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NASCAR is in serious trouble. According to the NYT, the sport pulled in $3 billion in revenue this year, half of which came from sponsorship deals. As you would expect, with advertising budgets getting clobbered all around the world, a lot of companies are reevaluating whether sponsoring a NASCAR team is really the most prudent way to allocate dollars. Even scarier, about $500 million (or a third of all sponsorship revenue) comes from the big three automakers, each of which could be bankrupt by the time the season starts.

The Red Sox are exposed here. Or, at least, the team’s holding company, New England Sports Ventures, is exposed. NESV’s marketing firm, Fenway Sports Group, owns 50% of Roush Fenway Racing, whose drivers include Carl Edwards and Matt Kenseth.

It’s tough to say how much the team could be hurt, since NASCAR’s economics are kept in a black box similar to that of MLB’s. But Forbes’s estimates help a bit, even if they seem a bit out of touch with reality at first. Just four months after FSG paid $60 million for its stake in Roush Fenway, the magazine had the team valued at $316 million. In the last two years alone, according to Forbes, RFR has brought in $68.7 million in operating income.

So what’s going on here? The magazine explains:

But Roush is selling at a discount for the prospect of vastly larger revenues. By hooking up with Henry’s New England Sports Ventures unit, Fenway Sports Group, he says, his team can now offer potential sponsors access to coveted New England sports fans, where TV ratings for racing are minimal. Sponsors can now advertise on the Red Sox cable network or put up signs at Fenway Park through a deal with Roush Fenway Racing, marketing prowess other teams can’t offer. “We believe sponsors will want to be affiliated with our team in the future as we can offer them a powerful platform to reach a broader audience,” says Roush.

If Forbes’s numbers are anywhere near accurate, FSG got a 60% discount, buying their shares at three times 2007 earnings. That is such an incredible deal, it will be hard for them to lose money on it, unless Roush Fenway simply goes under (which is unlikely, but far more possible than anyone would have thought a few months ago).

But even with that said, the value of FSG’s stake will certainly shrink in 2009, and I wouldn’t be surprised if NASCAR loses a significant amount of money in the near term. Racetracks often hold up to 200,000 people, making them hard to sell out (let alone charge high ticket prices) in this kind of atmosphere. Advertising, meanwhile, generally mimics GDP, rising or falling at 2-3 times the pace of the general economy. In a deep recession like this, that multiple could be even higher, as companies cut any and all expenditures that aren’t considered essential.

NASCAR is taking steps to cut costs, but they are in many ways at the center of the current storm. Roush Fenway is very well run (as are all of the other NESV companies, for that matter), and Jack Roush is generally considered a fantastic manager. But the team will no doubt take its lumps, as NASCAR tries to regain some stability in the coming year.

Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com

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