tool name
closeEconomy not helping NASCAR attract sponsors
JIM PEDLEY
The Kansas City Star
Saturday, Jul. 19, 2008
About a week after becoming a former Sprint Cup driver when his team was shut down, Dario Franchitti was asked how things were going.
“Not great,” Franchitti said. “It was a big shock that it happened.”
That shock, some around NASCAR are saying, could soon be spreading like crabgrass. Tough economic times have descended upon the American economy, and that spells bad news for a sport that is joined at the hip, shoulders and ankles to the business community.
Sponsorship money for teams, cars and drivers appears to be thinning significantly, some are saying.
Asked last week what he thinks the sponsorship picture looks like right now, Jeff Burton — one of the headier drivers in NASCAR — said, “It’s lean. It’s very lean.”
The finding and mining of sponsorship money has been a race within the racing in NASCAR for decades. Speed, as the saying goes, costs money.
But things are different these days. Money supplies are down for potential sponsors, and the cost of racing is up — way up. It is estimated that the successful teams are spending $25 million a year per car to race in Sprint Cup.
And the situation with Franchitti was different. Having won last year’s Indianapolis 500 and IndyCar championship, and being married to movie star Ashley Judd, Franchitti would appear to be marketable in the extreme.
He also was hired to drive in Cup this year with a high-profile team, Chip Ganassi Racing with Felix Sabates.
Clearly, Franchitti, Ganassi and Sabates didn’t anticipate financing problems when the deal was struck.
“It was a big surprise,” Franchitti said of his team going under. “I mean, I knew the situation and the sponsorship wasn’t there, but it was a surprise to me. I think it was probably a surprise to Chip as well, judging by his tone of voice.”
Sponsorship is, basically, advertising. And during tough economic times, advertising is viewed by business as a place to cut costs.
And that can put NASCAR teams on the spot.
In addition to the problems at Ganassi, some other high-profile teams have had problems attracting sponsorship this year. Teams such as Yates Racing, whose two cars have raced at times this year without corporate support.
Other teams are facing tough sponsorship fights in the coming months as they make plans for next year and beyond. Some very prominent sponsors are rumored to be pondering exit strategies.
The Navy announced recently that it would not be back as sponsor of the Nationwide team owned by Dale Earnhardt Jr.
“I’m not aware of a new major sponsor coming in, and I am aware of a few that are leaving,” Burton said. “That means it’s going to be tough. The economy is down.”
Don Hinchey, vice president of communications for the Bonham Group, a Denver-based sports and entertainment marketing firm, said yes, it is the economy that is reaching down into the NASCAR world.
“The NASCAR (phenomenon) appears to have hit a wall,” Hinchey said.
He said that companies are taking looks at all of their advertising outlays. “They are facing scrutiny from their shareholders,” Hinchey said. “They are looking at justifying their corporate investments.”
NASCAR has been through economic downturns before. Burton mentioned earlier in the decade, when it appeared that there would not be enough entrants to fill 43-car fields.
“I see something similar to that,” Burton said. “I see less full-time teams involved next year. I may be wrong about that, but I know teams are unsponsored and I have a hard way of understanding how they can exist without sponsorship.”
NASCAR officials say they are not overly concerned about the situation. In fact, they disagree with Burton.
“There are over 400 sponsors currently sponsoring teams in our three national series,” said Ramsey Poston, NASCAR’s managing director of corporate communications. “Over 100 sponsors are Fortune 500 companies and represent America’s blue-chip companies. Does that mean that anyone who wants sponsorship gets it? Of course not. The sport is very healthy. Unfortunately there are not enough people focused on all the new sponsors and those that have renewed contracts.”
Poston mentioned Claritin, Avis, Lifelock, AMP Energy Drink, Principal Financial Group and Verizon as new sponsors and said several existing sponsors have increased their commitment to NASCAR.
Richard Childress, whose team has three cars this year and is adding a fourth next year, also proclaimed the sport healthy. And, he offered companies who are considering — or re-considering — NASCAR investments, some advice.
“I think it’s kind of like going back into the Great Depression,” Childress said. “Companies that backed off of advertising during that time are not the top companies in the world today, and companies that went into advertising and went ahead and did their thing in tough times, they are still here today and doing good.”
The deal last week that driver Tony Stewart struck with Haas CNC Racing is being viewed by some as an attempt to attract sponsorship.
Stewart was lured to Haas CNC by way of being offered 50-percent ownership of the team. There had been reports that Stewart was given half the team. When asked about that, he made a joke and then said he did not want to talk about that aspect of the deal.
Stewart did say, however, “I’m hoping to come in as a driver, but not only as a driver, but as an equal partner in this and be able to attract sponsorship to where Haas CNC doesn’t have to spend that money out of their own pocket and to where we can make it pay for itself.”
Several other drivers, such as Ryan Newman, have also been offered portions of teams in exchange for their services and, presumably, marketable names.
Four-time Cup champion Jeff Gordon said, “To a team that is desperate, that is struggling, needs sponsorship or needs reorganization,” offering an ownership deal can help.
“I think while Haas, I don’t feel they were as desperate as some teams out there, it was very vital for them and their health in this sort to continue on, to make a move like that,” Gordon said.
All in the sport — haves and have-nots alike — hope the economy turns and lusher times are in the offing.
Could happen, too, Hinchey said.
He said that after the economic problems of the 1970s, “NASCAR was able to rebuild and accelerate, and it could do that same thing here.”
