Revving it Up with NASCAR’s Chief Marketing Officer Steve Phelps

Andrew Nyquist

NASCAR interview, Steve Phelps, Chief Marketing Officer

Steve Phelps is an accomplished guy:  He’s spent 20 years in professional sports leading corporate sponsorship and marketing initiatives for the National Football League (NFL) and the National Association for Stock Car Racing (NASCAR), twice been named to Sports Business Journal’s “Forty under 40” sports executives, and even found himself starring on the television series “Undercover Boss.”  But what he is not defines him as well:  No bravado, no personal upsell.  A doer by nature, Phelps is humble, well spoken, and one of the most creative minds you’ll find in sports.  And, boy, NASCAR definitely has benefitted from his expertise.

Shortly after Phelps arrived at NASCAR, the economy unleashed a series of consumer headwinds.  First it was surging oil and energy prices.  Then came the collapse in housing and higher unemployment.  And to top it all off, a credit crisis and stock market crash that left many corporations in financial dire straits.  Considering the consumer-centric heart of NASCAR’s enterprise, Phelps and fellow executives were beset with an enormous challenge of revamping the business of NASCAR.  But, as cliché would have it, the cream always rises to the top.

After initially sputtering along side the economy, Phelps and Co had to dig deep, embrace change, and map out a new long-term vision.  A short-term fix just wouldn’t cut it.  With Phelps’ leadership, NASCAR embarked upon a multi-prong mission:  to enhance the value proposition at the racetracks, improve the race day product, and heavy up on advertising.  Midway through 2011, the results are promising.  Ratings are up, consumption metrics are coming back, and the key 18-34 year old demographic is up 25% year over year.   These numbers are quite remarkable, considering the slow and uneven nature of the economic recovery.  According to Phelps, this is just the start of something good, and NASCAR’s future is looking up again.

“The numbers are encouraging and the racing is as good as it has ever been.  We are building a positive narrative.  It’s a great time to be at NASCAR… good things are coming out of scenic Daytona Beach.”
                                                                                                                                  ~ Steve Phelps

Ever gracious with his time, Phelps and I covered a wide array of topics including his early years growing up on the East Coast, his goal to get into the professional sports industry, his time with the NFL, and the past, present, and future of NASCAR.

 

Andrew Nyquist:  When you were growing up, what sports did you like and what teams were you a fan of?

Steve Phelps:  I grew up in Vermont, so I was a New England boy.  My teams were the Red Sox, Celtics, Bruins, and Patriots — and I also liked the Cowboys.  From a NASCAR standpoint, there was a local track near us that my dad started bringing us to when I was 5 or 6 years old.  The racetrack was called Catamount Speedway and it was my first exposure to stock car racing.  So, I was a fan of NASCAR from early on as well.

Andrew:  How did you get involved with professional sports and what attracted you to the professional sports industry?  And further, what attracted you to NASCAR?

Steve:  When I was in business school I really wanted to be involved in the business of sports — in some fashion.  In reality, I’m not even sure I knew what that meant.  After getting my MBA, I looked at sports; sporting goods, equipment, footwear, leagues, and teams.  I got nowhere, which is not surprising.  Towards the end of my sports search, I met with a family friend that advised me to get a job with a Fortune 100 company, go through their training program, and stay there for 3 to 5 years.  So that’s what I did.  I started as a Brand Assistant and worked my way up to Brand Manager.

Two months into a new branding opportunity, a friend of a friend called to tell me about an opportunity at the NFL.  I remember telling him that my current position asked for nine months and that I wasn’t sure that I could ethically take the job.  I remember him pausing and saying in a thick East Coast accent, “What, are you kiddin’ me!  It’s the NFL!  You have to at least go down to their offices!”  And the rest was history.  I was with the NFL for 13-plus good years.

Then during a brief stint with Wasserman Media Group, NASCAR called.  They wanted me to run their New York office, which seemed a bit too similar to the job I had at the NFL.  So, at first glance I wasn’t very interested.  But, they were persistent.  We talked through the job and the opportunity and I realized that it would present new challenges in the area I love:  sponsorship.  At the NFL, sponsorship was a big number and we ran a great business, but it paled in comparison to other revenue streams.  Here at NASCAR, sponsorship is the lifeblood of the industry… just a different dynamic with more responsibility.  And after a few months at NASCAR, I was named CMO – it’s been a great ride.

Andrew:  Looking back on your 20 years in professional sports holding senior executive marketing roles for two of sports most powerful fan bases, can you elaborate on a couple of key people that assisted you with your professional journey?

Steve:  I had a boss at the NFL named Jim Schwebel.  He was a very good boss.  One of his strengths was that he didn’t micro-manage.  He really let people grow and do their work, showcasing what they can do.  So when he left, my promotion was an easier transition because I was proven and tested.

Here at NASCAR, my boss Brian France also is a tremendous leader.  He will challenge you when you need to be challenged, but he’ll also let you go and do your business.  He trusts his people to do the right thing.  His style is an incredible one.  He’s always there and always watching.  He’s got his guiding hand on you, but he’ll let you do the right thing for the business.  I’ll give you an example.  We were going to do a communications study — a complete review of the sport’s communication practices, not just at NASCAR the sanctioning body, but at the teams, at the tracks, with driver PR reps, anyone who was in the competition space.  I told him that I wanted to use a consultant to do the study because I thought it was very important to have 3rd party validation of whatever the recommendation would be that we put forth to the industry.  He said that he didn’t think that it was necessary but that if I believed it was needed, to go ahead and do it, which we did.  The review was done over several months and yielded great results.  The first time he saw the review, he said, “I was wrong, you were right.  This has been a very worthwhile exercise and I’m thrilled we did it.”  So that gives you a sense of who he is.  A great leader and a great boss.  He believes in hard work and listening to his people and I pass those expectations on to my people as well.

