Race Weekend Central

2013 Staff Preview, Part IV: Solving The Cup Sponsorship Crisis

As the NFL fades away this week, sports fans across the country turn towards the next big event on the schedule: NASCAR’s Super Bowl. After a three-month hiatus, Daytona beckons as the 38-week, 2013 schedule descends upon us.

But the Great American Race is the Great NASCAR Beginning, the start of a journey that takes us to Las Vegas, Pocono and nearly two dozen American locales in between. There’s plenty of unanswered questions about what’s to come, a year filled with changes from the Gen-6, to new qualifying, to new competitive rookies for the first time in over four years. So let us get you revved up once again; it’s Frontstretch season preview time, all week setting up not only the Sprint Cup season and the excitement of our coverage to come.

“2013 SEASON PREVIEW, PART I: IS THE GEN-6 NASCAR’s FIX-ALL”:https://frontstretch.com/tbowles/42266/
“2013 SEASON PREVIEW, PART II: WHAT CUP DRIVER HAS THE MOST TO PROVE?”:https://frontstretch.com/tbowles/42267/
“2013 SEASON PREVIEW, PART III: DOES A CHAMP NEED TO CHANGE”:https://frontstretch.com/tbowles/42270/

Today’s Season Preview Topic: Sponsorship has become an issue heading into 2013 with none other than the sport’s Most Popular Driver, Dale Earnhardt, Jr. having races unsold. What’s your fix to this problem, if you have one and is the issue going to get worse throughout the year?

Tom Bowles, Editor-In-Chief: I feel a bit more positive on this issue than I did two weeks ago. There has been a sudden jump in announcements as of late for the smaller teams, from Tommy Baldwin’s two-car organization to Swan Racing’s No. 30 that makes me think new deals with companies are still possible.

The problem to me, in a nutshell is Hendrick’s attitude towards the No. 88 car. The owner is claiming companies are lining up in droves to back Earnhardt but he just hasn’t found the right fit, pushing him to the point he’ll even fund the ride out of pocket if necessary. That leaves us with two realities. One, Hendrick is full of you-know-what and the car, which at one time I’ve been told had $40 million in cash getting pumped to it has priced itself out of the market. Two, Hendrick’s hardball/pickiness allows the price for top-tier support to be so absurdly high there’s no way these new teams with a dollar and a dream are ever going to be competitive enough to get there. It’s one thing for the New York Yankees to have the most money and give back to the small markets. In this case, not only does Hendrick not have to do the same but he knows the bottom-tier competition is like the equivalent of playing a high school baseball team with this business model. Why allow others to become a threat if you don’t have to? It’s much easier to collect the most money and leave everyone else running 35th and dirt poor.

Unfortunately, in the long run that mentality has been proven to kill audiences who like to see parity in sports (see: the NFL). So how do you block Hendrick, Roush, Gibbs, etc. and their unlimited bankroll without franchising? One option would be to allow no more than one sponsor on the hood per season. That, in theory could release all these other companies pursuing limited deals and A) force them into a 36-race schedule while B) giving them the option of other cars. But the Devil’s Advocate argument there is would they even choose to stay in the sport? And are you screwing over smaller teams that, in theory could collect a number of small, one-race deals to survive should the NASCAR economy revive itself? There’s no easy answer here, but I do think it’s a mistake to let the Big Five keep expanding and/or holding the rest of the sport hostage with sponsorship pricing. It’s a dangerous game.

Will Dale Earnhardt, Jr.’s car have a blank hood when we hit the summer months? If so, what does it say about the state of the sport?

Tony Lumbis, Marketing Manager: Dale Earnhardt, Jr. not having a sponsor for a portion of the season is the answer to the problem. I do not think NASCAR should get in the business of franchising or attempting to implement any “cap” model. Finding a process to do so will be complicated, hard to regulate and most likely will have unintended consequences (See the now defunct Top 35 rule).

