San Jose Grand Prix still looking for big-name sponsor
[Editor's Note: As we have said on numerous occasions, Champ Car is not going to draw the hardcore fan base necessary to increase TV ratings and hence land new sponsors, until it realizes that its emphasis must be on attracting and growing big name drivers, particularly American drivers, since it is American based. As NASCAR learned decades ago, any successful sport is ultimately driven by the popularity of its athletes. American race fans won't tune into TV to watch a 3-day street festival of speed, but they will tune in week-in-and-week-out to watch their favorite race driver compete.]
As the San Jose Grand Prix kicks into gear this weekend, event organizers are hoping it will lure enough fans and win enough attention to attract the kind of investment it needs from the local business community to keep it going.
But the young event lacks a coveted title sponsor, such as the Toyota Grand Prix of Long Beach, which is considered crucial to its long-term success.
So far, San Jose Grand Prix Chief Executive Dale Jantzen said business is good.
"We're full of optimism here. The number of companies that have already contacted us for 2008 sponsorships is impressive," Jantzen said. "We have a handful of companies coming to the event to scope it out for San Jose next year."
The open wheel racing event in many ways epitomizes the struggling Champ Car World Series organization, said Bill Chipps, senior editor for the international marketing firm IEG Sponsorship Report.
While North American-based companies increased their spending on sponsorships for motor sports teams by 11 percent last year to $3.2 billion, a majority of that money went to NASCAR. The Champ Car World Series and the Indy Racing League do not have the established fan base and drivers that NASCAR can boast, Chipps said.
"From a marketers' perspective, companies are hesitant to align with a series that no one knows the future of," he said.
David Higdon, executive vice president of strategic development of Champ Car World Series, said many Grand Prix series races are still getting their footing. The organization is trying to build a brand and audience with the right events in the right cities.
The San Jose Grand Prix received complaints for lack of organization its first year and attracted fewer fans than organizers claimed last year. When only counting tickets sold as opposed to those given away by sponsors and promotions, the paid attendance was 83,248.
Jantzen declined to say how many tickets had been sold this year but did say it was ahead of this time last year. He also said the race has lost money each year and wouldn't guess when it would make money.
"We expected to be investing at the beginning of this process and like any start-up we are striving toward profitability," he said.
Sponsorships often are the biggest or second-biggest revenue stream for an event, said Malcolm Bordelon, executive vice president in charge of business operations at Silicon Valley Sports and Entertainment. The group runs business operations and marketing for the Sharks and events like the SAP Tennis Open.
"Tickets alone don't make it anymore," he said.
Title sponsors often bring in a six-figure fee, and Silicon Valley's technology companies generally look for events where they can showcase technology and host clients, Bordelon said.
At software developer Adobe Systems, Michelle Mann, group manager of community relations, said in an e-mail response that the company sorts through many requests for support before selecting an event.
"Ultimately, the majority of the sponsorships we fund are the ones that are most closely aligned with our business objectives, such as Zero One and Cinequest," Mann said.
Cisco Systems, which announced sponsorship of Cisco Field this year as a way to showcase technology, said its brand campaign advertising and sponsorship strategy is primarily focused on the global and national media. That includes being a technology sponsor for the National Basketball Association and Major League Baseball.
But Redback Networks, which is the biggest sponsor at this year's Grand Prix, said being the raceway sponsor gives it the biggest return for its spending. The company, which declined to say how much it pays, uses the annual race to both market its networking gear and recruit new employees.
The San Jose-based company, which Swedish telecommunication giant Ericsson announced it would buy last year, is on a hiring spree, increasing its workforce to 1,150 employees from about 700 at the time of last year's Grand Prix.
"It's good to be associated with performance and speed, and it's something we talk about a lot when we do things," said Georges Antoun, senior vice president of worldwide field operations, product management and marketing for Redback. "We're all about performance of the network and speed and quality." San Jose Mercury News