Grassroots: Daytona, Florida
Daytona Area Engines Sputtering
Cassandra Reynolds saw more than flying steel as 57 cars roared at 180 mph around an asphalt oval in Daytona, Fla., in February. She saw the future of her community's economy.
Reynolds, a Daytona Beach city commissioner, is founder and chair of the Motorsports Daytona Beach Executive Committee, a group that aims to maximize the economic potential of the motorsports industry. She formed the committee out of the belief that the city needed a more diverse economic foundation than beach-related tourism. "And motorsports was the best thing I could think of that we could use as a catalyst," Reynolds said.
Economy needs a jump start
Most notably, stock car racing's signature event, the Daytona 500—dubbed "the Great American Race" by promoters—comes to Daytona International Speedway every February. The race caps several days of parades, festivals, concerts, and preliminary races. The 2009 race drew 180,000 fans and paid prize money totaling more than $16 million. The track also hosts another major NASCAR race along with numerous smaller events throughout the year.
Weakened demand led Daytona race officials to cut ticket prices for the 2009 Daytona 500, and it sold out just hours before the starting flag waved. They have also taken the unusual step of closing sections of grandstands for other races. During March, when Bike Week rolled into town, Volusia County's tax revenues from short-term hotel and condo rentals slipped 16 percent, to $918,488, from $1.09 million in March 2008, according to the Daytona Beach News-Journal, which cited figures from the county revenue department.
Other motors are also stalling
Total nonfarm employment in the Daytona metropolitan area during the first half of 2009 averaged 165,800, the lowest level since 2004, according to the U.S. Bureau of Labor Statistics (BLS) (see chart 1). A preliminary June unemployment rate of 11.3 percent was worse than the state rate of 10.6 percent and the U.S. level of 9.5 percent. The local downturn has been steep: Daytona's unemployment rate has more than tripled since it averaged a scant 3.3 percent in 2006 (see chart 2), according to the BLS.
This employment picture is in part a result of lower attendance at races, despite aggressive pricing at the events. Lower attendance also means fewer merchandise sales, hotel room stays, restaurant meals, and so forth, according to Sean Snaith, director of the University of Central Florida Institute for Economic Competitiveness (IEC) in Orlando.
International Speedway Corp., which runs Daytona International Speedway and 12 other motorsports tracks, including the Talladega Superspeedway in Alabama, reported in Securities and Exchange Commission filings that its food, beverage, and merchandise revenue slid 34 percent in the first half of 2009 from a year earlier, to $26.8 million. In the same period, the company's ticket sales revenue declined 16 percent, to $91.5 million.
"That all adds up to slower and lower activity in that region," Snaith said. "When you're tightening belts, it's easier to give up going to Daytona than to give up a house payment."
As high-profile as they are, auto racing and motorcycle rallies are hardly the entire economy in the Daytona area. In fact, the housing market bust has hurt the area at least as much as the downturn in tourism, according to Andrew Gledhill, a Moody's Economy.com analyst. From its 2006 peak, the area's median house price has fallen 32 percent, with a 60 percent drop likely by the end of 2010, Gledhill wrote in a March 2009 report. However, the speed of that decline will slow as home sales improve. And those house price figures are not as bad as those for Florida as a whole.
Is improvement around the bend?
On a brighter note, the Daytona area's stable retiree population makes for a strong health care industry. The education and health care sectors added 1,200 jobs in 2008, while other industries lost jobs and leisure and hospitality employment was unchanged, according to the BLS. Through May 2009 employment in education and health care along with leisure and hospitality was flat in Daytona compared with the same period a year earlier. These sectors were comparativelystrong, however, as total employment through May 2009 was down 10,421 jobs from January to May 2008. Indeed, the metro area's 10 largest employers include two hospitals (Halifax Health, the second-largest employer, and Florida Hospital, the fourth); Volusia County Schools, which is the biggest employer, with 8,350 workers; Daytona State College; and Embry Riddle Aeronautical University.
Reynolds, of the Motorsports Daytona Beach Executive Committee, hopes to blend the area's economic strengths and help citizens use education as a doorway to the motorsports industry, broadly defined. "These careers go far beyond the jobs on the race teams for these events," she said. "They can include careers in engineering, marketing, finance, information technology, health care, and hospitality, to name a few."
Any expansion in those sectors will no doubt be welcomed.
This article was written by Charles Davidson, a staff writer for EconSouth.