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Dale Jr.'s switch could mean marketing windfall
'Red Army' of fans could be seeking a whole new look
STEVE HARRISON / The Charlotte Observer
Friday, May. 11, 2007
THE CAR | Sponsor's logos appear all over Dale Earnhardt Jr.'s No. 8 Chevy, which is owned by Dale Earnhardt Inc. As Earnhardt Jr. looks for a new race team to join, those sponsorships will be up for grabs -- including the primary car sponsor, Budweiser.
THE MAN | Earnhardt Jr. also has "personal service agreements" with companies such as Budweiser and Wrangler that are separate from the team sponsorships. Earnhardt Jr. will be looking to increase control of the marketing of his name as he negotiates with other car owners in NASCAR.
Much of NASCAR nation might be wondering today: Is my wardrobe obsolete?
Dale Earnhardt Jr.'s decision to leave the racing team founded by his late father raises the possibility that ubiquitous Dale Jr. brand -- which accounts for 30 percent of the sport's estimated $500 million in merchandise sales -- could undergo a major transformation.
When Earnhardt Jr. races in 2008, he will have a new team, and likely have a new number that replaces his No. 8. It's also possible he could have a new primary car sponsor and color if Budweiser doesn't follow him.
His "Red Army" could become a blue one.
In the coming weeks, Earnhardt Jr.'s handlers will look to maximize the merchandising windfall from the switch -- from selling the remaining T-shirts, hats and die-cast cars to controlling the marketing of new ones. One thing is certain: Negotiations will take place with Earnhardt seeking more power over his name and image.
"I think people are going to snap up the remaining No. 8 hats," said Mike Bartelli, senior vice president of motorsports with Millsport, a sports marketing firm that has an office in Charlotte. "And when he moves to a new team, it's going to be a big day."
Bartelli said the possible frenzy over new Dale Jr. merchandise could be similar to a boom in sales after his father died in a crash at the Daytona 500 in 2001.
Earnhardt Jr. isn't NASCAR's best driver, but he is its most popular due to his freewheeling style and because of fans' fondness for his father.
Earnhardt Jr.'s is leaving Dale Earnhardt Inc. due to a power struggle with his stepmother, Teresa Earnhardt, over majority ownership of the team. Ownership would have allowed Earnhardt Jr. to control the marketing of his name, number and car. More control could also mean a greater cut of sales, which, along with sponsorships, are worth more than winnings.
"We will look to control the licensing (with the new team)," said Thayer Lavielle, vice president for marketing and brand developing at JR Motorsports, Earnhardt Jr.'s racing shop. "I won't say total control, but control."
Earnhardt Jr. said he wants to move to an established team, rather than start racing in the Nextel Cup series with JR Motorsports, which races in the smaller Busch Series.
Until recently, Earnhardt Jr. didn't have the rights to his own name.
When he was just starting out in the sport, he signed those rights away to DEI. That meant he didn't have control over how his signature was used, though he did receive a cut from the sales.
Lavielle said she and DEI will be monitoring the demand for the existing No. 8 merchandise. Will the T-shirts and hats be shunned? Or snapped up as collector's items?
"We need to understand our fan base," Lavielle said. "People might not want it anymore. We need to manage our inventory carefully."
She speculated Thursday about introducing a farewell line of merchandise.
Mike Maynard, who lives near Austin, Texas, is in the area to watch the Dodge Avenger 500 at Darlington Raceway this weekend, before going to Lowe's Motor Speedway on May 19 for the Nextel All-Star Challenge. When he heard about the news conference, he rushed to Earnhardt's Mooresville headquarters, where he stood outside as Earnhardt Jr. spoke to the press inside.
He said he'll continue buying merchandise with Earnhardt Jr.'s current No. 8.
"But I'm really looking forward to what comes next," Maynard said. "It might still be Budweiser, but it might be a black No. 3 or a black No. 8.
"That's exciting."
During his news conference, Earnhardt Jr. said he wouldn't feel "comfortable" driving a No. 3 car -- the number that's closely associated with his father. Merchandise with the No. 3 and Earnhardt's name is still a big seller, six years after his death. He also said he would prefer to continue driving a Chevy, which uses him prominently in commercials.
"That's where my heart is," Earnhardt Jr. said about Chevrolet during his news conference.
Before the season began, some insiders speculated Toyota -- which is new to NASCAR -- would attempt to sign Earnhardt Jr. to a lucrative contract.
His association with Budweiser is less clear. The beer manufacturer's contract with DEI to sponsor the No. 8 car expires at the end of this year, though it has a separate marketing agreement with Earnhardt Jr. that runs through 2008. Sponsors generally pay teams between $8 million and $15 million to sponsor cars.
Because of his own marketing agreement with Budweiser, Earnhardt Jr. can't have another beverage sponsor other than the beer.
He also has personal deals with Wrangler, which means he will still be appearing in blue jeans commercials no matter where he lands. Wrangler was a longtime sponsor of Dale Earnhardt.
He also has a separate agreement with the penmaker Sharpie.
Another question: Could Earnhardt Jr. continue driving a No. 8 car, even for another team? DEI owns the rights to that number, though it could transfer it to another team.
"It would be awesome to have the No. 8," Earnhardt Jr. said. "But Teresa would probably like to keep that at DEI."
DEI president Max Siegel, who attended the press conference, said he couldn't comment on whether the No. 8 could be bought.