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Newman/Haas/Lanigan Racing loses sponsorUPDATE #2 Scott Morris of AR1 adds to our response to the reader:
My feeling is that the McDonald's deal was there only because of Paul Newman, and his passionate contribution to the sport and charity. With Paul now gone, McDonald's is too.
Newman was a man of infinite gift and generosity. Much of what he did involved McDonald's. McD's also carried his products in the stores, the profits of which naturally benefit the Newman's Own Charity mission. So there was a relationship there that extended beyond the typical formula. Think about the fact that McDonald's was there when they were in Champ Car, and they were on Spike, which is about the same as Versus. Infomercials had higher ratings than Champ Car.
Consider that McDonald's was there when they had a driver that could not even say their name. Even though he won a few championships, nobody had any idea who Bourdais was.
So it was clearly not about the media exposure. I asked this question myself years ago, and assumed there were other reasons they were there.
Anyone in this business should know that the media exposure is rarely the reason a sponsorship exists. It is a component, but rarely the primary reason. It is a simple and easy thing for board members and stockholders to understand however, so it is often times more played-up than it's real worth would represent.
After all, there are much more effective ways to simply get exposure. However, the other components and environment that racing delivers are what makes for an wise investment; provided the team or series knows how to deliver that.
Anyway, I think the television package excuse is not really valid in light of that.
The bottom line, is that even if IndyCar were all on network TV, and the ratings were decent, and McDonald's was a sponsor...do you think they would sell more hamburgers? They are one of those brands that doesn’t really need the series. The series needs them.
I would almost venture to say that there are a number of brands whose general recognition makes them more valuable to a property than the property (i.e. racing series) itself.
Unless IndyCar and NHL racing can show McDonald's that their sponsorship sells more burgers, fries and shakes, then they have no reason to stay...do they?
That is the problem with most racing. So many teams (and series) seem to miss the point that it is an investment that needs to produce incremental sales. Exposure itself is worthless unless it produces sales. After all, that is what a business is about.
Otherwise a "sponsorship" is just a good time for the company execs, or simply charity because the company's owner likes racing. We would like to think that all businesses are run from a purely business perspective, but that seems to be more the exception than the rule. If a CEO is a huge tennis player, you will find them sponsoring pro tennis tournaments. Racing will be a tough sell if they have no interest in it. However, if you can tie it to sales, you have half a chance of catching their attention.
I would venture to guess that more than 2/3 of sponsorships out there are based on a true return-on-investment motive. Personally, I see that as a weakness and a threat to the sustainability and growth of the sport, and certain series in particular.
(on a further note, we just got an email from an official that was part of that program, and he said the very same thing)
01/17/10 A reader adds, Dear AutoRacing1.com, If McDonalds is indeed gone that is a major negative as McDonalds is, or was, one of only a few globally recognized brands participating in IndyCar and brought a lot of credibility to the series.
You say the reason Graham Rahal is not signed is because Newman/Haas/Lanigan lost the McDonalds sponsorship, then question if it is because only 40% of the IRL events are broadcast on a major network. One of the most important criteria to keep sponsors is winning races. Many sponsors demand their brand is in the spotlight every weekend fighting for race wins and the championship. With Bourdais at the wheel McDonalds became accustomed to winning races and championships. On the other hand Rahal has only won one race in three years, with that fact as a benchmark and the IndyCar Series becoming ever more competitive McDonalds may have concluded the future with Rahal at the wheel wasn’t likely to include winning on a regular basis or a chance at the championship. The driver is similar to the quarterback of a football team and drivers need to be assigned a similar level of responsibility for the results, good or bad.
Even after a full year of driving for the team NHLR didn’t feel comfortable putting Graham behind the wheel of the McDonalds entry and decided to sign proven race winner Justin Wilson to replace the departed Bourdais. Their decision was validated when Wilson did win and dominated Rahal in equal equipment. At the end of last year NHLR said how disappointed they were not to have won a race to keep their record of at least one victory every year but one in their 27 years of racing. Did you consider maybe McDonalds was even more disappointed, and didn’t believe there multi-million dollar annual investment would net the returns a consistently winning driver would? Steve Alquist, Atlanta, Georgia
Dear Steve, Given Rahal's age, that would be a stretch. With the recession it's likely McDonald's revenue is down and 0.1 ratings on Versus just does not cut it for a big company like McDonald's that expects a return on investment with eyeballs in front of the TV screen and Versus simply cannot deliver that.
Did the IRL's miniscule TV ratings on Versus cause the team to lose McDonald's
According to inside AR1.com sources the reason why Graham Rahal does not yet have a ride with the Newman/Haas/Lanigan Racing team for 2010 is because they have lost McDonald's as a sponsor.
Unless they come up with a new sponsor before the season opener in Brazil, Rahal will take the couple of million dollars of sponsorship he does have to a team that can afford to run him at on a smaller budget.
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