Sponsorship costs sky rocketed with the popularity of the sport, led by the top dogs in the series (Hendrick, Roush, Gibbs…etc.) When one team is able to raise the ante for sponsorship dollars, the others must follow suit or be left in their dust. I believe the opposite will hold true as well. Now that Hendrick is struggling with sponsorship, and Roush is still down a team because of a lack of funding, the asking price should, in theory, begin to fall. As the cost of sponsorship decreases, NASCAR will become a more viable entity for potential companies to market their brand.

Jeff Meyer, Senior Writer: “Sponsorship has become an issue heading into… (insert any year past or present here)” (eye roll) Two quick fixes here. 1st: No more “official this or that of NASCAR.” The sanctioning body needs to direct companies more toward the teams if they are really concerned about the longevity of the sport as we know it. NASCAR has enough “official sponsors.”

Second, we need to reduce the number of cars in the races. Less space makes available space more desirable! It used to be companies competing to get _on_ a car; now, you can’t give space away. Time to bring back the “something special” about having your logo on a car.

Mike Neff, Short Track Editor: You have two options when you are selling sponsorship on racecars. You can take one-race deals and piece together an entire season, or you can wait to find partners who will stick with an organization for several years. Rick Hendrick has decided to try and find someone that will partner with the team for at least three years. That is why they are still looking for the races that Dale Earnhardt, Jr. has unsold. Jack Roush has not compromised on his pricing for sponsorship, and that is why they have many different, one-off sponsors on their cars. There isn’t a fix to the situation because, at its very core, NASCAR is the epitome of capitalism. The best teams garner the biggest sponsorships and the things that come with having the most money to spend. One thing is for certain in racing: racers will spend as much money as they have, no matter what money they have. Until teams decide to spend less money, the challenges of finding sponsorship are still going to be there. The economy turning around is helping things, but it is always going to be expensive to go Cup racing and that is going to cause sponsorship issues.

Phil Allaway, Newsletter Editor: Compared to last year at this time, the sponsorship situation to me actually looks a little better. Remember that Matt Kenseth started last year with something like 12 races of sponsorship for the season on the No. 17. The Earnhardt, Jr. situation is an exception to that rule, though. Hendrick is obviously charging top dollar to get on the No. 88. My guess is that he’s still trying to get a $40 million total for the year, which is Looney tunes. Hendrick needs to think more realistically and quit turning down legitimate deals. I’m more worried about teams like Stewart-Haas with races to sell than Hendrick Motorsports, though.

As for a fix to the overall problem, the only option would be for the teams to ask for less money to fill their schedules. They’re not doing that anytime soon. The economy is still not the best and won’t be improving to the point it helps NASCAR in 2013.

Beth Lunkenheimer, Managing Editor: Blame it on the recession … blame it on the decline in attendance and television viewers … blame it on whatever you want to. But the bottom line is that NASCAR has got to quit signing so many “Official (fill in the blank)” sponsors. A quick count of all of those official partnerships shows 41 different companies that NASCAR has snapped up. Sure, some of them do also back teams across the sport; however, many others have scaled back. The bottom line is that NASCAR needs to reach into their own pockets and let go of some of their backing; until then, the problem will likely continue.

Brett Poirier, Senior Writer: According to Street & Smith’s Sports Business Journal, NASCAR saw a 25 percent ratings drop last year in the 18-to-34-year-old demographic. Yeah, that should bring some more sponsors into the fold. This problem is only going to get worse, and it shouldn’t come as a surprise because the writing has been on the wall for years. It hit the Nationwide and Truck Series first, then Sprint Cup, and now even the biggest name in the sport, Dale Earnhardt, Jr. I’m not sure what the solution is, but I sure do miss the days when each team had one primary sponsor backing its efforts.

Amy Henderson, Managing Editor: Somehow, I don’t think Dale Jr. needs to worry about backing. Rick Hendrick said he’s turned some companies down because they want the whole car (National Guard always has a spot, and that won’t change) or aren’t the right fit. I worry more about Ryan Newman in that department. Several teams are adding sponsors, too so the news isn’t all bleak. Earnhardt Ganassi Racing, Penske Racing, Front Row Motorsports, Swan Racing, and Tommy Baldwin Racing have all announced new financial support in recent weeks.

