Bucky Badger
Go Kyle Go
By Jana Winter
If the Big Three Detroit automakers are denied a government bailout and allowed to go into bankruptcy, it just might spell the end of the road for America's No. 1 spectator sport. If the wheels come off for GM, Ford and Chrysler, they could for NASCAR, too.
NASCAR's stars — Jeff Gordon and Jimmie Johnson, among others — have been showing their support for the auto industry, urging their fans to contact their members of congress to push through the $25 billion Detroit bailout plan.
"We're optimistic that Congress will help support the automakers and help them get through this very difficult time," said Andrew Giangola, Director of Business Communications for NASCAR.
Click here for photos.
"It would affect NASCAR if the manufacturers were not with us. It would very strange to watch NASCAR and not see Chevy and Ford and Dodge racing around the track."
Along with the rest of the country, NASCAR is feeling the financial crunch right now. Hundreds of millions of dollars in sponsorship funds fuel stock car racing, and the money just isn't flowing in as it used to. On top of that, attendance is down by just under 10 percent, and some sponsorship deals have not been renewed.
General Motors is cutting back on sponsorships; Sears dropped its 13-year running title sponsorship deal for the NASCAR Craftsman Truck series; and AAA and the Army have left altogether.
In an attempt to cut costs across the board the sport recently banned off-season testing, in which teams use official NASCAR racetracks to test or tweak vehicles or for practice. It's expected to save each team $1 million, but it has also cost about 1,000 garage workers their jobs.
Venues, teams and the sport itself are competing against each other for the same sponsorships. Lower profile racing teams worry they won't have the funds to enter next season; higher profile teams are merging to share resources.
"NASCAR in general is at risk with a broad bankruptcy in the industry, and I think [not bailing out the Big Three] would just frankly take out NASCAR," said Dr. David E. Cole, chairman of the Center for Automotive Research, a nonprofit group that studies the industry.
"But assuming there's some sort type of bridge loan to the Big Three and we'll get stability in the credit markets, I think NASCAR will live and at least two of the Big Three will continue to participate."
"NASCAR has a very significant stake in these talks to develop some form of a bridge loan," Cole said.
Somehow, experts say, NASCAR will survive. If the bailout comes through, industry experts say the sponsorship money will still flow into the sport, just more slowly. But if it doesn't come through, they say, the sport could be set back by 30 years.
Teams will have to learn how to survive with less money, there will be more shared sponsorships, fewer teams, less cash. It's possible that Honda -- or another foreign manufacturer -- could step in and fill the void left by Chevy and Ford and Dodge.
Dr. Larry DeGaris, president of Sponsorship Research & Strategy, who has conducted national sports scholarship surveys, said Chevy and Ford have had great success marketing to the NASCAR demographic and will likely maintain some level of reduced sponsorship. (Chrysler's NASCAR campaigns have shown less traction.)
The sport's fan base comprises somewhere between 40 million and 70 million people, depending on one's definition of a fan, and is strongest in smaller markets in middle-of-the-country states, near the American automobile manufacturers and the plants of their foreign competitors Toyota and Honda.
"That's all the more reason to maintain a visible presence at NASCAR," DeGaris said of the Big Three bailout seekers. "I don't think it would be a good idea for them to throw in the towel."
Racing teams are kept afloat by corporate sponsorship, from which they get 90 percent of their revenue. Sponsors include Loews and Home Depot home improvement outlets, NAPA Autoparts, Coors and Budweiser beers and Sprint/Nextel telephones. And big name drivers like Dale Earnhardt Jr. and Jeff Gordon have fronted multimillion-dollar marketing campaigns.
Sponsors have historically tapped into the sport's "real American" reputation, and experts agree that is expected to continue.
For example, despite SEARS dropping its $4 million annual sponsorship of the Craftsman Truck Series, Camping World filled the void a deal reported to be worth between $5 million and $7 million annually.
But NASCAR and its sponsors will have to tread lightly. Experts say corporations will have to be careful not to roll out expensive marketing campaigns to an audience that's increasingly unemployed. Similarly, if the Big Three automakers get their bailout, they'll need to be careful not to appear to be wasting taxpayer money with marketing campaigns.
"What the bailout represents is a downturn economy, and in a downturn economy your marketing budgets are among the first to be slashed," said Mark Dodds, sports marketing professor at State University of New York-Cortlandt. "I think it would be difficult to rationalize marketing spending when you're also making decisions to put people out of work."
But experts agree, the purchasing power is too strong.
"NASCAR fans know who the sponsors are and they appreciate them and they act on it," DeGaris said. "Their purchase behavior is influenced by NASCAR sponsorship. No other relationship or sport comes close to that success. NASCAR and Chevy is the best there is."
NASCAR is a private company, and revenue figures are not easy to come by. But since television contracts were still in place this past season and sponsorship contracts remained in place, experts suggest next year could show a loss. (Ticket sales do not affect the company; racetracks operate independently, as do racing teams.)
"Right now it's a reduced version of what it was, but the fundamentals are still solid," DeGaris said. "The big question mark is next year."
"Do we have our eye on things? Absolutely. As industry we're doing what we can," said NASCAR's Giangola.
"NASCAR has been around for 60 years. We've been racing when the stock market's been booming and racing when the stock market's been through difficult times.
America's love affair with automobile is certainly not going to diminish anytime soon."
