.
This month, we will look at the business of sports tourism and how motorsports contributes to the bottom line.
The annual trek south for fans begins as racing revs up in the Sunshine State. The first three months of the year feature non-stop racing of all types.
Legendary events include: Daytona Kartweek, 24 Hours of Daytona, Speedweeks, Dirtcar Nationals, Gator Nationals, the Mobil 12 Hours of Sebring, and Daytona Bike Week.
Tourism is one of the largest contributors to Florida’s economy. The state attracts almost 120.0 million visitors annually, Nearly 90% are domestic travelers with the remainder international – led by Canada. Orlando’s is the most favored destination due to its multiple theme parks.
Officials underscore the importance of identifying, attracting and retaining sporting events. They stimulate the local economy thru direct spending and ancillary revenue. Events enhances the area’s image and contribute to the quality of life.
Florida benefits from two segments of sports tourism. Participant based travel will attract drivers, teams, sponsors and related entities to compete in races at track around the state. Spectator travel is comprised of those who watch events while visiting a destination.
The key to Florida’s success is the multitude of races over a short time period. Multi-day events allow promoters, racers, teams, and spectators the ability capitalize on the opportunity. Racers can earn prize money and fans can support their favorites several nights in a row.
The big tracks – Daytona Int’l Speedway, Sebring Int’l Raceway, Gainesville Raceway and Homestead-Miami Speedway built infrastructure to host teams and spectators who spend weeks in their recreational vehicles at the track.
Campgrounds with modern amenities charge premium rates. Sponsors activate in fan zones, playgrounds, and picnic areas deepening their bond to a desirable consumer base.
The annual economic impact of the facilities in Florida owned by International Speedway Corporation exceeds $2.0 billion. Several hundred thousand fans attend events, stay in hotels and spend on food and entertainment. Florida based companies with sponsor events and promote with on-site activation.
Government officials realize the importance of sports related tourism. They created various incentive programs that are directed at this industry. Florida has programs for sports facility construction and the retention major league baseball spring training franchises.
The One Daytona project received a combination of grants and property tax abatements, which were used for infrastructure improvements. Homestead-Miami Speedway was the beneficiary of the Florida professional sports franchise facilities taxes. Sebring Int’l Raceway is exempt from property tax since it is located and leased from the local municipal airport authority. Gainesville Raceway has sought tourist development tax funds since it is owned by NHRA, a non-profit entity.
Public support of sports has its critics. There is considerable debate over the use of subsidies that go towards the building of new sports facilities. Does public money turn into private profits?
Motorsports has long been a business that has been self-financed through credit lines or profits. Over the last twenty years, it has selectively utilized the typical sports facility model of public involvement.
When the green flag drops and the grandstands are at capacity, the local businesses continue to value the contribution that race fans make to the Florida economy.