Professor of Speed: NASCAR Economics 101

Despite reports declaring that the “Great Recession” is over and that America is poised for economic recovery, recent events in NASCAR would prove otherwise. When established organizations like those of Joe Gibbs Racing and Michael Waltrip Racing find it necessary to shut down Nationwide Series operations, or when the reigning Camping World Truck Series champion can’t secure stable backing, it speaks poorly to the stability of American business and its ability (or willingness?) to get involved in a lucrative, long-term investment like stock car racing.

Let’s not kid ourselves; even a NNS race team requires hefty sponsorship, despite the idea that this “second-tier” series is merely a feeder division that leads to eventual Sprint Cup competition. The fact that so many Cup drivers moonlight in the NNS demonstrates that the division is much more than a triple-A level of racing; the NNS offers drivers and crews the chance to gain valuable experience while working on necessary skills and strategies, all while introducing these competitors to several different tracks in areas around the country (and across the continent) where the Cup Series doesn’t go.

With an apparent lack of possible sponsors, is it safe to assume that all bets are off in this post-recession period of supposed recovery?

Is the off-track competition for solid financial backing becoming even more heated than the already-hectic, on-track competition for wins and championship points? It’s no longer a matter of how fast can you afford to go; now the question seems to be how many weeks can you afford to show up?

And this goes beyond the typical “poaching” argument one hears regarding the Cup drivers who run (and often win) Nationwide events. The same thing goes for CWTS events. We know of some Cup drivers who see the CWTS and/or the NNS as a chance to develop and build a future Sprint Cup operation of their own – a way to sustain themselves and keep their competitive fires stoked once they decide to hang up their helmet and opt for life atop the pit box.

Sure, such ambitions exist, just like such ambitions exist for the baker who does freelance work on the side as they save and plan to someday open a bakery of their own; this is what can happen in a capitalist, free-market economy, and it’s often a trait we admire in small-business people. When such a concept is compared to Sprint Cup drivers “stealing” opportunities from full-time Nationwide Series drivers, however, it’s often regarded simply as being small-minded.

Part of the issue here is that so many sponsors fail to monopolize on their overall NASCAR investment. It’s one thing to plaster your company’s name and logo across the fender (or hood, or rear deck lid) of a racecar – it makes for some nice pictures and even some decent television exposure – but if that’s as far as your investment goes, then you’re not benefiting from the total NASCAR “We Move Products” sponsorship experience.

I won’t choke you here with reams of data and marketing research statistics showing the bang that sponsors can get for their bucks in NASCAR racing. We know that NASCAR has the most loyal fanbase in all of professional sports and we know that this loyal fanbase puts its money where the names are, regardless of the series or the success of the team in question.

Many years ago (as in the summer of 1992), I was asked to conduct research in the Charlotte region to investigate the feasibility of establishing a NASCAR/stock car museum in the Piedmont area. I happened to make a quick stop at what-was-then Bahari Racing, the facility where Michael Waltrip‘s No. 30 Pennzoil Pontiacs were based. While talking with several members of the team’s personnel, I learned a curious fact: the Pennzoil brand was experiencing an increase in sales nationwide by nearly 30%, even though Waltrip had yet to visit victory lane (a drought that would drag on until the 2001 Daytona 500).

Even though the team had never won a then-Winston Cup event, the executives at Pennzoil were thrilled at the return on their overall investment; their product had near-instant recognition (remember that bright yellow paint job?), the appeal of a popular, fan-and-media-friendly driver, and the advantages of running a circuit that covered broad swaths of the country, so that highly-populated regions had contact with/exposure to a NASCAR race.

To the companies that complain they can’t afford to sponsor a team that doesn’t win, my response is: you’re just not trying hard enough to make your commitment beneficial to everyone involved. Sure, winning might get you on the front page of Monday morning’s sports section, but having a long-term presence in racing will earn you so much more. To have loyal fans, a sponsor must demonstrate its loyalty first by hanging in and doing what it can to stay visible in NASCAR.

