Declining NASCAR team values

[none]

http://finance.yahoo.com/news/nascar-big-trouble-team-values-183826950.html

The NHRA analog has been hashed out here ad nauseam but it's an interesting read...

 

[Jeff]

racing has always been part hobby, part business .... the pre-bubble years made too many think it (NASCAR) could be 100% business

go to the web site of their referenced source and search for the term NHRA. That'll show you a little about NHRA economics, it's a tough gig.

 

[mw6789]

It makes me wonder how many racing sponsorships are done because the business owners are enthusiasts and are not necessarily looking at the numbers like a Fortune 500 company with stockholders to answer to. The owner loves racing, its a total write off, he has the money, so who cares if the numbers work or the outlay is justified. And quite naturally declining attendance has an adverse effect on any sport whose lifeblood is basically advertising.

 

[PJ]

Some do it as a business. Had a company call on me this week, I get tons of cold calls a day. I took this one and had a meeting. Told them they got in the door because they sponsor a drag racing team.

Not all of them are just fans tossing money around, they want ROI as well.

 

[vegasnitro]

It makes me wonder how many racing sponsorships are done because the business owners are enthusiasts and are not necessarily looking at the numbers like a Fortune 500 company with stockholders to answer to. The owner loves racing, its a total write off, he has the money, so who cares if the numbers work or the outlay is justified.

It is mostly this. The CEO flies into NASCAR land on his private jet, hangs out in the hospitality/VIP areas, hobnobs with the drivers and heads out when the race is over. He has a great time, so he is justified scratching out that big check every year, and the write off looks good come tax time. The real issue hits for some companies when the CEO can't work around bean counters or share holders, as the cost of sponsoring a car in NASCAR has increased proportionally more than the company's total advertising budget, and for some companies you just can't justify having that many of your advertising eggs in one marketing basket, particularly a declining basket such as NASCAR ... and by extension all of motorsports.

Now you know why Tony Stewart always thanks Johnny Morriss of Bass Pro Shops every time he runs that car, as did Jamie McMurray before him. Stroke that ego. We see it some in NHRA land, Capps rattled off a bunch of NAPA execs a few weeks ago when he won, as did Jason Line for the Summit folks.

 

[parrotwhisperer]

Chris's description works for a small NASCAR team like Phil Parsons team or a top NHRA team. If you want your name on Jimmy Johnson's car every race the tab is $30-32 mil. This is not CEO boondoggle land. The advertising better work. Most big NASCAR teams have many sponsors to split up the cost somewhat. There are many three/five/eight race deals. An NHRA deal is so though based on the advertising numbers and return they can only justify $500,000 and they are not interested in getting involved in a peanuts deal. NHRA is not just a hard sell it is hard to get ANYBODY to take/return your call.

 

[G'ginna]

Chris's description works for a small NASCAR team like Phil Parsons team or a top NHRA team. If you want your name on Jimmy Johnson's car every race the tab is $30-32 mil. This is not CEO boondoggle land. The advertising better work. Most big NASCAR teams have many sponsors to split up the cost somewhat. There are many three/five/eight race deals. An NHRA deal is so though based on the advertising numbers and return they can only justify $500,000 and they are not interested in getting involved in a peanuts deal. NHRA is not just a hard sell it is hard to get ANYBODY to take/return your call.

Only partly; for example, Cingular Wireless former sponsor of Jeff Burton. Purchased AT&T Wireless, then parent companies merged, changed name to AT&T Mobility and new heads of company (the landline dudes) prefer F1 so NASCAR got much less attention and at their first opportunity dropped it. A different reason was given publicly, but large numbers of the Cingular people believed strongly it was due in large part to CEO preference.

 

[vegasnitro]

Only partly; for example, Cingular Wireless former sponsor of Jeff Burton. Purchased AT&T Wireless, then parent companies merged, changed name to AT&T Mobility and new heads of company (the landline dudes) prefer F1 so NASCAR got much less attention and at their first opportunity dropped it. A different reason was given publicly, but large numbers of the Cingular people believed strongly it was due in large part to CEO preference.

Ginna, as I remember it, since Cingular/AT+T was in NASCAR when Nextel/Sprint took over the series sponsorship, they were given an exemption as Sprint/Nextel were supposed to be the only wireless sponsor in NASCAR. When that exemption ran out, AT+T sued to remain in NASCAR, albeit unsuccessfully. Also, AT+T has been involved in F1 since the '90s via their Orange brand, particularly as the title sponsor of the former Arrows team. They finally branded some stuff in Europe as AT+T and got involved with WilliamsF1. I guess what I am trying to say is they would have been involved in both if they could as both meet different marketing objectives. (as an aside, this is how Verizon came to sponsor Penske's IndyCar team and ultimately be title sponsor of the series, they wanted to sponsor one of his Cup cars and couldn't)

I also disagree about only small teams sponsors getting in the CEO "boondoggle" as Steve put it. I can absolutely tell you that the FedEX - UPS sponsorship rivalry was very real in terms of private planes, hospitality at the track and VIP experiences. What caught UPS out was the escalating costs of NASCAR sponsorships versus relatively static marketing budgets, so someone at UPS decided the party was over. Apparently the same thing has happened at FedEX, as they are down to a half-season or so with Hamlin. Besides, even the big teams sponsors that "only" sponsor 6 or 8 races, you better believe the frills and tickets and hospitality and VIP treatments are going to upper management of those sponsors to this day. It is still a lot of money and a significant portion of their marketing budgets, not to mention high visibility. Just because they may have reduced their involvement does not mean they have reduced the perks they get out of it. Stroke that ego.

 

[G'ginna]

Chris, the F1 involvement originally was truly not the Orange brand (that was Cingular which was cobbled together from various regional carriers about '99-2000,) it was via Blue (AT&T) side, but yes, they had a long time involvement. The attitude shift felt by Orange employees toward the NASCAR team started at the merger and while we understood the legal aspect of it re: Sprint/Nextel, the attitude of upper management was definitely not the same after the two companies 'merged' as prior regardless of level of involvement or intent to continue.

 

[vegasnitro]

Just watched Ty Dillon win at Indy in the Nationwide series ... His Grandfather Richard Childress and Ty both thanked Johnny Morriss before thanking Bass Pro Shops. Stroke that ego.