In difficult times, rich will get richer
Team owner Richard Childress has signed Caterpillar and General Mills to sponsor his cars next season, and he’s expected to soon land UPS, as well. All three companies are moving from less-successful teams, leaving Bill Davis Racing, Petty Enterprises and Michael Waltrip Racing scrambling to find financing—any kind of money at all It’s doubtful those teams will secure anything close to the $20 million or more in annual funding that the best teams attract.
Based on recent contract announcements, it seems only 24 cars currently have full sponsorship in place for the 2009 season. Some have massive budgets, others are settling for what they can get. In the meantime, many companies are finding that to stay in NASCAR, they must do so at a reduced price.
It’s created a situation where a sponsor might be shopping an $8 million to $10 million deal around the garage, determining just what it can get for the money.
For Roush-Fenway Racing, that price might buy a handful of races as a primary sponsor. But Davis, Waltrip or even Ganassi might sell a whole season at that price just to get some cash flowing into the organization.
So, which is the better deal? Does a company pay that money to a contender who will drive its logos to the front in five or six races? Or does the cash go to a 25th-place car for an entire season, unsure of how much television coverage the team will receive?
One solution is a move toward split sponsorship. Rick Hendrick signed Amp and the National Guard to share Dale Earnhardt Jr.’s car this season. But some have estimated that deal is bringing Hendrick upward of $30 million a year— cash the smaller teams won’t ever see.
That’s not likely to change as the competition gap grows. There were 15 teams in the top 20 in 1998; today, nine hold down those same spots. Through 18 races, cars from just six different organizations have won all the events, led by Joe Gibbs Racing’s seven victories.
France opposes a franchising model, which many car owners are clamoring for because it would secure their NASCAR investment. Under that plan, owners would pay a fee to secure a spot in the field and follow a model similar to other pro sports where teams share revenue. When an owner wants out, he has a franchise to sell and isn’t left with nothing the way Bobby Ginn was last year when sponsorship woes forced him to sell the operation to Dale Earnhardt Inc.
Because France won’t budge on that issue, perhaps it’s time to consider different strategic decisions that would bring down escalating operating costs while allowing slumping teams to rebuild themselves into a better value to potential sponsors.
But in maintaining the status quo during this economic crisis, NASCAR risks Ganassi being just the first owner to kill a race team.
And that’s not OK for anyone. Yahoo! Sports