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DATE News (chronologically)
12/15/08
nascar
NASCAR’s Sponsors, Hit by Sticker Shock  At the Indianapolis Motor Speedway last July, the parking lot was filled with excited NASCAR fans chugging beer, roasting pigs and exchanging drivers’ statistics.

But in an office inside the racetrack, the scene was far from celebratory. Executives of the Big Three Detroit automakers told Brian France, the NASCAR chief executive and chairman, that they planned to cut their investments in the sport sharply in the 2009 racing season.

Since then, Chevrolet has said it is cutting back on advertising and sponsorship deals with 12 tracks. Ford is trimming NASCAR spending by 20 percent, and Chrysler by 30 percent.

The economic crisis is hitting industries around the globe, and the pain is beginning to filter down into professional sports. Many sports may face smaller crowds and shrinking player salaries, with, of course, exceptions for stars like the Yankees pitcher C. C. Sabathia.

General Motors said in September that it wouldn’t buy any advertising time for the Super Bowl in February; earlier this year, it withdrew Cadillac’s sponsorship of the Masters golf tournament. It has also terminated its $7 million-a-year endorsement deal with Tiger Woods.

The National Basketball Association and the National Football League recently announced staff layoffs, and the Dallas Cowboys and the New York Giants and Jets of the N.F.L. are still trying to find companies willing to pay to put their names on stadiums under construction. Honda said recently that it was dropping out of Formula One and selling its team.

“The economic crisis is going to hit all sports. Every team should operate under the worst-case-scenario assumption,” says Michael E. Rapkoch, founder of Sports Value Consulting, based in Dallas. “Many sponsors’ contracts that are up for renewal this year or next probably won’t be renewed. For the long-term contracts, I won’t be surprised if they try to get out of them through bankruptcy or some other way.”

NASCAR, which relies on corporate sponsorships more than other sports, is particularly vulnerable. In the 2008 racing season, 400 companies put up more than $1.5 billion to sponsor races, cars and drivers. About a third of that was provided by auto companies, which are now struggling with the economic downturn, if not possible bankruptcy.

Automakers aren’t the only ones pulling out. Longtime sponsors — including Kodak, Texaco and Domino’s Pizza — are abandoning NASCAR. Even Craftsman, the Sears brand that has been the title sponsor of the truck series since it started in 1995, is cutting its ties.

And this summer, Chip Ganassi Racing shut down the team of Dario Franchitti, the 2007 winner of the Indianapolis 500, after being unable to find a sponsor for his car following his switch to NASCAR.

“Many of the major sponsors pulling back have been involved in our sport for decades,” Mr. France says. “They’re making cuts, and we’re affected.”


It’s a big comedown for NASCAR, which has had sizzling growth over the past decade. A multibillion-dollar TV deal in 2001 helped propel it from a regional sport that drew most of its revenue from sales of tickets and merchandise into a popular franchise with a national following.

Its top-level Sprint Cup series of 36 races draws an average of 7.8 million television viewers a race, making NASCAR the second-most-watched sport, behind professional football. It can attract crowds — more than 200,000 for the Daytona 500 and Talladega — that exceed those for a Super Bowl, a World Series game and an N.B.A. finals game combined. Over all, NASCAR sanctions more than 1,200 races at 100 tracks in the United States and abroad.

This year, revenue was approximately $3 billion, a 50 percent increase from 2001. That’s better than the N.F.L., the N.B.A. and the National Hockey League in the same period. Only Major League Baseball grew faster. “If you go back to 1998, there is no question NASCAR has shown the biggest growth,” says David Broughton, research director of SportsBusiness Journal.

But the sport will not see those kinds of impressive numbers next season.

TV viewership has slipped in the past year or so, and so has attendance. The truck series’ official sponsor is now Camping World, the largest retailer of recreational vehicle equipment. NASCAR gave the retailer a substantial discount: Camping World will pay approximately $2 million a year, half of what Craftsman is estimated to have paid. While it is gaining as well as losing sponsors, NASCAR expects its take from title sponsorships to drop 20 percent next year, to about $150 million. More at NYTimes.com

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