Souvenir sales take big hit
Plunge might force vendor to close shop
By Don Coble| Morris News Service
Thursday, January 07, 2010

Dale Earnhardt Jr. continues to be an overwhelming success in souvenir sales, but even he might not able to keep that industry from collapsing.

Sales have dropped so badly during the past year the biggest vendor, Motorsports Authentics, is on the verge of filing for bankruptcy.

According to filings with the U.S. Securities and Exchange Commission, MA hasn't paid guaranteed royalties since the third quarter and is trying to renegotiate its contract with most of its vendors.

Television ratings and attendance both dipped more than 10 percent last year, but the drop in souvenir sales were so dramatic the company owned by Speedway Motorsports Inc. and International Speedway Corp. is close to going out of business.

SMI and ISC own all but two of the racetracks on the Sprint Cup Series schedule.

"MA is exploring other business strategies to turn its business around," the filing said. "If such efforts are not sufficient or timely, MA could ultimately purse bankruptcy."

Fans have complained for years about the prices in NASCAR. Since so many people are in line to receive a share of the profits -- the driver, car owner, NASCAR and sometimes the sponsor -- it often can cost more than $20 to buy a hat or t-shirt at the racetrack.

Another problem has been the way drivers switch teams and sponsors. Earnhardt Jr. sold more than $50 million in Budweiser souvenirs when he raced for his family's team, only to switch before the 2008 season to Hendrick Motorsports -- and new sponsors, AMP Energy Drink and the National Guard.

Last year Tony Stewart, the second-most successful driver at the souvenir stands, jumped from Joe Gibbs Racing and Home Depot to his own team and Old Spice and Office Depot.

In a bad economy, fans not only stayed away from the track, they limited their souvenir purchases.

According to NASCAR.com's Superstore, Earnhardt was the top-selling driver in 2009, followed by Tony Stewart, Jeff Gordon, Jimmie Johnson, NASCAR-branded items and Kyle Busch.

Dale Earnhardt, who died on the final lap of the 2001 Daytona 500, was ranked 10th.

Although Stewart, Gordon and Johnson apparently closed the gap on Earnhardt, they know they probably won't catch him. They also know it's not easy to selling caps and shirts when so many Americans are struggling to pay their mortgage.

"He's the most popular guy out there, there's no doubt about it," Gordon said. "Has he taken a bit of a hit with the performance not being there? Sure but what happens is when somebody moves over to a new team and they get a new sponsor and they do well they spike? Tony (Stewart) is a guy that's always been solid in souvenir sales. So when you see a guy like him change teams, number, and sponsor and then do well then the souvenir sales are going to be there. They're all down.

"It's all taken a hit and we've got to be more creative to find out how we can grow that business and get it back hopefully to where it was in the late '90s and 2000."

Gordon believes the entire souvenir industry can be saved if Earnhardt can be competitive again. His fans are extremely loyal and passionate to the third-generation driver and his father.

"I think Junior has got a lot of staying power," Gordon said. "He's got a huge appeal but I do think it's a little bit different now that he's not at DEI and he's at Hendrick."

Reach Don Coble at don.coble@morris.com.

From the Thursday, January 07, 2010 edition of the Augusta Chronicle
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