28 April 2011
Money's tight as contract renewals loom
In all, Roush Fenway Racing has four major sponsors whose deals were up for renewal at the end of this season: re-signing 3M takes care of one of those, but there are still three to go. Matt Kenseth is backed by whisky maker Crown Royal (who are also one of the title sponsors of this weekend's Sprint Cup race at Richmond International Roadway) while David Ragan has sponsorship from international logistics giant UPS.
"Let's be honest: the world has changed a lot since the economy crashed," said UPS's director of sponsorship Ron Rogowski. "NASCAR has had a few setbacks. The numbers haven't been where they used to be. You have this economic impact and the state of the sport. You sit down with teams, and there's a very active discussion to make an investment work harder."
Amazingly, Roush Fenway's other driver, Carl Edwards - who currently leads this year's Sprint Cup championship, after finishing in fourth place in 2010 - is one of the drivers whose contracts expires at the end of the year and who has not yet agreed an extension with the team or so far signed an alternative deal elsewhere. His #99 has been sponsored by medical insurer Aflac, and by Scotts Miracle-Gro (the world's largest seller of lawn and garden products) for the past eight years, which has previously praised Edwards as "a great representative [for Scotts] with integrity, passion and a winning attitude."
But as much as companies like Aflac and Scotts may like Edwards, can they justify and afford to keep him on the books? It's reminiscent of the moment when Ford Motor Company's global board suddenly asked, "Who is this Eddie Irvine?" when they found out that the Jaguar F1 driver was one of their most highly paid employees. From that moment, Ford's involvement in the sport was doomed and they pulled out shortly after.
"We're seeing a lot of discussions around measurement and showing how [sponsoring teams] in NASCAR generates greater sales, greater exposure and greater brand awareness," said Steve Newmark, Roush Fenway's senior vice president of business operations.
"The type of money the marketplace was commanding a few years ago isn't there anymore," pointed out Dave Grant, head of sports and events specialist marketing agency Team Epic. "The pricing has maxed out. Teams are recognising the new reality, and that's part of it."
"Three years ago you saw deals in the $18 to $22 million range and today we're probably in that $13 to $17 million range," agreed Tamera Green, a vice-president at GMR Marketing.
Where previously NASCAR and the teams held the whip hand in negotiations, now the boot is firmly on the other foot and teams are having to add more value, accept "performance related" deals dependent on triggers such as qualifying for the Chase, or simply be more flexible in negotiations if they want to keep their sponsors on board. Even the formidable US Army is trimming its marketing budgets: it has reduced its sponsorship of Stewart-Haas Racing down to 15 races from 23 last year and negotiated a lower price per race, "to take into account audience, TV ratings and where the market is moving." The Stewart-Haas team is having to make more promotional appearances for the Army, and even sweetened the deal by making Tony Stewart's suite at the Indianapolis Motor Speedway available for their corporate sponsors' use during the Indy 500 and Brickyard races.
Similarly, Roush Fenway Racing's renewed deal with 3M is also reported to be for fewer races from 2012, reducing the company's overall expenditure - but at least the flexibility is keeping the sponsor on board for the majority of events and securing Biffle's position in NASCAR.
Among the drivers with no deal in place beyond the end of the season is Earnhardt Ganassi's Juan Pablo Montoya, who despite not having anything like the level of race-winning success of Edwards, Harvick, Biffle or Busch is still one of NASCAR's top stars and most recognisable and bankable names, thanks to his time in Formula 1, IndyCar and ChampCar. Montoya is yet to win on an oval track in NASCAR, but has won twice on the series' road courses at Sonoma and Watkins Glen. Montoya's #42 is sponsored by US retailing giant Target, which also sponsors the Ganassi cars of Dario Franchitti and Scott Dixon in IndyCar.
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