Much of the post-recession talk about sponsorships revolves around companies needing to shore-up their budgets to defend against potential financial woes; how can a CEO or a CFO justify authorizing a NASCAR sponsorship when there’s a good chance that employees will be laid off or offices might be closed? Such cases are both unfortunate and true, but what about the struggling school district that cuts teachers and increases class sizes while keeping their football and basketball teams afloat?

What is the true rationale for sponsoring a sports team? Is it about making money or is it about making connections with your community – the students, the families and the local businesses that constitute said community in the first place? Losing teams offer one glimmer of hope that justifies all investment in their future: things may just get better. It may not be right now, it may not be next season, but it just might be sooner than you think.

Talk to a Chicago Cubs fan and you’ll see what I mean. Better days lie just ahead, if only the organization can get the right break at the right time. Talk to a Dale Earnhardt Jr. fan, and see if you don’t hear the same reasoning. Sponsors in NASCAR need to stay in the game if they hope to achieve long-term customer loyalty; “you can’t win if you don’t play,” as they say in state lottery commercials.

Consider what long-term sponsorship deals did for a brand like STP. Through its years of involvement as a sponsor of Richard Petty, the brand grew a reputation more for its ties to “King Richard” than it did through recognition for what the line of products actually did. The “hit-and-quit” approach to motorsports sponsorship isn’t enough to do anyone any good; maximum returns come from maximum time before your target audience and there’s no better target audience (my apologies to Juan Pablo Montoya and the No. 42 team) than 75 million or so NASCAR fans in the United States of America alone.

The trick within NASCAR is to recapture the attention of possible sponsors in a positive way, through thrilling on-track competition, not through questionable off-track lapses in judgment and behavior. Close finishes and respectful competitors, and a potential sponsor just might make that oh-so-necessary call to offer needed support.

Treat the garage area or pit road like a barroom and watch the money go away; some fans may relish such boorish behavior, but violent outbursts do little to win the hearts and minds and cash of a Fortune 500 company. Much of NASCAR fan loyalty is related to the success of particular drivers and that’s totally normal. Recent flare-ups after races seem to stem from another perfectly normal condition seen in sports: frustration over one team’s competitive dominance.

This is the issue regarding, like him or not, Kyle Busch. His consistent success in all three of NASCAR’s top touring divisions reflects dominance, and a winning record – while building a fanbase for the younger Busch – also frustrates fans who follow other drivers and/or teams. Over the years, NASCAR fans harbored similar attitudes toward such dominating drivers as Petty, Dale Earnhardt and Jeff Gordon. It wasn’t all that long ago when “Anybody but Earnhardt” signs could be seen at Cup events. Fans are infamous for booing a winner, especially when that winner is not that fan’s favorite driver.

That said, isn’t the current backlash against the success of Kyle Busch just more of the same thing? Given such, maybe it’s appropriate that the people more visibly lashing back at Busch recently are fierce competitors like Kevin Harvick and Richard Childress – two men directly connected to the organization that will forever be associated with the late Earnhardt. While all the fists are flying and the sheetmetal is bent; however, the ever-present media provides audiences with glimpses (both visual and textual) of sponsor names and images.

As the old adage states: there’s no such thing as bad publicity. Maybe there are poorly-behaved people, but their actions, oddly enough, can still move products and generate revenue.

Sometimes all it takes is a creative approach to developing a solid sponsorship package – one that gets the team its needed cash while bringing the company its needed recognition. From working with both race teams and corporate sponsors, I have come to learn that a little thinking “outside the box” can lead to advantages for a sponsor above and beyond simply winning races or even running in the top 10. It’s far easier to be innovative than it is to expect/demand victory each week, so creative promotional campaigns are both necessary and ultimately profitable. Take, for example, next week’s exhibition event at Watkins Glen, brought to you by the folks at Mobil 1.