That doesn’t mean the situation is rosy all around, because it’s not. Sponsors have priced themselves out of the game as they pony up more and more dollars to back a winner. What could NASCAR do? Find ways to funnel money toward the teams instead of into their pockets. Long term, healthy teams mean a healthy sport, and more money for NASCAR. If they helped those companies that fork out money to be the “Official (fill in item here) of NASCAR” connect with a needy team instead, that could bring a lot of money onto the racetrack. Also, while NASCAR does need to help tracks turn a profit, they should cut their astronomical sanctioning fees instead of decreasing purse money that goes to the teams. Those fees are the reason why Rockingham and Martinsville don’t host the Nationwide Series; they don’t break even after those fees. While NASCAR needs to turn a profit, they should be looking at the big picture and not just short-term gain.

S.D. Grady, Senior Editor: We’ve been watching this sponsorship trend over the past few years as team after team patchwork together a season full of funding. No, there’s nothing much to be done. As with the rest of the Nation, NASCAR needs to get its collective house in shape. If Hendrick can’t afford to run four teams, he shouldn’t. What the Gen-6 can’t possibly bring to the table in terms of parity, the great American Dollar will. Less sponsorship will equal smaller teams, and that will serve to equalize the field faster than any redesign of a car.

Summer Bedgood, Assistant Editor: It’s less of a solution and more of inevitability. The cost of racing is going to have to go down. Yes, in the meantime, teams will learn how to divvy up sponsorship throughout the season to cover their butts. We’ve already seen that the past couple of seasons. But even with the season divided up amongst two, three, or more primary sponsors, even that is unsustainable. It’s difficult enough for the experienced and successful teams such as Dale Earnhardt, Jr. to find enough funding to cover the year, let alone the lesser-known and struggling one. I don’t know how it’s going to happen or how long it’s going to take, but one way or another this sport is going to have to become more economical. Period.

Even the most successful teams, like Ricky Stenhouse, Jr.’s former Nationwide Series program have slammed into a wall when it comes to sponsorship in recent years.

P. Huston Ladner, Senior Writer: Until NASCAR changes to the F-1 model of sponsorship or adopts the concept of franchising, sponsorship will always be an issue. First, the field should be capped at 36 – there’s no need for 43 cars anymore, and there’s probably an argument to be made that even more than 25 is too much.

As for the franchising idea, this adjustment is where the best gains could be made because as franchises teams would have both stability and inherent sense of worth. Even a low-level team, say BK Racing, would provide a platform for marketing and visibility. In comparison, even a team like the Cincinnati Bengals brings attention and is worth something. BK Racing could fold tomorrow and the only thing that would be worth anything are the parts, cars and machinery that could be sold.

Brad Morgan, Senior Writer: There are 43 cars in every Sprint Cup points race that all have ample room for companies, with both big and small budgets, to show off their brand. During race telecasts, the television camera is constantly panning between the contenders for lap after lap. Thousands of laps go by during a ten month long season in which every car is shown at one point or another. Those telecasts go out to over 100 countries and are viewed by over 75 million fans, making exposure an important selling point and an extremely valuable asset to the companies involved in NASCAR.

Teams should also consider what their driver represents to NASCAR’s huge fan base when sifting through potential sponsorship offers. Matching an appropriate sponsor to a driver’s personality and reputation is just as important a selling point as the exposure that the sponsor gains.

Vito Pugliese, Senior Editor: The statement issued by Rick Hendrick was that there was no shortage of suitors, just not the right fit. I think what we’re seeing with NASCAR’s Most Popular Driver is what we’ve seen happen at Roush Fenway Racing that led to the No. 6 car being shelved last year. It takes a certain sponsor who can pony up a pre-determined amount of dollars before they’ll be allowed on the flanks of the flagship cars of a team or a sport. The sponsorship on the No. 88 also helps to float the boats of the No. 24 and No. 5 cars as well; Even Jeff Gordon, a name as synonymous with the sport as Dale Earnhardt, Jr. has had difficulty scoring sponsorship in the last few seasons. Hendrick Motorsports is in a unique position where they can be picky who they place on the hood and quarters of their cars.

