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NASCAR Teams Racing To Find Sponsors

The Charlotte Observer (North Carolina), February 08, 2009

By Jefferson George and David Poole, McClatchy Newspapers

After years of trying to go as fast as possible, some NASCAR teams and drivers just hope to stay on the track this season.

With the economy in meltdown and companies announcing layoffs and financial losses almost every day, NASCAR sponsorships are on their shakiest ground in years. With teams in Florida for the start of the NASCAR season, some corporate sponsors have scaled back or shut down their motorsports programs.

"Deals are getting done, just not as many," said William Chipps, senior editor with Chicago-based IEG Sponsorship Report. "There's definitely pullback."

Most sponsors are staying put, a NASCAR spokesman said, but many are spending less, meaning fans will see fewer signs and fewer hospitality events at races this season.

"They're trying to be smarter, leaner, meaner, and trying to spend less," said Andrew Giangola, NASCAR's director of business communications.

Automakers especially are hurting. General Motors has slashed NASCAR spending, letting contracts at multiple speedways expire. Last year's UAW-Dodge 400 race in Las Vegas is now the Shelby 427 after DaimlerChrysler didn't renew its sponsorship.

"I don't blame them at all," said Marcus Smith, president and chief operating officer of Speedway Motorsports, which owns the Las Vegas track and six others, including Lowe's Motor Speedway in Concord.

Sponsors that remain despite bad financial news are banking on their NASCAR investment to generate more business–vital in a recession.

Sprint Nextel, the title sponsor for NASCAR's top circuit– said on Jan. 26 that it will lay off 8,000 employees. The company also is a sponsor at all 22 tracks that host Sprint Cup races and has a 10,000-square-foot marketing display at each race.

That level of involvement won't change, a spokeswoman said, and Sprint actually plans to spend slightly more on NASCAR this year.

Home Depot has also announced it's cutting 7,000 jobs. The company last year renewed its sponsorship of a Joe Gibbs Racing team–with Joey Logano driving the No. 20 car–and has no plans to renegotiate the multiyear deal, a company spokeswoman said.

In January, Bank of America reported its first quarterly loss in 17 years, and has said it will trim 42,500 jobs worldwide in the next few years. The company is the title sponsor of the October race at Lowe's Motor Speedway, and is the official bank of NASCAR. Those roles will remain, a spokesman said, although the bank plans to spend less on hospitality events at races.

Some companies see the downturn as a chance to break into NASCAR. Search engine Ask.com is sponsoring the No. 96 car for Yates Racing.

"I'm always a little bit contrarian," said Jim Safka, Ask.com's CEO, "so my belief is when other folks are battening down the hatches, it's a good time to stick your head up above the foxhole and see where there might be some opportunities."

Safka said he previously worked with pro football and baseball, and that NASCAR is "not just a sport. It's a lifestyle and it's packed with emotion. From a marketing standpoint, that's gold."

Yet the Ask.com deal isn't for a full season at this point, just as the U.S. Army sponsorship of the No. 39 car for Stewart Haas Racing is for only 23 races of the 36 on the schedule. Such deals aren't uncommon in NASCAR but could become more popular for cash-strapped sponsors.

A race team that starts the season without a sponsor can't build up its fleet of cars and is limited in acquiring the best crew members and equipment to improve its cars.

Landing a primary sponsor for most races allows a team to more easily find sponsors for other races and hire staff to seamlessly change color schemes between races. The driver and sponsor also develop a closer tie in fans' minds. Changing sponsors every few weeks can make it hard to link a driver to any of the sponsors.

About three dozen teams–of a full race field of 43 cars–have sponsors this year. Those that don't tend to be lower in the standings, Giangola said.

There are 57 entries for Daytona 500 qualifying, which starts Sunday.

"This is a performance based sport," he said. "The top drivers have sponsorships. It's the back of the pack that will look a little different."

With the contraction in sponsors, teams are looking at every dollar spent on personnel, equipment and even travel, said Michael Waltrip, a driver and owner with teams in the Sprint Cup and Nationwide series.

For races within driving distance, Waltrip said, "there might be some times when we elect to go the morning of the race rather than the night before. . . . We're making sure there isn't any fat anywhere."

At least one team is faring better with sponsors this year. After running two cars with several different sponsors last season, Yates Racing will have the Menards hardware chain for the No. 98 car driven by Paul Menard, along with the Ask.com sponsorship for the Bobby Labonte No. 96 car.

Even so, most teams likely will have to be more flexible in their negotiations with sponsors, said Chipps, the sponsorship expert. Besides cutting prices, he said, teams could offer multiyear deals with most costs on the back end.

"It is a buyers' market, for sure," he said.

How can companies pay for sponsorships amid plunging profits and increased layoffs? Because the NASCAR deals get results, some sponsors say.

"Advertising is not optional," said Kimberly Meesters, a Sprint spokeswoman. "When you're in difficult economic times, it's more important than ever."

NASCAR sponsorships have helped Sprint attract new customers, she said, and led existing customers to use more Sprint services, resulting in more average revenue per customer, Meesters said.

"Our measurements were all up in 2008," the first year Sprint was a series title sponsor, Meesters said. "That's what we look at. Does it drive our business?"

At Bank of America, sales of the NASCAR banking products doubled from 2007 to 2008, company spokesman Joe Goode said. The bank also formed a motorsports advisory group a few years ago to focus on NASCAR lending opportunities–for construction, plane and bus purchases, investment management and other needs.

The group helped Speedway Motorsports buy the New Hampshire Speedway last year, Goode said, and that credit business has grown by 20 times since it was established.

"We don't want to stop things that help us grow our business," he said. "NASCAR helps our bottom line."

The concern is how many companies can pay to play in this economy. Motorsports remain wildly popular, but the rules have changed for many sponsors.

"I don't think NASCAR has lost any of its marketing juice," Waltrip said, noting that many longtime sponsors remain. Rather, the recession has made companies take a closer look at their dollars.

"They've got to scrutinize every one of them that they spend," he said.