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Lowe’s and BofA keep pace as NASCAR sponsors
Charlotte Business Journal, May 24, 2010
By Erik Spanberg
At a time when many corporate sponsors are waving goodbye to NASCAR, two locally based companies remain among the sport’s most prominent backers.
Bank of America Corp. and Lowe’s Cos. Inc. see no need for caution flags, banking on stock-car racing’s fans and key players to bolster investments of millions of dollars in sponsorships.
Lowe’s executives bill the company’s role as lead sponsor for four-time defending NASCAR champion Jimmie Johnson as the center of their sports-marketing universe. And at BofA, which for many years eschewed NASCAR in favor of the Olympics and traditional team sports, confidence in current deals with track operators Speedway Motorsports Inc. runs high.
Each company takes a different approach and targets different audiences. But both view NASCAR as an important vehicle for keeping customers — and finding new ones. In these TARP-sensitive times, BofA and Lowe’s say they are diligent about measuring return on investment and see clear links between the sponsorships and business gains.
“Very few people do it for awareness and image,” says Max Muhleman, principal at Private Sports Consulting and a longtime participant in racing-related sponsorships. “So the question for large sponsors is, what sports properties do they stay with? It keeps coming down to return on investment.”
Muhleman and others acknowledge sponsorship, much like advertising, offers murky evidence of direct links to higher revenue. At the same time, they see little doubt of an impact from the association with NASCAR and other sports.
Both companies decline to disclose how much they are spending on sports sponsorships in NASCAR and beyond. Trade publication IEG Sponsorship Report ranks BofA and Lowe’s among the nation’s 25 largest corporate sponsors, with estimated 2009 investments of $100 million and $50 million, respectively. Those figures project the companies’ sponsorship investment in not just sports leagues and teams but also in the arts and entertainment.
Top spenders such as PepsiCo Inc. ($335 million) and The Coca-Cola Co. ($245 million) dwarf those figures. But BofA and Lowe’s remain significant sports sponsors — and easily the best-known in this region.
Their respective NASCAR portfolios reflect stock-car racing’s traditional Southeastern strongholds as well as more recent gains for the sport across the nation. Even with NASCAR’s sagging popularity the past few years, sponsorship executives at both companies say the sport still delivers a passionate, and coveted, audience. Attendance and TV ratings have declined for several years across NASCAR, with continued sluggish results so far in 2010.
Mike Hargrave, who manages motorsports sponsorships at BofA, points instead to NASCAR races still attracting 100,000 fans most weeks and ranking among the most popular televised sporting events.
“The sport is still a tremendous opportunity for sponsors,” he says. “And there is still a uniqueness about the sport — all of the stars are in the same event every weekend.”
BofA holds the title sponsorship to the fall Sprint Cup race in Charlotte, known as the Bank of America 500. The bank also has agreements with several of Charlotte Motor Speedway’s sister tracks, all owned by parent company Speedway Motorsports. Similar sponsorships with rival track operator International Speedway, including the Daytona and Chicago tracks, give the bank access to tickets, promotions and entertaining clients across the country at various NASCAR races.
The bank is also a smaller sponsor with Hendrick Motorsports, the team that includes popular drivers Johnson, Jeff Gordon and Dale Earnhardt Jr., and is the official bank of sanctioning body NASCAR.
To make a more direct link between NASCAR and banking, BofA introduced a racing-themed rewards program several years ago that now has 250,000 members. New and current bank customers also can choose from NASCAR-themed credit and debit cards and checks through the bank’s agreements with 13 top drivers, including Johnson, Gordon, Earnhardt Jr., Kasey Kahne and Tony Stewart.
Then there are the bank’s financial services within the NASCAR community itself. BofA has provided loans and credit for track construction and expansion, worked with industry executives and drivers through the bank’s wealth-management division, and so on.
Lowe’s backs Johnson, as well as Hendrick Motorsports, in what’s believed to be one of the largest team sponsorships in NASCAR. Last year, just after Johnson won a record fourth straight season title, Lowe’s extended the agreement through 2013.
Lowe’s runs a Team 48 fan club for Johnson that has more than 1 million members, entrée to build loyalty with existing and potential shoppers in search of lawn mowers, paint and other items.
The home-improvement retailer uses its Hendrick Motorsports alliances to promote both its stores and the company’s Kobalt Tools line. Two races, one in Phoenix and one in Atlanta, are known as the Kobalt Tools 500. The title sponsorship in Phoenix begins this year.
Last year, Lowe’s dropped a $3.5 million-per-year naming-rights agreement with the Charlotte speedway, ending an 11-year partnership. But Lowe’s remains a smaller sponsor with Speedway Motorsports.
Tom Lamb, Lowe’s senior vice president of marketing and advertising, says the decision to drop the corporate name from the speedway is a reflection of the company’s established national reputation more than any diminished confidence in NASCAR.
When Lowe’s put its name on the track in 1999, the company was beginning an aggressive national expansion and used the speedway alliance to help make people familiar with the company beyond the Southeast. Now, few shoppers are unfamiliar with Lowe’s.
The unspoken sentiment is also clear to industry experts: Lowe’s already has the sport’s top driver and race team, so why bother with a speedway when Johnson’s No. 48 Chevy provides a constant rolling billboard gobbling up considerable TV time as he fights for race victories and championships?
“Let’s not underestimate the power of winning,” Lamb says.
BofA and Lowe’s share something else in NASCAR beyond high-profile sponsorships. Each has played a prominent role in the newly opened, $200 million NASCAR Hall of Fame. The bank led the bid campaign and provided financing, while Lowe’s was among the hall’s first corporate sponsors.
All of which explains why, over the next two weeks, BofA and Lowe’s will host more clients and have more employees at the races than they do at any other time during the 10-month race season.
The reasons are obvious: NASCAR is in the companies’ hometown for the next two weeks and the racing industry is based here, a recipe for easy convergence.
Across the board, the companies make use of extensive racing alliances. From BofA enlisting star driver Stewart to help with an employee-volunteer program to Lowe’s staging a “Jimmie Jam” concert uptown featuring Darius Rucker, the message is clear: For these companies, NASCAR means business — and more.