Geico on a dragster...... (1 Viewer)

[BrettV]

My point is that with the way insurance companies made outside investments (they take in a portion of their income through actual policy payments), their nestegg MAY get knocked down a few pegs by them being attached to something that may take its own spin down the crapper...

.... As a privately owned entity that has a majority of its customer base working for the government, you can only hope that GEICO has their stuff together better than those guys across the street at AIG...

I believe (and I haven't researched so I certainly could be wrong) that back in the 60's the GEICO customer base was government employees (like my dad in the National Guard) but they have long since gone public and are open to anyone. I'd bet that government employees are no bigger a percentage of their customers than any other insurance company. (For example, I'm a government employee and my insurance is through Progressive and Virginia Farm Bureau.)

I would be more concerned about sponsers and even owners in other hard hit industries - like the construction industry. If times get really tough and Ken Black has to cut back it would be a big hit, potentially 3 cars. Boy I hope that doesn't happen!

 

[vegasnitro]

I would be more concerned about sponsers and even owners in other hard hit industries - like the construction industry. If times get really tough and Ken Black has to cut back it would be a big hit, potentially 3 cars. Boy I hope that doesn't happen!

Ken Black is cutting back ... he is parking Hillary Will at the end of the season unless outside sponsorship can be found for '09.

 

[vegasnitro]

My comparison to Knoll, again, is exclusively based on if worse came to worse, would the Lucas' and JR suffer from extenuating circumstances and being on the losing end due to association. We're going to see many more corporations check their real bank accounts soon, and not the Monopoly-game finance world that they have been living on lately, and I hope for the sake of ANY team that gets support that the well stays wet for a long time. That's gonna be a hard job for the next few years..

I just don't think the comparison to Knoll is valid. Sponsors come and go, that's what they do, sometimes they are insolvent. Vis Viva or CMKX would be much more valid comparisons than Knoll/Torco. Knoll crushed the whole sport. 1 sponsor on 1 car (such as GEICO) doesn't have near that impact.

 

[clwill]

As a privately owned entity that has a majority of its customer base working for the government, you can only hope that GEICO has their stuff together better than those guys across the street at AIG...

I'm a Berkshire shareholder (owner of GEICO) and have the 2007 annual report in my hand. GEICO hasn't been focused on government insurance for decades, it is simply a retail insurance company (you've see the ads, right? Cavemen, Gecko, etc.).

And it's doing exceptionally well. Last year they made $1.1B in profit on $12B in sales, with a $7.7B float (reserve against claims). Their market share in the last decade or so has increased from 2.5% to 7.2% of the US insurance market. In the last three years their share of the motorcycle insurance market went from 2.1% to over 6%. In short, they're kicking butt.

And here's the kicker, last year they spent an amazing $751M on advertising. Yep, that's 3/4ths of a billion in advertising. Up over 20-times in the last 13 years.

In short, GEICO is a solid company, owned by one of the most blue-chip of all blue-chip companies which is run by the most respected and conservative money people on the planet (Warren Buffet). And they have a HUGE advertising budget. My guess is the investment in NHRA is something like 0.1% of their ad budget.

Compare that to Knoll, which appears to have been smoke and mirrors with at least 1/2 their ad budget spent on the sport. Not comparable.

 

[yoda]

That's some good, accurate information Christopher. Thank you for that- good that the 'net can provide some bits of truth to a subject.

And I see your point CC- those examples, particularly CMKX, are perfect in describing the situation as I see it. Positive wishes to JR and GEICO for a sucessful season, with many more in the future.

 

[Jim]

I'm a Berkshire shareholder (owner of GEICO) and have the 2007 annual report in my hand.

In short, GEICO is a solid company, owned by one of the most blue-chip of all blue-chip companies which is run by the most respected and conservative money people on the planet (Warren Buffet). And they have a HUGE advertising budget. My guess is the investment in NHRA is something like 0.1% of their ad budget.

Compare that to Knoll, which appears to have been smoke and mirrors with at least 1/2 their ad budget spent on the sport. Not comparable.

Good points Chris.
I suppose, because the "bar to entry" is so, relativly low, NHRA may attract more under-capitalized sponsors (Heck, take their money - as long as it lasts) and some will evaporate from time-to-time.
As a businessman, a team-owner should manage cash and resources wisely. Budget wisely - plan ahead - keep the team marketing operation active in anticipation of future adverse developments - spread the risk among more than one sponsor.

Hey, CONGRATS on your Berkshire holdings (I wouldn't mind a couple thousand<GG> of those. I think they'll do OK!