The upcoming (as in Tuesday, June 14) ride-swap at Watkins Glen between Tony Stewart and former (as in 2008) Formula 1 world-driving champion Lewis Hamilton is an event that came about – in part – through the enthusiasm of Mobil 1, a sponsor shared by the two drivers. Stewart’s two Sprint Cup titles, along with his years of experience as an open-wheel driver, made the swap a no-brainer as a way of attracting attention to the company.

Toss in the fact that Hamilton has been a student of NASCAR for several years and has expressed interest in “crossing the pond” to try his hand at stock cars, and you’ve got an exhibition made in marketing heaven. Stage the event at a legendary facility like Watkins Glen and everything else falls neatly into place.

Stewart’s an all-American boy, born and raised in the Heartland of our nation’s Midwest (all capitalization here was intentional), while Hamilton is an ambitious young upstart; at the age of 10, he told McLaren’s team manager, Ron Dennis, that he fully intended to drive for that team.

Hamilton was raised in Hertfordshire, a district not far from London that is considered non-metropolitan; the area is not only home to such international corporate giants as T-Mobile and GlaxoSmithKline, but it’s also been immortalized as the location of Jane Austen’s legendary 1813 novel Pride and Prejudice. It’s safe to say that Mr. Darcy never imagined the kind of horsepower that Stewart and Hamilton will swap in upstate New York.

When thinking about the significance of Hamilton dipping his toe into the waters of NASCAR, one needs to consider his past racing successes. Hamilton missed out on winning the F1 world driving title by one point during his rookie season; he lost the 2007 championship to Kimi Raikkonen in a season-long battle that was highlighted by the usual political/manufacturer/sanctioning body finger-pointing we’ve all come to recognize and expect.

As was also somewhat recognized and expected as-of-late, success as a Formula-1 world champ doesn’t mean much to NASCAR folks; Raikkonen’s attempts at both CWTS and NNS racing came off as less-than spectacular and too-much-too-soon. Such a career transition is possible, as we’ve seen through the efforts of Montoya, but it’s anything but easy and nothing is guaranteed.

One quality Hamilton has going for him is his seriously aggressive driving style, which could make his laps around the 3.4-mile “long course” at Watkins Glen tons of fun. Once he gets a feel for the track and develops a good sense of what Stewart’s Chevrolet can do, it’s likely that spectators will be in for quite a show. Given that Tony is no “shrinking violet” behind the wheel, it’s safe to say that Hamilton’s ride will receive a fair amount of playful punishment.

Having two drivers with similar styles sharing their respective machines with the blessing of their shared corporate benefactor, might we be seeing a new chapter in the book of Stewart-Haas Racing?

There’s already been some mention within the media about Danica Patrick possibly landing a ride with Stewart’s operation. Now that Hamilton is 1) trying out a Cup car, 2) being open about his interest in NASCAR and 3) being backed by a huge sponsor who also backs a Stewart-Haas team, could this be the first volley being fired in the creation of another Sprint Cup super team? Might Stewart-Haas go the way of Hendrick, RCR and Roush Fenway, and try to develop a maxed-out-at-four cars motorsports institution? Let us dream a bit and consider some of the many possibilities.

Let’s say Hamilton has a great day at Watkins Glen and discovers that he can wring tons of speed and handling out of Stewart’s Chevrolet. As history has shown us, such successful “swaps” can plant the seeds that lead to career changes; for more details, see Montoya. If Stewart-Haas Racing were to develop a four-car Cup roster of Stewart, Ryan Newman, Patrick and Hamilton, it’d be NASCAR’s version of the Fantastic Four –the Marvel comic book team that combined superpowers with super-familial (and even, at times, super-economic) dysfunction… the perfect combination for a fledgling Sprint Cup operation!