NASCAR interview, executive

Andrew:  Turning to the economy, the recession and economic downturn have hit the pocketbooks of many sports fans pretty hard.  How did your vast experience in marketing help you eye up prospective changes in the way you market NASCAR and communicate with fans?

Steve:  The first thing that I knew we needed to do was understand the fan base and their challenges.  And this really goes back to research, and using the research to inform your decisions.  If you have high unemployment, decreasing discretionary income — all the things that came with financial hardship and the recession — you have to understand what your fan is facing.  For us, a lot of it had to do with listening.  So we wanted to make sure that whether they were at the track, or at home watching, that their voice was being heard.  For example, we developed the Fan Council in 2009 — 12,000 avid fans that opted in, and provide us with feedback after every race.  We ask them “What did you think of the race?  How would you rate the competition?  How do you rate the television coverage?  And how did the race make you feel?  It’s on a one to ten point scale.  And there are open-ended questions as well.  Things they’d like to change, etc.  A lot of their feedback has led to some significant changes like the double file re-starts, rather than single file, and 3 attempts at a green-white-checkered flag because they don’t like seeing the race end on a yellow flag.  You can learn a lot by listening.

Andrew:  Can you highlight a few important changes that have taken place within the NASCAR race day business model?

Steve:  We don’t own the racetracks, so all we can do is try to influence what happens there.  We certainly talk to them about pricing and the importance of finding the right price points for all parts of the fan base.  And we work with local communities on hotels and all the things around the race that cost money.  So pricing was clearly an important thing to work on.  We also heavy up’d our institutional advertising around the racetracks and promoting races.  That’s advertising we get as part of doing deals with FOX, ESPN, and Turner, as well as our radio folks SIRIUS XM Radio, MRN, PRN, and other terrestrial radio.  We also looked at the value that the race fan will experience on race day.  This included changes to the product, along with pricing points… and we continue to monitor these factors.  With unemployment at high and stubborn, we have to make the race fan feel good about the return that they are getting for their dollar.  So, we try to better understand their complete experience, from the time they purchase their tickets, whether over the phone or online, to the traffic that they experience, to parking and the product at the track, including bands playing, interactive displays, technology communications with handhelds and smartphones.  We even focus on entertaining the fans after the race is over.  The fan experience is very important to us.  And this focus is showing up in our ratings, which are up year over year across the board.

Andrew:  Ratings are up and excitement is rising in 2011.  Talk a bit about this if you will?

Steve:  It really comes down to the product itself, and the racing is as good as it has ever been.  We’ve had 15 different winners this year… winners from small underfunded teams, to the powerhouses.  Jeff Gordon has won three races, including his 85th career victory, which places him 3rd on the all-time wins list, so it’s great to see him back in the winner’s circle.  We’ve had a competitive Dale Earnhardt Jr.  The narrative around NASCAR is very positive and we have a lot of momentum.  We had a great Chase for the NASCAR Sprint Cup Series last year, and I think we’ll see the same thing as we watch the Chase for 2011.

Andrew:  What do you think differentiates NASCAR from other sports?

Steve:  Before I came to NASCAR, I didn’t understand the true sense of community that existed within the industry itself.  If you kind of think of this in concentric circles, starting with the drivers, the owners, the sanctioning body, then the sponsors, media partners, and it just keeps expanding — everyone feels a great sense of ownership and a sense of community amongst the stakeholders.  And then the fans, the biggest concentric circle.  Even their sense of ownership of the sport is very unique and very different.  It’s what makes the sport great.

One story that I like to tell…  I had just started at NASCAR 6 weeks earlier and I was at a racetrack on a Saturday morning.  There was no one in the garage, and I was waiting for a meeting, having a cup of coffee by myself at a picnic table.  And suddenly a gentleman, who I noticed walking the other way, turned and started walking out of his way towards me.  He had purposely come over to me to say hello.  “Hey, how are you doing today?”  And I said “I’m fine, how are you doing today?”  And he says, “I’m great, I just wanted to come over and say hi.”   It was Richard Childress who is one of our prominent owners, who went out of his way to say hello to a complete stranger.  I was new and he had no idea who I was.  It would be understandable if he had heard that I was just hired to run the New York office, and wanted to introduce himself.  But he hadn’t a clue.  And that to me says everything about this sport.

Andrew:  If you were a driver, what track would be your favorite and why?

Steve:  It would have to be Daytona.  That’s where we run our most iconic race, the Daytona 500.  Just a fabulous race day experience.

Andrew:  So, how much fun was “Undercover Boss” and what was it like to be on a hit television show?

Steve:  It was good to have it over with (chuckle).  Came and went, my friend.  Actually the opportunity came through our L.A. office.  When they asked me to do it, I said you must have the wrong guy.  I’m not much for cameras, but it was a good time.  And it was good for NASCAR.

Andrew:  That wraps it up.  Special thanks to you and your team at NASCAR for taking time out of your busy schedules to make this interview happen.  Here’s to NASCAR’s continued success in the back half of 2011 and into the future.

Steve:  Anytime.  Thanks Andy.

 

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