The View from Here: The Business of NASCAR

I’ve been on vacation for the past few weeks and thus haven’t been submitting any blog entries, but now it’s back to work.

And, with the Race for the Chase nearing its end, everyone’s attention is on who will make the Chase—and it’s close. But rather than ramble on that topic, I’d like to address recent comments by #31 regarding the “long-term health of NASCAR”.

It seems that Jeff Burton believes it’s in the best interest of NASCAR, the teams, and the sponsors if the number of cars attempting to qualify for a race is limited to the 43 slots.

“The philosophy of having 48 cars all vying for 43 sports, I know that’s cool and everything. Or the thought that if you’re not good enough, you just go home because you don’t deserve to be in the race. But that’s not economically sound,” said Burton in an interview at Michigan last week.

He believes that spreading the sponsorship dollars over more cars de-values the sponsor—and even hurts teams because the sponsors will, in the current economic climate, not be as willing to risk backing a team that possibly will not make the race.

“Forty-three cars that are assured of being in the field is the best scenario for our sport,” Burton stated.

I’m not even saying the "F-word” (and here's more on the "F word") but to me it certainly sounds like that’s what Jeff is saying. And how does a team get to be one of the 43?

Here’s a thought for you -- if the number of cars attempting to qualify for a race is limited to 43, how do we get new drivers, new teams, and new sponsors into the sport? Yes, the sponsors of those 43 teams are quite happy knowing their driver will be in the race but I think it’s short-sighted in the long run.

But that’s simply the view from here.

Jon

Posted by at 11:25 AM | Permalink | Comments (2)

So,what is the public face of NASCAR? Is it the face of the happy American nuclear family? No? How about the faces represented throughout North America? Is it 북아메리카 (that's Korean) or L'Amérique du Nord (French) or even Norteamérica (Spanish)? Perhaps its face is Tex-Mex, Southern, or even Creole. Maybe it is the face of the surfer culture of California or that of the Midwestern farmer or the urbanite deep in the canyons of NYC.

Whatever the face of NASCAR is, it is surely a face that has character and one that has deep value. While the recent lawsuit has yet to show what fruit it will bear one thing is sure -- it can not be taken lightly or NASCAR will slip back into the world of shadowy stereotypes. You know, the stereotype which stunts the acceptance of NASCAR as a 'legitimate sport' and which turns away the 'might-be' fan.

I won't belabor the point here. I hope NASCAR's house is in order. And if not, that it is restored soon.

Because,a good reputation can be fleeting.

"Quella è la vista di qui"

('That's the View From Here' for all you fans of Italian)

Michael

Posted by at 9:26 AM | Permalink | Comments (0)

A couple of years ago, Dale Jr. uttered a four-letter expletive during a post-race interview. NASCAR hit him with a sizeable fine. Several other drivers have been known to cuss over their headphones when talking with their crew chiefs. When that has happened, NASCAR fined them for behavior unbecoming the sport.

Indeed, NASCAR likes to promote its clean, family-oriented sports image and likes its drivers and crews to reflect that image. In fact, sponsors and NASCAR have been blamed for the blandness of the sport, with fans citing the lack of the flamboyant drivers and hard-racing action they came to love in the past.

So, now that NASCAR is in the midst of a multi-million dollar lawsuit that weighs heavy on the clean-cut image that NASCAR has worked so hard to develop, what will the sponsors now think? Will we see a revolt of sorts by current sponsors as their contracts with team owners begin to expire? Will teams be faced with even more difficulty securing sponsors because of the nastiness of the charges along with the current economic situation that we’re all facing?

It’s hard to imagine NASCAR coming out of all this without some major bruises to its image as the sport without controversy, drugs, or scandals. Time will tell whether sponsors will reconsider the value of putting their names on cars to the tune of $20-25 million when the sport may be in court—legal as well as public opinion—for quite some time. This isn’t a “Kentucky lawsuit”; it’s a lawsuit that most everyone can identify with in one way or another.

And that’s the view from here.

Jon

Posted by at 9:22 AM | Permalink | Comments (0)

Well, I think I can answer Jon's below 'can he sell ' question regarding Kyle Busch, who has been accumulating both victories and boos in impressive quantities. YES, he can. Apparently people are beginning to warm up to him (winning helps). See this May 7 article from Dustin Long, who covers NASCAR for the Roanoke Times, the Virginian-Pilot and the Greensboro News & Record. The relevant portion is below.

THE FAVORITE BUSCH

Fans might boo Kyle Busch, but somebody is buying his merchandise.
Mark Dyer, president and CEO of Motorsports Authentics, said Busch merchandise has seen among the biggest increases in sales from last year.
Part of that, no doubt, relates to M&M's, which is Busch's sponsor. The candy product is a popular souvenir item.
Busch is in the top 10 among drivers but hasn't cracked the top five, which typically includes Dale Earnhardt Jr., Jeff Gordon, Kasey Kahne and Jimmie Johnson.
Said Dyer of Busch: "He's captured the imagination of a lot of fans with his aggressive style and winning races. He's been way up this year. It's been exciting to see."

Also note that this is even more interesting when considering that Mars, Inc., owns numerous brands that also appear on his (and others) car such as Pedigree, Snickers, etc. He also is linked with Pedigree in a campaign. I have pasted most of it below:

"From May 1, 2008 through October 15, 2008, NASCAR fans and dog lovers can log onto http://www.Dogsrule.com to make a monetary pledge to sponsor miles* of any of Busch's Sprint Cup races during that window; a roster which will sport 25 races and more than 10,000 miles. Donations from pledges will directly benefit The PEDIGREE Adoption Drive Foundation, a non-profit organization that provides funding to 501(c)(3) status animal shelters and breed rescues nationwide. Kyle kicked off the program from Richmond, Va., where he raced the No. 18 PEDIGREE(R) Toyota for the first time during the Crown Royal Presents the Dan Lowry 400.