The Fantastic Four, if you remember, was comprised of scientist Reed Richards; his wife, Sue Richards; his brother-in-law, Johnny Storm; and a gruff family friend/associate by the name of Ben Grimm. These four flew into space aboard a privately-built spacecraft (are you reading this, President Obama?), were bombarded by gamma rays and returned to Earth to discover that they suddenly possessed amazing powers; Reed could elongate himself, Sue could turn invisible, Johnny became The Human Torch, and Ben transformed into The Thing – a pile of orange rocks with a bad attitude.

Could such a combination of racers, combined with a financial powerhouse like one of the world’s largest oil companies, become the latest and greatest NASCAR dream team? The principal players are already in place.

The leader of this Fantastic Four would be, naturally, Stewart (it’s his name on the team, is it not?). Granted, he’s not married to Patrick, but she’d be a shoo-in for the female member of the organization (she’s anything, however, but invisible). Hamilton is a stellar match as the young, brash, and compulsive Human Torch character, even if he’s not really Stewart’s brother-in-law as was the case with Johnny Storm (he was Sue’s kid brother).

That leaves Newman in line as the growling, no-nonsense, in-your-face “muscle” of the group. Given Newman’s recent on-and-off-track physical confrontations with Montoya (and subsequent “secret” fines, as well?), this might just be the most true-to-life casting of the four.

Such heroic identification is nothing unique. Consider NASCAR driver Raymond Williams, who had the nickname of “Captain America” back during the 1970s. We can also look to someone like “Ironman” (or “Iron Man,” depending on your source) Jack Ingram, the legendary Busch Series’ driver who stepped down from NASCAR competition in 1991. Toss in a driver like Helio Castroneves, whose fence-climbing antics earned him the nickname “Spiderman,” and you can see there’s a precedent.

Stewart has tried his hand at fence-climbing, as well, but Castroneves seems to be the first to have done so. Oddly enough, it appears that Marvel has cornered the market in driver nicknames; DC Comics has played a role in NASCAR, but that’s been limited to putting character names and images on cars as part of sponsor-related tie-ins. The power of crossover marketing and such, I guess. Taking advantage of such driver “branding” could be golden.

The trick would be for the PR folks at Mobil 1 to try and market this high-speed, globally-affiliated version of the Fantastic Four effectively. Maybe they could all wear blue firesuits emblazoned with the number four on the front? Giving each of them a car number of “4” would be unrealistic (as well as impossible to score), but what if each team member had the digit somewhere within their official NASCAR designation? Stewart already drives the No. 14, so how difficult would it be to give his teammates similar car numbers? That’s a possible option, although the No. 24 and the No. 48 would be out.

Of course, other similarities could also work. On the downside of the deal, what if Stewart created on-track problems by trying to make his Chevrolet too long or too wide, or what if Patrick made contact with another car because the second driver couldn’t see her? I guess Hamilton could overwork an engine and burn it up, especially during the months of July and August, no matter how dependable his trusted Mobil 1 products might be.

And don’t forget that Newman could easily turn an innocent bump draft or tight traffic through a corner into NASCAR’s version of “Clobberin’ time” (as The Thing would often say when it was time to get tough). Such correlations wouldn’t be good for the team’s racing successes, but it’d sure give the marketing staff at Mobil 1 something with which to work.

Memo to Mobil 1 legal department: check to see if copyright for “It’s clobberin’ time” (or any variations thereof) has been applied for by Richard Childress and/or Richard Childress Racing. It’s apparently worth at least $150,000 to him.

In the meantime, it’s off to Pocono and one of the most challenging tracks in the Cup Series. Parts of the place race like a superspeedway, while others make you think you’re running a road course. Different lengths of straights and different types of banked corners will test everyone’s set-up, patience and strategy. The heat there can be downright oppressive, with high humidity always a summertime possibility.

If you think fuel mileage has been as issue lately, wait until Sunday afternoon. Maybe it’s time for a calculator company to step up and finance a team or two? Getting endorsements from drivers and crew chiefs wouldn’t be difficult, especially if the numbers being crunched turned out to be in the team’s favor.