NASCAR teams feel pressure on sponsor pricing

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http://www.sportsbusinessdaily.com/Journal/Issues/2017/06/26/Marketing-and-Sponsorship/NASCAR.aspx

When Hulu entered into NASCAR earlier this month via a team sponsorship, the organization it landed with raised eyebrows around the garage.

Many top teams have open inventory, making it a buyer’s market where brands can align with the sport’s best cars this season for a discount. But the pact with Hulu, which has about 12 million subscribers to its over-the-top network, was with Circle Sport-The Motorsports Group, a little-known Monster Energy NASCAR Cup Series team with fewer than 22,000 Twitter followers.

The digitally oriented Hulu may be more focused on generating content on driver Jeffrey Earnhardt, Dale Earnhardt Sr.’s grandson, than getting brand exposure on television, where less competitive teams like Circle Sport rarely appear. But at a time when blue bloods like Hendrick Motorsports, Joe Gibbs Racing and Stewart-Haas Racing have numerous unsold races, the deal with the buzz-worthy brand underlined the erratic sponsorship environment that has taken root in NASCAR.

With an unusually high amount of unsold inventory on the market and the fiercely competitive environment to land ever-scarcer dollars, NASCAR’s sponsorship space continues to go through a market correction, according to sponsorship executives around the sport. The sport has seen price wars in sponsorship for years, but with lower-rung teams like Circle Sport asking a fraction of what top teams ask and even some top teams now delving far below their prior price ranges, a new level to the price war has emerged, executives said.

“NASCAR, like many other sports and entertainment properties fighting for corporate partnership and advertising revenues, is indeed going through a correction; the growth rate and levels of corporate partner investments experienced over the past 20 years were not sustainable,” Brian Corcoran, founder and CEO of Shamrock Sports & Entertainment, which consults with several stakeholders in the NASCAR space, said via email.

This comes as some of the sport’s top teams, who used to be seemingly impervious to sustained sponsorship issues, have started to see cracks in the foundation. For example, Joe Gibbs Racing primary sponsor Dollar General went from 30 races to none in one fell swoop last year; Stewart-Haas Racing’s Nos. 10 and 14 teams have had trouble rounding out their sales inventory; and the two sponsors on Hendrick Motorsports’ No. 5 team with the most races, Farmers Insurance and Great Clips, will both depart after 2017.

“It is very competitive,” said Ben Schlosser, chief marketing officer of Richard Childress Racing. “I don’t know that it’s more competitive than it was four years ago, but I think there are teams with more inventory than they’re used to having.”

Exacerbating the issue, some executives said, are the incremental declines the sport has seen in business metrics in the last decade, underscored by the sanctioning body selling its Cup Series title sponsorship to Monster Energy for around $20 million a year. With top teams having previously sold yearlong team deals for around or even more than that figure, some are having to face a reset on their pricing to make the economics of the system work, these executives said.

“There is a natural evolution and cycle of deals — as new sponsors come in, it can drive sales and prices up; as sponsors leave or renegotiate, it can drive prices down,” said Tyson Webber, president of GMR Marketing, which represents several NASCAR sponsors including Lowe’s, which recently signed a one-year extension with Hendrick driver Jimmie Johnson. “The effect can be felt industrywide, but many times the market adjustment may take years based on the length of terms.”

He would not disclose whether his agency was able to negotiate a lower fee as part of its extension.

While lower-rung teams have been asking lower amounts than top teams for decades, there have been renewed gripes privately of teams devaluing sponsorship.

“It’s worse than I’ve ever seen,” said a team executive who declined to be quoted over the sensitivity of the issue. “Sponsors talk [to each other], and once you price a Cup race at Truck and Xfinity fees, you’re in a world of hurt long term. It’s hard to get someone to pay three times as much from their initial investment for the same asset.”

The precise dollar figure of Hulu’s deal could not be confirmed, but sources familiar with it said the amount was in the low to mid-five-figure range per race. That would pencil out to a fee that’s likely less than $1 million despite being for more than half the season, a fraction of what the sport’s top teams would typically ask for that length. For example, Nature’s Bakery in 2015 struck a three-year, $45 million deal with Stewart-Haas in the 25-race range, which pencils out to around $500,000 per race.

A correction of team sponsorship could hurt teams in the short term but potentially help the sport in the long term; theoretically, as prices come down, the pool of brands that could serve as sponsors should widen.