Rick Hendrick might be a used car dealer by trade, but this isn’t some clapped out Lumina he’s going to unload just because somebody shows up with $900 in cash.

Danny Peters, Senior Writer:
The fix is for the price of entry for sponsors to be much lower than it is now. Of course, that’s not going happen any time soon. Is it going to get worse? Probably not in the immediate short-term but if costs keep rising, in a sport based hugely on sponsorship, this could become even more of a critical issue than it is now. Worrying…

Kevin Rutherford, Nationwide Series Expert: Is sponsorship really that big an issue? I realize Dale Earnhardt, Jr. has struggled to find a backer to fill out the rest of the season, but as Rick Hendrick is quoted as saying, he’s looking for the “right deal, not any deal.” A team of this caliber is undoubtedly looking for the best possible options, rather than resorting to smaller deals that may indeed fill out the season, but don’t feel like the complete package like, say, National Guard and Diet Mountain Dew.

As a sign that the sponsorship situation in NASCAR’s top series is actually looking up, I point to Tommy Baldwin Racing, a team that has struggled to find major backing since its inception in 2009. During its “7 in 7” series of announcements, TBR has revealed sponsorship for a number of races for the Nos. 7 and 36 and is arguably looking toward its best season yet, especially in terms of funding.

Plus, the landscape of sponsorship has changed. Gone for now are the days of teams getting full-season sponsors; instead, what reigns for many teams are smaller deals with multiple backers, as some sponsors are unwilling to commit to an entire season with an uncertain economy.

I’m not going to call sponsorship a real issue until big teams are forced to shut their doors, and that’s just not going to happen unless the economy actually worsens. We’ll talk then. For now, I predict an announcement on another sponsor for Junior before the halfway point of the year.

Jeff Wolfe, Senior Writer: If the Gen-6 car leads to better and closer races, then that will help. I think NASCAR needs to market their drivers as everyday kind of guys, not superheroes. They’ve done better, especially with the ESPN spots last year. I think making more drivers accessible to fans during race weekends would help, too. Sure, they are busy and have lives, but the more interaction they can have and be seen as regular people only helps their attractiveness to fans who are faithful to their sponsors. Also, all drivers should be required to carry their phones and tweet at least ten times on race day before they get in the car. Then, they should be required to carry the phones in their car so they can tweet if there is a red flag. No other sport has an opportunity to connect with fans in such a way. Call it the Keselowski resolution.

Matt Stallknecht, Senior Writer: There is no simple fix to this problem. Lots of different things need to change for the sponsorship situation to become remedied. NASCAR is still every bit as lucrative to sponsors now as it was ten years ago; the issue is that the cost of doing business in this sport has become astronomically high. Sponsors would be knocking down the door to get on a car for a full season if it only cost 3-4 million do to so, but alas, such sponsorship costs upwards of 20 million in today’s NASCAR. Whether the sport can get costs down via technical regulations or through other means, it absolutely must figure out a way to do so, and the owners need a say in those discussions as well. Otherwise, if a fix is not found, stock car racing could very easily price itself out of existence.

Rick Lunkenheimer, Contributing Writer: Sponsorship woes are sadly a sign of the times. Just a few years removed from a recession, the sport continues to suffer from the decline in numbers both at the track and on television. There’s no quick fix to the problem in a time when so many corporations are downsizing and scaling back their advertising budgets while outsourcing to other countries. If the companies don’t have the funds to keep their workforce in its current capacity, things like outside sponsorships are usually the first to go. The easy solution would be to limit owners to two to three-car teams; however, that wouldn’t make anyone happy, especially since there was a big fuss about limiting them to four cars. In reality, there’s not a quick fix and it’s a problem that will likely plague the sport for many years to come.

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