Published in USA TODAY on Wednesday, October 19, 2011 by Nate Ryan.
Though not expected to be the “Black Monday” in which hundreds of crewmembers lost their jobs after the 2008 season finale, contraction is coming in NASCAR.
Team owner Jack Roush says sponsorship dollars are tougher to come by than ever in his 24 years in NASCAR.
In the Sprint Cup Series, Richard Childress Racing andRoush Fenway Racing are expected to drop at least one car apiece after the season. and the future of two-carRed Bull Racing is in doubt. That team has filed a North Carolina notice of impending layoffs, as have at least three Camping World Truck and Nationwide series teams.
Mike Boykin, vice president of sports marketing for GMR Marketing, said many sponsor deals signed just before the 2008 downturn expired this year. Marketing budgets remain under great scrutiny, meaning less cash is available.
“There have been positive steps in TV ratings, and (NASCAR) is a better value than it’s ever been,” Boykin said. “But you’re still swimming against the tide.”
Just Marketing International CEO Zak Brown said sponsor price tags are down 20%, from $25 million a year to $20 million for top teams.
“Everyone has cycled through any contractual protection they had,” he said. “You see more (companies) staying and reducing, which tells you it’s still working, but they’re recalibrating to the new world.”
Team owner Jack Roush said it’s the most difficult business environment in his 24 NASCAR seasons because “the best sponsors want just enough of a car to be able to do their promotions and want to share the bulk of the expenses. It’s a really strange time.”
Discounts squeeze smaller teams
As the general manager of an underfunded Cup operation, Jerry Freeze is used to getting beat on the racetrack. Being beaten in the boardroom is a new experience.
Sponsorships at Front Row Motorsports, which fields Fords for David Gilliland, Travis Kvapil and J.J. Yeley, top out at about $150,000 a race. Until this season, that was considered a bargain in a series where powerhouse teams typically charge at least $400,000 a race.
Now, high-profile teams are moving in on Front Row‘s price points.
“I hear the top end of the garage is doing deals for $150,000 or less now,” Freeze said. “They never would have done that. Some sponsors right in our wheelhouse in the past are going with those guys. I think the $400,000 race sponsorships are a thing of the past for the foreseeable future.”
The scramble for sponsorship cash is fierce at NASCAR’s premier level.
Among championship-caliber teams, Roush Fenway seems most affected. The team re-signed points leader Carl Edwards two months ago but still is assembling the sponsorship next year for his No. 99 Ford. (Fastenal will be a half-season primary sponsor, and Aflac, the full backer the past three years, is expected to return.) The team also is hustling for funding for Matt Kenseth (whose No. 17 Fusion is losing Crown Royalafter the season) and David Ragan (whose No. 6′s future with UPS is uncertain).
Roush is committed to fielding the cars of Greg Biffle (who is solid with 3M), Edwards and Kenseth — even if he doesn’t have full sponsorship — in 2012.
“I’ve never seen anything like this,” said Roush, who has run two Nationwide Series cars without sponsorship for much of this season. “It will be different than in the past.”
Cup teams luring Nationwide dollars
The effect on NASCAR sponsorships seems to be two-fold: More companies are doing partial-season deals, and some are coming from lower-tier series. In the past two weeks, Dollar General (12 races with Joey Logano at Joe Gibbs Racing) and 5-Hour Energy (24 with Clint Bowyer at Michael Waltrip Racing) announced moves from Nationwide to Cup teams in 2012.
Boykin said hefty sponsor deals that once went for $20 million with top teams have been discounted to $12-14 million.
“There’s great opportunity,” Boykin said. “Now, big Nationwide sponsors can get great value in the Cup series.”
Freeze is hoping the increase in bargains will open the door to companies “that couldn’t give NASCAR a look because it was priced out of their league before. Maybe instead of a Fortune 100 now it’s back out to Fortune 1,000.
“We’ve had some relationships this year of sponsors never in NASCAR before. They’re not companies that would have gotten in at $400,000 a race.”
NASCAR is trying to widen the sponsor pool, too, by providing more assistance in teams’ money hunt. It established a 13-person team in Charlotte five years ago to help teams attract and retain sponsors and burnished the effort by launching a new Integrated Marketing Communications team this year.
Said Childress: “I think everybody’s business model changed, and we’re all having to adjust to it. But we’ve got a lot of new companies that are looking at us.”
NASCAR Chairman Brian France said the economy “will continue to have some impact on us” but echoed Childress’ silver-lining sentiment — hoping that new teams can fill the coming Cup voids.
“I hope everybody comes back and gets what they need to compete,” France said. “But if the economy is difficult, it does allow opportunities for others.”
To help Ward achieve his goal of raising at least $2500 in donations for the charity, GMR Charlotte staff is volunteering at the night of the auction as well as securing donated items to incorporate in his date package and the event’s silent auction. GMR staff is also donating money to purchase tickets to the event.