“This is probably a very difficult time to be out in the marketplace with a lot of inventory,” said Andrew Campagnone, senior managing partner of Sports Marketing Consultants, a Charlotte-based sales and marketing agency that has deep ties in NASCAR. “But at the same time, it’s a buyer’s market — it’s a great time for a company to be looking at the sport because you can get in at a low rate and you have the cream of the crop with some assets that are open. You’ll have a shot of winning races and bringing value. I think the teams are just finally getting to the point where everything is resetting.”
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As I have said before when you can sponsor the entire series for around 20 million why would you want to pay that same amount to sponsor only 1 team?

"Exacerbating the issue, some executives said, are the incremental declines the sport has seen in business metrics in the last decade, underscored by the sanctioning body selling its Cup Series title sponsorship to Monster Energy for around $20 million a year. With top teams having previously sold yearlong team deals for around or even more than that figure, some are having to face a reset on their pricing to make the economics of the system work, these executives said."
 
I could be all wet but I see less money coming into Nascar as a good thing as, IMO, the series started to decline once the big money invaded. Less money means more freedom and more freedom means less rules and less rules allow smart men and women to innovate.

I am sorry that this will result in job losses for engineers, marketing types and ordinary Joe's but this is the exact type of shakeup that if managed properly could turn Nascar into a really cool niche series with some great racing that is beholden to less people.
 
Skoalbandit33 said:
I could be all wet but I see less money coming into Nascar as a good thing as, IMO, the series started to decline once the big money invaded. Less money means more freedom and more freedom means less rules and less rules allow smart men and women to innovate.

I am sorry that this will result in job losses for engineers, marketing types and ordinary Joe's but this is the exact type of shakeup that if managed properly could turn Nascar into a really cool niche series with some great racing that is beholden to less people.
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Less money means fewer resources to innovate with - less skilled engineers with less money to implement what they do come up with
 
Charlie Spencer said:
Less money means fewer resources to innovate with - less skilled engineers with less money to implement what they do come up with
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I don't think engineers and wind tunnels are synonymous with innovation that leads to better racing necessarily. I think someone like Chad Knaus knows a lot of what to do based on intelligence and experience.
 
I personally think the sponsorship issues have hurt SHR for example. I always wondered why they brushed of 5 hour energy like it was nothing and signed clint without sponsorship to go with him. This is what happened to roush, their strategy is shed the high priced high profile drivers, bring in some young guys at way way less money. which begs to question since roush had to deal with this well before anyone else could they be positioned for a resurgence because they already adjusted?
 
Doing more with less is going to be the memo.

Teams might as well deal with lowering prices, its going to need to happen if teams want to hold onto sponsors. Look at JTG, they are probably asking for less and have enough consistent sponsorship for damn near three teams.
 
Kiante said:
Doing more with less is going to be the memo.

Teams might as well deal with lowering prices, its going to need to happen if teams want to hold onto sponsors. Look at JTG, they are probably asking for less and have enough consistent sponsorship for damn near three teams.
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be careful with that statement, having a bunch of sponsorship is a bad sign IMO, it says to me that alot of races were sold at the very last minute. When that happens the pricing discount is very very steep. The thinking is we can either run the car blank or pick up 15k to pay for some tires and gas for that race. Stability is ideally one primary sponsor that runs the whole season, less ideal, is 2-3 that run the season, even less ideal is more than that. problems occur when there is even more different sponsors than that. I would rather be the 13 team with geico on the car all the time than JTG with more different sponsors.
 
sloggie said:
Big money sponsors bring a lot of baggage with them that NASCAR doesn't need. The racing will be better without them.

Sent from my SM-G935V using Tapatalk
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I agree as it is is easy to be negative and think doom and gloom because less money is coming in but I see great potential. The more money you take from more sources just means the more you are owned and you lose needed autonomy. There will be bumps in the road as this is all being phased in but it could be just what the series needs to find its way again.
 
hidesert cowboy said:
be careful with that statement, having a bunch of sponsorship is a bad sign IMO, it says to me that alot of races were sold at the very last minute. When that happens the pricing discount is very very steep. The thinking is we can either run the car blank or pick up 15k to pay for some tires and gas for that race. Stability is ideally one primary sponsor that runs the whole season, less ideal, is 2-3 that run the season, even less ideal is more than that. problems occur when there is even more different sponsors than that. I would rather be the 13 team with geico on the car all the time than JTG with more different sponsors.
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It is possible that if sponsorship comes in at more reasonable dollars we could start seeing companies staying on cars for longer periods of time. The Velveeta deal with RCR is not big dollars but if that type of money becomes normal they may think it worthwhile to sign on for 10-15 races.
 
