NASCAR’s small teams feel squeeze
By MICHAEL SMITH
Staff writer
Published September 15, 2008 : Page 01

Don’t try to tell Richard Childress Racing that the economic malaise is adversely affecting sponsorship in NASCAR.

Childress not only added sponsors Caterpillar and General Mills for 2009, but it turned away UPS because the team was out of inventory on its Sprint Cup cars.

NASCAR’s own research says that new or increased sponsorship spending in 2009 will surpass $100 million, backing up its claims that the sport has maintained its strength in a sluggish economy. By comparison, NASCAR teams generated a little more than $90 million in new or increased spending in 2008 and $96 million in 2007.
General Mills left Petty (top) while
Old Spice and Office Depot ponied
up for Stewart Haas.

But below the surface of NASCAR’s mega-teams like Childress, the sport’s smaller, less competitive outfits are scrambling to replace sponsors that have defected to the bigger teams. Caterpillar left Bill Davis Racing and General Mills exited Petty Enterprises; neither team has found a replacement.

That’s the way of life in NASCAR these days as the gap between the haves and have-nots grows into a chasm, one that threatens to swallow the smaller teams if they can’t find sponsorship during tough times.

“We’re going to grow some partners and we’re going to lose one or two,” said David Jessey, vice president of sales and marketing at Gillett Evernham Motor-sports. “Companies are slower in making their decisions, they don’t extend out as far as you’d like, and there’s not as many new companies coming into the sport. But it’s not horrible, either. You just have to work a little harder at it.”

Like Caterpillar and General Mills, several team sponsors are increasing their spending for 2009 despite the soft economy, either by moving to a bigger team or increasing their investment at the same team.

Aflac will step up from a mid-seven-figure deal on Carl Edwards’ car to a $26 million primary sponsorship, representing about $20 million in increased spending. UPS is expected to spend an additional $3 million a year to move from Michael Waltrip Racing to Roush Fenway Racing. Office Depot and Old Spice are increasing their expenditure by about $5 million each to share the hood of Tony Stewart’s new team.

These are the kinds of numbers that NASCAR cites when it touts the health of the corporate side of the sport.

Team marketers said they weren’t surprised by the data because sponsorships with the top drivers can reach $25 million to $30 million a year. But team officials lament the lack of new business coming from brands outside the sport.
Caterpillar will jump to Richard Childress
Racing next season from Bill Davis Racing.

“I don’t know if we’re in a recession or not, but it sure feels like it,” said Zak Brown, CEO of Just Marketing, whose clients include Subway, UPS and DirecTV. “Companies have to be careful when they’re firing employees on one hand and then spending millions in sponsorship and advertising. They have to create a perception that they’re pulling back, at least from a politically correct standpoint.”

With so many of these sponsors leaving smaller teams to join larger organizations, many in the sport predict team consolidation and perhaps elimination. About 15 to 20 teams field cars in the Sprint Cup Series.

“There may not be a press release every time teams decide to work together, but you’re going to see more of it,” said John Story, vice president of motorsports at Dale Earnhardt Inc. “Mergers might be the only way for some teams to survive.”

The impact of the economy is most evident among the manufacturers. Dodge recently announced that it no longer would fund the truck series and Chevrolet has pulled back on track sponsorships. If the smaller teams lose funding from manufacturers, they’ll be further endangered.

What these smaller teams offer, though, is the opportunity for a sponsor to own a primary sponsorship for less than the big boys charge. It’s still possible for brands to enter the sport as a primary for $12 million to $15 million, but the expectations for success on the track have to be tempered.

Just look at the 12 drivers in this year’s Chase for the Sprint Cup. They represent just four teams: Joe Gibbs Racing, Richard Childress Racing, Hendrick Motorsports and Roush Fenway Racing.

“You have to ask what value the smaller team brings (to sponsors),” Brown said. “The competition is at the front of the field, not the back of the field. At the front, there are still a lot of big checks being written.”

DEI’s Story said his organization is keeping sponsor rates flat in hopes of offering an alternative to higher-priced teams.

“We’re not seeking increases,” he said. “Instead, we’re looking for more operational efficiencies so that we can pass that on to current and prospective partners. But at some of the other teams, you hear some pretty big numbers for sponsorship.”

That so many sponsors are hopping from one team to another has created a “wild west mentality,” said a team executive. Most teams publicly protest such poaching, but many also practice it. It’s the price of survival in a sport where most teams generate 75 percent of their revenue from sponsorships.

“The weak teams are going to get weeded out and the strong are getting stronger,” Brown said. “Many companies are seeing that their best deals are in the biggest deals. You’ve got to be all in or not.”

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eh the real reason RC turned UPS away is he would not be seen fielding and ugly brown race car! !

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Rome did not create a Great Empire by having meetings--- They did it by killing all people who opposed them!

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The JACK CREW!!!