NASCAR makes slow economic recovery
CONCORD, N.C. — After five years of a downward trend in revenue, attendance and television ratings, things are looking up for NASCAR.
The corporate-driven organization that governs the Sprint Cup seemingly has turned the financial corner after enduring a series of setbacks following the 2008 economic meltdown. It's been rejuvenated some by a lucrative, eight-year renewal with Fox Sports and a surprising influx of new sponsors.
Even though some familiar Fortune 500 companies, including DuPont, have jettisoned the sport, new ones — including Cessna and One Main Financial — have signed long-term deals, mostly with Cup and Nationwide Series teams.
“We're quite confident that we're going to get the right packages and the right partners,” said Brian France, chairman and CEO of NASCAR. “We have great partners now. My hope is that we'll be able to extend those.”
The enthusiasm among NASCAR officials transcends dollars and cents. The new Generation-6 car, designed to look more like the manufacturers' showroom models, has gotten near-unanimous approval from drivers.
However, the sport lost a familiar brand name when Dodge pulled out after powering Brad Keselowski to the 2012 Chase championship. While Chevrolet, Ford and Toyota appear to be entrenched, France figures the sport would be strengthened by Dodge's return or by the addition of another manufacturer.
“I know there are a couple of big manufacturers — and there always are — who have an interest in at least understanding the NASCAR opportunity,” France said. “I think over time that we will have a fourth manufacturer.
“It would be very difficult for a car manufacturer to get enough quality teams to make their program work properly, but four is certainly manageable, and we're encouraged that at some point we'll attain that again.”
NASCAR has regained its financial footing, albeit barely. The Cup teams with the most resources — including Hendrick Motorsports and Joe Gibbs Racing — have gained new sponsors and held on to others that considered bowing out of a sport that only minimally affected revenue growth the past several years.
“There are some companies not happy with one or two percent growth,” said Fox Chapel native Chip Ganassi, co-owner of Earnhardt-Ganassi Racing with Felix Sabates. “They want to see more. There are two bottom lines in this sport. There are wins and losses, and there are profits and losses. They both are connected on many levels.”
The wins have been far and few between for EGR. Juan Pablo Montoya and Jamie McMurray, both of whom are in the final year of their contracts, were winless the past two seasons after McMurray swept the Cup series' premier events — Daytona 500 and Brickyard 400 — in 2010.
Still, Ganassi convinced Cessna to agree to a multiyear deal to sponsor McMurray's No. l Chevrolet.
“We invested a lot of money in our business last year,” Ganassi said. “We had a good enough bottom line to make those investments in our teams. We're fortunate we're not a public company that has to report quarterly earnings, so we can take a chance sometimes. I wouldn't say we rolled the dice, but we can forgo some profits for investments in the company.
“Our business operations teams have done a good job. We're not exactly bringing in Joe's hot dog stand. We're bringing in some serious companies. Our overall sponsorship is up from a year ago.”
While cash-stressed teams like Front Row Motorsports and Wood Brothers are still seeking financial backing, dominant teams like Hendrick Motorsports, Joe Gibbs Racing and Roush-Fenway Racing added new sponsors to help flip the more than $400,000 required for their cars to chase after the checkered flag and Sprint Cup title.
Gibbs re-signed all of its major sponsors — including FedEx, Home Depot, Interstate Batteries and Mars. Also, JGR added One Main Financial and Dollar General, which continues to partner with defending Daytona 500 winner Matt Kenseth, who joined JGR's stable that also consists of perennial Chase contenders Kyle Busch and Denny Hamlin.
“I couldn't be more excited about our sport,” Gibbs said. “I think our best years are still in front of us. All of those sponsors have re-signed with us in the middle of a tough environment financially, and they did long-term deals with us. I appreciate that because it's a statement for our sport that some of the biggest sponsors are saying this is something they want to be involved in and it brings back value to their companies.”
Hendrick Motorsports, a winner of 10 Sprint Cup titles, enters next month's Daytona 500 as the favorite to capture another driver's title. Undoubtedly, it has the resources to fuel the efforts of five-time champion Jimmie Johnson, four-time champion Jeff Gordon and 10-time most popular driver Dale Earnhardt Jr.
All three have some of the more lucrative sponsorship deals in NASCAR. With millions of sponsorship dollars available, owner Rick Hendrick is upbeat about the upcoming season.
“We've seen more Fortune 500 companies came into the sport at the end of the 2012 season and at the beginning of this year, which is well ahead of 2008,” Hendrick said. “There's been a 10 to 15 percent increase in commercials for Daytona 500.
“I feel like we're going to energize a lot of our fans because the cars will be competitive. It's going to be a banner year for NASCAR.”
In 2012, Roush-Fenway had nine major sponsors who were up for renewal. In the past few weeks, owner Jack Roush worked out a deal that will have all nine sponsors back in the fold to fund a three-car Cup operation — Greg Biffle, Carl Edwards and Ricky Stenhouse Jr., who replaced Kenseth in the No. 17 Ford.
“We are in much better position this year than we've been in the past couple of years from a partner perspective,” said Roush-Fenway Racing president Steve Newmark. “It's a testament to the power of the NASCAR marketing platform.
“Hopefully, it's indicative that the initiatives we started the last couple of years are working for our partners, meaning they are generating a positive return on their investments. We are still in a similar position as some other teams. We still have some inventory available, mostly with Ricky.”