hidesert cowboy said:
be careful with that statement, having a bunch of sponsorship is a bad sign IMO, it says to me that alot of races were sold at the very last minute. When that happens the pricing discount is very very steep. The thinking is we can either run the car blank or pick up 15k to pay for some tires and gas for that race. Stability is ideally one primary sponsor that runs the whole season, less ideal, is 2-3 that run the season, even less ideal is more than that. problems occur when there is even more different sponsors than that. I would rather be the 13 team with geico on the car all the time than JTG with more different sponsors.
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Having Kroger as the primary sponsor results in all of the stores that sell product are like "associate" sponsors. For instance, AJ primarily has Kroger and Boosher has Cottonelle as a primary sponsor. JTG has no worries at this moment, I'd say they need to win another race to really keep Kroger because the contract ends next year, I think.
 
This could put a smaller team like a JTG in a decent spot if the other teams have to scale down at large rates...they're small, but by no means the smallest. I think the size of there team could be just right for this current time in NASCAR cup series.

They're use to making the most out of what they've been doing, larger teams are going to be forced to run a smaller operation for each race car whether they like it or not.

Might be cool if JTG can keep pace what they've been doing for a while. I'd like to see how it does in a couple seasons.
 
These are trying times for Nascar and virtually all forms of motor racing. The manufacturers are still spending like crazy, and cable TV sports networks are multiplying like rabbits. These mask and delay the pain, but if either changes course, the hangover is severe.

Sugar daddy corporate sponsors can evaporate quickly when a particular corporate executive dies, retires, or gets reassigned. Business-to-business deals are what most everyone is chasing, as the ROI calculations are completely different from consumer advertising. That benefits some teams more than others...

Sadly, most of the major forms of motorsport have suffered leadership voids, Nascar included. Dynamic, forward thinking leadership is scarce in racing. The France family is intent on milking the cow, but weak on replacing her. The cozy, incestuous relationship between Nascar and ISC has a lot to do with this, IMO.

IMO, MotoGP enjoys the best management in racing, but that has been a long tough slog. F1's new owners seem intent on applying similar principles. Nascar has also been more proactive and collaborative in recent years, so at least there is that. Just my $0.02.
 
Has the looks of pricing themselves out of the market. Many times, a cheaper better product is introduced into the market during this process.

Keep an eye on Red Bull's Rallycross series.
 
I for one would not mind if NASCAR got small again. Like anything, it will boom then bust...and the cycle continues
 
Hopefully with this comes lower ticket prices. I know I keep harping on it but the tickets are way too expensive for the current demand. Sonoma's main two grandstands were empty, but the third by the esses looked packed yesterday.

At MIS turn one has way more people than the center grandstands
 
LewTheShoe said:
These are trying times for Nascar and virtually all forms of motor racing. The manufacturers are still spending like crazy, and cable TV sports networks are multiplying like rabbits. These mask and delay the pain, but if either changes course, the hangover is severe.

Sugar daddy corporate sponsors can evaporate quickly when a particular corporate executive dies, retires, or gets reassigned. Business-to-business deals are what most everyone is chasing, as the ROI calculations are completely different from consumer advertising. That benefits some teams more than others...

Sadly, most of the major forms of motorsport have suffered leadership voids, Nascar included. Dynamic, forward thinking leadership is scarce in racing. The France family is intent on milking the cow, but weak on replacing her. The cozy, incestuous relationship between Nascar and ISC has a lot to do with this, IMO.

IMO, MotoGP enjoys the best management in racing, but that has been a long tough slog. F1's new owners seem intent on applying similar principles. Nascar has also been more proactive and collaborative in recent years, so at least there is that. Just my $0.02.
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I think your assessment is fair as what is happening to Nascar has already happened in other racing series and the good news for fans is that they are still with us but operate on a smaller scale. I know when I am watching a hockey game I don't care if 800,000 or 8 million are watching it because as long as the game is still played and a broadcaster finds the product appealing enough to show I am happy.

Normally the period of uncertainty is the most difficult time to navigate as you are waiting for normal to return or establishing what normal will become. I think the best thing that could happen to Nascar is to get a bright young CEO that is active and proactive and can sell, sell, sell. Even the most ardent fans are not necessarily Brian France fans and amongst many he is an object of wrath whether it is fair or not. If Nascar could get a leader that could express a vision and implement it I think people would respect it even if they were not on board with everything.
 