Others aren't so sure how it'll all pan out. "I would say difficult times ahead," Dodds said. "It would be difficult to imagine seeing NASCAR gone. But will it change? Most certainly."
http://www.gearheadtalk.com/forums/showthread.php?t=15152&referrerid=324
If the Big Three Detroit automakers are denied a government bailout and allowed to go into bankruptcy, it just might spell the end of the road for America's No. 1 spectator sport. If the wheels come off for GM, Ford and Chrysler, they could for NASCAR, too.
NASCAR's stars — Jeff Gordon and Jimmie Johnson, among others — have been showing their support for the auto industry, urging their fans to contact their members of congress to push through the $25 billion Detroit bailout plan.
"We're optimistic that Congress will help support the automakers and help them get through this very difficult time," said Andrew Giangola, Director of Business Communications for NASCAR.
Click here for photos.
"It would affect NASCAR if the manufacturers were not with us. It would very strange to watch NASCAR and not see Chevy and Ford and Dodge racing around the track."
Along with the rest of the country, NASCAR is feeling the financial crunch right now. Hundreds of millions of dollars in sponsorship funds fuel stock car racing, and the money just isn't flowing in as it used to. On top of that, attendance is down by just under 10 percent, and some sponsorship deals have not been renewed.
General Motors is cutting back on sponsorships; Sears dropped its 13-year running title sponsorship deal for the NASCAR Craftsman Truck series; and AAA and the Army have left altogether.
In an attempt to cut costs across the board the sport recently banned off-season testing, in which teams use official NASCAR racetracks to test or tweak vehicles or for practice. It's expected to save each team $1 million, but it has also cost about 1,000 garage workers their jobs.
Venues, teams and the sport itself are competing against each other for the same sponsorships. Lower profile racing teams worry they won't have the funds to enter next season; higher profile teams are merging to share resources.
"NASCAR in general is at risk with a broad bankruptcy in the industry, and I think [not bailing out the Big Three] would just frankly take out NASCAR," said Dr. David E. Cole, chairman of the Center for Automotive Research, a nonprofit group that studies the industry.
"But assuming there's some sort type of bridge loan to the Big Three and we'll get stability in the credit markets, I think NASCAR will live and at least two of the Big Three will continue to participate."
"NASCAR has a very significant stake in these talks to develop some form of a bridge loan," Cole said.
Somehow, experts say, NASCAR will survive. If the bailout comes through, industry experts say the sponsorship money will still flow into the sport, just more slowly. But if it doesn't come through, they say, the sport could be set back by 30 years.
Teams will have to learn how to survive with less money, there will be more shared sponsorships, fewer teams, less cash. It's possible that Honda -- or another foreign manufacturer -- could step in and fill the void left by Chevy and Ford and Dodge.
Dr. Larry DeGaris, president of Sponsorship Research & Strategy, who has conducted national sports scholarship surveys, said Chevy and Ford have had great success marketing to the NASCAR demographic and will likely maintain some level of reduced sponsorship. (Chrysler's NASCAR campaigns have shown less traction.)
The sport's fan base comprises somewhere between 40 million and 70 million people, depending on one's definition of a fan, and is strongest in smaller markets in middle-of-the-country states, near the American automobile manufacturers and the plants of their foreign competitors Toyota and Honda.
"That's all the more reason to maintain a visible presence at NASCAR," DeGaris said of the Big Three bailout seekers. "I don't think it would be a good idea for them to throw in the towel."
Racing teams are kept afloat by corporate sponsorship, from which they get 90 percent of their revenue. Sponsors include Loews and Home Depot home improvement outlets, NAPA Autoparts, Coors and Budweiser beers and Sprint/Nextel telephones. And big name drivers like Dale Earnhardt Jr. and Jeff Gordon have fronted multimillion-dollar marketing campaigns.
Sponsors have historically tapped into the sport's "real American" reputation, and experts agree that is expected to continue.
For example, despite SEARS dropping its $4 million annual sponsorship of the Craftsman Truck Series, Camping World filled the void a deal reported to be worth between $5 million and $7 million annually.
But NASCAR and its sponsors will have to tread lightly. Experts say corporations will have to be careful not to roll out expensive marketing campaigns to an audience that's increasingly unemployed. Similarly, if the Big Three automakers get their bailout, they'll need to be careful not to appear to be wasting taxpayer money with marketing campaigns.
"What the bailout represents is a downturn economy, and in a downturn economy your marketing budgets are among the first to be slashed," said Mark Dodds, sports marketing professor at State University of New York-Cortlandt. "I think it would be difficult to rationalize marketing spending when you're also making decisions to put people out of work."
But experts agree, the purchasing power is too strong.
"NASCAR fans know who the sponsors are and they appreciate them and they act on it," DeGaris said. "Their purchase behavior is influenced by NASCAR sponsorship. No other relationship or sport comes close to that success. NASCAR and Chevy is the best there is."
NASCAR is a private company, and revenue figures are not easy to come by. But since television contracts were still in place this past season and sponsorship contracts remained in place, experts suggest next year could show a loss. (Ticket sales do not affect the company; racetracks operate independently, as do racing teams.)
"Right now it's a reduced version of what it was, but the fundamentals are still solid," DeGaris said. "The big question mark is next year."
"Do we have our eye on things? Absolutely. As industry we're doing what we can," said NASCAR's Giangola.
"NASCAR has been around for 60 years. We've been racing when the stock market's been booming and racing when the stock market's been through difficult times.
America's love affair with automobile is certainly not going to diminish anytime soon."
Others aren't so sure how it'll all pan out. "I would say difficult times ahead," Dodds said. "It would be difficult to imagine seeing NASCAR gone. But will it change? Most certainly."
http://www.gearheadtalk.com/forums/showthread.php?t=15152&referrerid=324
