Separation of Sport and State: Does Military’s Relationship with NASCAR Cost Taxpayers?

Does military’s relationship with NASCAR cost taxpayers?

It is a sport which has never been ashamed to cater to nationalism.

Sundays at a NASCAR race are awash with American flags donned on T-shirts, race cars and beer koozies.

Thousands of fans camped out at the racetrack proudly fly the stars and stripes from the flagpoles fixed upon their recreational vehicles.

As “The Star-Spangled Banner” reaches the high notes before the race, Air Force jets zoom overhead on cue and 200,000 fans on their feet wave their caps and cheer for the “land of the free and the home of the brave.”

But for all the patriotic themes in NASCAR, the more impressive footprint of the government and military may rely less on symbolism and more on actual dollar signs.

Follow the Money

Just last month, the state of North Carolina facilitated an agreement between the motorsports industry and the U.S. Army Special Forces, creating a public/private partnership Gov. Bev Perdue promised would have “worldwide implications” for jobs and investment in the state.

“Teams and industries are already working with various branches of the military,” said Karen Ray, a director of the N.C. Motorsports Association and chairwoman of the Motorsports Advisory Council created by Gov. Perdue in 2010.

“This is a great opportunity for the motorsports industry to diversify their work and bring defense dollars to North Carolina with huge concentration,” said Ray, a former state legislator.

The agreement would streamline a process for allowing special ops to take advice from NASCAR professionals on effective engine performance, flame retardant suits, driver functions and fuel consumption, potentially creating millions in lucrative military contracts now enjoyed by defense giants Lockheed Martin and Northrop Grumman.

According to the state’s own calculations, the motorsports and defense industries bring in close to $30 billion a year combined to North Carolina, representing close to 8 percent of its gross domestic product.

As motorsports industries partner with the military, North Carolina stands to gain plenty from the new defense model aiming to be a “smaller, leaner and more agile force,” as described by Defense Secretary Leon Panetta.

“This is a very unique relationship to the state that will build a model for the military working with the private sector,” said Lance DeSpain, executive director of the North Carolina Military Foundation.

“Whether it is unmanned aerial vehicles or cyber security, there is a whole spectrum of advanced needs that will need innovation in the future,” said DeSpain.

Industry experts say that military officials have already compiled large databases of possible motorsports partners.

“There are plenty of race teams and parts producers that have already set up some contracts with big defense companies,” said Ted Sturgeon of the Institute for Defense and Business in Chapel Hill.

“The fact is, there are a lot of performance shortfalls in the military, and the entire motorsports industry has the specialized know-how to fill that gap,” said Sturgeon. “It’s a great opportunity for everybody.”

Loopholes and Boulevards

Incentivized by tax breaks, NASCAR track owners were allotted $45 million in tax breaks in 2010 and 2011, with another $29 million earmarked for 2012, according to the U.S. Treasury Department.

But local and state funds have also been finding their way into the sport, a fact well known by the residents of nearby Concord.

In late 2007, Charlotte Motor Speedway owner Bruton Smith began construction of a drag strip just across the highway, much to the chagrin of the Concord City Council.

Council members were sensitive to constituents’ concerns about the noise and traffic such a track would create.

They hastily threw together ordinances and laws effectively banning a drag strip, but Smith decided to play his best hand as a response.

The billionaire track owner threatened to shut down Charlotte Motor Speedway and move its three events elsewhere, jeopardizing hundreds of millions of dollars in revenue for the city and region.

The council panicked, pledging $80 million of county and state money to the project and even renaming a nearby boulevard after the speedway magnate.

A Staple of Americanism

While the official financial arrangements with the Defense Department might be new, the relationship has been strong for over three decades, all thanks to an enthusiastic business pioneer from Gaston County.

In preparing for the annual 600-mile Memorial Day race at the Charlotte Motor Speedway in 1980, track president and Belmont native Humpy Wheeler looked to prop up the military following the failed hostage rescue in Iran.

Wheeler invited a hero from the incident, 1st class Airmen Ronnie Tole, who pulled a helicopter pilot to safety, to be the honorary grand marshal.

“The fans went totally crazy,” Wheeler recalled to NASCAR’s self-titled news site. “Patriotism was back in the U.S.”

In exchange for military participation in future races, Wheeler allotted Army recruiters unprecedented access to the NASCAR fans at the track.

Years later, helicopters, jet flybys and rappelling Special Forces wielding their weapons have become established tradition at races, evoking cheers and excitement from thousands of race fans in the grandstands.

Now, that symbolic relationship is better measured by the numbers.

In sponsorships alone, close to $30 million was spent by the military last racing season, split up among Cup drivers Ryan Newman with the Army, Dale Earnhardt Jr. with the National Guard and A.J. Allmendinger with the Air Force.

Military-Industrial-NASCAR Complex

In the face of a looming fiscal deficit in February of last year, Rep. Betty McCollum, D-Minn., struck a nerve with many race fans, offering an amendment to restrict financial sponsorship by the military in NASCAR.

This led to a much-publicized backlash, even culminating in threats to Rep. McCollum’s office and a quick public defeat of the amendment.

But in light of the budding relationship between NASCAR and the Pentagon, some economists and analysts believe that it is a relationship the American people should reassess.

“Defense contractors already pull in billions of dollars a year from the government — the motorsports industry stepping up doesn’t surprise me,” said William Hartung, a director at the Center for International Policy.

As an author and researcher, Hartung has spent years unraveling the extravagances of what he describes as the “military-industrial complex,” the enmeshing of private companies grown powerful by unchecked Pentagon spending.

If citizens allow the same procedure to engulf motorsports, warned Hartung, very similar consequences could arise.

“Big contractors will have the leg up,” said Hartung. “They have the lobbyists, they contribute to campaigns and they have key political alliances that will benefit them handsomely in the end — and not necessarily the taxpayer.

“What we have now is a true realization of the nightmare President Eisenhower warned about in his farewell speech. Just a few powerful industries are heavily enriched by continued warfare and lucrative contracts from the government.”

Such is the reason economists seem hesitant to embrace NASCAR’s collaboration with the Special Operations Command.

“The real loser is the taxpayer, be that now or in the future,” said Fergus Hodgson, fiscal policy director at the John Locke Foundation.

While the collaborative effort might promise temporary jobs in the region, Hodgson cautions that it will not be a sustainable venture in the end.

“If not achieving clear defense goals, military spending of this nature would better be described as corporate welfare — a form of crony capitalism,” said Hodgson. “Given the horrendous fiscal condition of the federal government, any spending expansion compels immediate skepticism.”

Representing the motorsports industry, Karen Ray, also a candidate for the late James Forrester’s state Senate seat representing part of Gaston County, plays down those concerns.

“Especially considering the economy, this agreement will go very far in bringing jobs and investment to North Carolina,” said Ray. “It’s something that will greatly benefit this region — it’s a win-win for everyone.”

Published in the Gaston Gazette.