Skoalbandit33 said:
If Nascar could get a leader that could express a vision and implement it I think people would respect it even if they were not on board with everything.
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In the last few years the top dogs are no longer exposed to the fans wrath. They now have Steve and others that are the voice HOWEVER we know that the top dogs are still in the background calling the shots. When these guys are retired things may change.
 
I've had a pretty good change of attitude about this whole NASCAR debacle in the last couple of weeks.

Right sizing, Down sizing, and Sponsor reductions are going to be a good thing for me!

I see it like this. Most of us who saw it when it was pure complain about it now. It goes unheard. The bleeding continues and WE are wrong. LOL OOOKay!!!

Sooo. I've had enough. I'm going to stand over here in the corner while the Phd's and engineers try to stop this hemorage. They aren't going to. They've had enough chances.
I'm going to enjoy the races and I'm going to hope that millions more tune out.

Why? Because then when the feeder series can't support the big tracks then maybe they will go back to their roots. Maybe NASCAR will only get 10 million bucks from Monster next time. Maybe they can't afford to haul that damn LIS around anymore. Maybe they big teams get little to no sponsor dollars and have to layoff half of their engineering staff. Maybe Joe blow and his buddies can build a competetive truck "out back". Maybe about 50 other good things will come of this!

Guess what. We're still going to race. Someone will get it right and the engines are still going to fire on Sunday afternoon. Until then? Keep screwing it up boys! I'm gonna love you for it in the end!

Dreams? Of course. Possibilities? Absolutely!!! GO BRIAN!!!!
 
Damn this article is merciless to NASCAR. Harsh truth baby.
 
NASCAR ****** up by throwing every team under the bus when it was announced how little Monster was paying for title sponsorship. Is $20m really worth it when you have destroyed the sponsor market for all your participants?

Insane the poor decisions this company has made and continues to make.
 
DUN24 said:
NASCAR ****** up by throwing every team under the bus when it was announced how little Monster was paying for title sponsorship. Is $20m really worth it when you have destroyed the sponsor market for all your participants?

Insane the poor decisions this company has made and continues to make.
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I agree and in retrospect it may have been better for the teams if Nascar had gone without a title sponsor for the foreseeable future. It is a difficult decision to make as sometimes a little is better than nothing but in other cases when a little sets the market it can have a bad impact overall.
 
Skoalbandit33 said:
I agree and in retrospect it may have been better for the teams if Nascar had gone without a title sponsor for the foreseeable future. It is a difficult decision to make as sometimes a little is better than nothing but in other cases when a little sets the market it can have a bad impact overall.
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Call it the cup series with a red logo and be done with it.
 
DUN24 said:
NASCAR ****** up by throwing every team under the bus when it was announced how little Monster was paying for title sponsorship. Is $20m really worth it when you have destroyed the sponsor market for all your participants?

Insane the poor decisions this company has made and continues to make.
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But you can't quantify edginess...
 
https://www.motorsport.com/nascar-c...d-look-dramatically-different-in-2018-924200/

Seems like the title is extremely misleading, I think Gene wants to keep all four teams going regardless of Patrick's and Busch's situations.

I think Gene brought up a great point in if he drops a team especially with Ford just getting into the SHR fold, that could mean Ford can reduce the amount of financial and technological means of support. It sounds like Gene has his finances in order and especially with his F1 team and Ferrari signing a huge deal to be associated, it sounds like he's fine. (Ferrari uses Haas CNC machines at Maranello)

The whole Nature's Bakery debacle hurt though and it sounds as if Gene has a possible replacement in terms of a sponsor for next year.

Very interesting indeed.
 
yeah Hendrick is really sweating it out..hand to mouth. :rolleyes:

The company is ranked by Automotive News as the sixth-largest mega-dealer operation in the nation, based on 2015 sales. In 2015, retail vehicle sales were in excess of 198,000. The company employs more than 10,000 people.
 
StandOnIt said:
yeah Hendrick is really sweating it out..hand to mouth. :rolleyes:

The company is ranked by Automotive News as the sixth-largest mega-dealer operation in the nation, based on 2015 sales. In 2015, retail vehicle sales were in excess of 198,000. The company employs more than 10,000 people.
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Racing is a hobby for these owners the same as owning an NFL team.
 
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