"As the owner of two dogs I know how happy they can make you, so to me it's really sad that each year four million dogs end up in animal shelters and breed rescue organizations and two million never make it out," said Busch. "Kyle's Miles hopes to raise money and awareness for the dogs that are so often overlooked and I'm excited to be able to do my part to help."
As an added incentive to the "Kyle's Miles" program, anyone who sponsors miles* is automatically entered into a sweepstakes to win a trip for two to Phoenix in November to meet Busch and attend the Checker Auto Parts 500 at Phoenix International Raceway on November 9, 2008. Those who'd like to enter the sweepstakes but not sponsor Kyle's Miles can also do so at http://www.Dogsrule.com .
The PEDIGREE(R) Adoption Drive
The fourth annual PEDIGREE(R) Adoption Drive launched in February 2008, with a goal to raise more than one million dollars for The PEDIGREE Adoption Drive Foundation. Because of their love for dogs, PEDIGREE(R) Food for Dogs created The PEDIGREE(R) Adoption Drive to help shine a spotlight on the plight of homeless dogs. Through no fault of their own, more than four million dogs end up in shelters every year. Sadly, nearly half of those canines never find a place to call home, a trend that the PEDIGREE(R) Brand and Busch hope to help reverse.
In addition to making a donation to "Kyle's Miles," there are several easy ways NASCAR fans can take part in The PEDIGREE(R) Adoption Drive all year long that help benefit the foundation:
-- If you're a dog owner, you can purchase PEDIGREE(R) products. Donations from product sales will benefit the foundation.** -- Visit Dogsrule.com to browse Dogs rule.(R) gear, a line of merchandise and apparel for dog lovers. Proceeds after expenses from the sale of all Dogs rule.(R) items benefit The PEDIGREE Adoption Drive Foundation. -- Additionally, those who adopt a dog from a local shelter or breed rescue anytime during 2008 are eligible for a FREE, one-month supply of food as a thank you from PEDIGREE(R) Brand."

Finally, two other points.

1.Mars, Inc., has announced it is buying Wrigley's for 23 billion.Think about who (JPM) drives the Juicy Fruit car (he finished second at Talledega). So now Mars will have a wider assortment of promo opportunities.

2.Since Mars' fiscal year ended in December 07, I know that their 2007 sales were up a whopping 19% to 25 Billion.

Nothing to 'snicker' at .....

Sorry, just couldn't resist.

Mike

Posted by at 3:54 PM | Permalink | Comments (0)

A couple of weeks ago, Brian Tarcy (“The Complete Idiot’s Guide to NASCAR” and the blog “Free Cheezeburgerz”—at the right) sent me an e-mail in which he posed a very interesting question: Since fans don’t seem to like Kyle Busch very much, how has the sales of M&Ms been doing since that Kyle’s primary sponsor? Brian suggested that perhaps the popularity—or lack thereof—might have a serious effect on the sales of the sponsors’ products? I tried to find some financial data but am still looking for any impact on M&M sales (I’ll get my colleague Mike to research that topic—it’s up his alley).

In any case, the fairly phenomenal success of Kyle in all three series would suggest that Masterfoods is very happy with its primary sponsorship. We all know that Dale Jr.’s sponsor didn’t sign on because it likes the number “88” but because Jr. has such a great following. And we can, no doubt, find many such instances.

But still it begs the question: Does the unpopularity of a driver—regardless of his (her) success—have a negative effect on his (her) sponsor? Or, even more so, does the make of race car have a negative effect? For instance, when JGR announced it was switching from Chevy to “ota”, many fans indicated their displeasure and even suggested they’d stop rooting for Tony.

So, is there a problem for a sponsor if the driver simply turns off fans? Mr. Tarcy raises an excellent question—and one I intend to keep an eye on.

So, that’s the view from here.

Jon

Posted by at 3:36 PM | Permalink | Comments (0)

Continuing the examination of our “NASCAR’s Wish List for 2008, we explain wishes 5 through 7, keeping in mind the “business” emphasis of the wishes. (Details on 8-10 are here.)

#7: Everyone loves the COT: The Car of Tomorrow is certainly now the Car of Today, at least in the Sprint Cup series. Tests at various locations last week showed that times were fairly comparable to those of the former cars. Most drivers had kind words for the COT as well. If success and happy drivers come out of Daytona, NASCAR’s efforts to create a safer car while minimizing team costs will be an overwhelming success. The fear of IROC style racing will be dissipated, and the fans can turn their attention back to racing and not controversy. It’s a win-win-win for NASCAR, teams and fans.

#6: One of the open-wheel drivers – preferably Montoya – makes the Chase: What better way to show the world that NASCAR racing is truly the best racing than to have an open-wheeler make the Chase. The new arrivals are adding to the diversity of the sport (at least “international diversity”) and can only help to entice open wheel fans to the NASCAR scene. That translates to fuller grandstands and larger TV audiences. And that makes NASCAR happy.

#5: An end to bickering over the 35 rule: We all know the 35 rule was instituted to ensure that major sponsors — doling out lots of change from their pockets — would have representation each week of racing. Despite the many calls — and there have been many calls from a variety of sectors — NASCAR isn’t about the scrap the rule. It’s still about the business of NASCAR, and ensuring happy sponsors is a primary goal. So, let’s get over it and go back to racing.

Remaining four wishes next week.

Can’t wait for Saturday—it’s been a long winter!

Jon

Posted by at 8:37 AM | Permalink | Comments (0)

A couple of weeks ago we posted our first blog entry for this racing season with NASCAR’s Wish List for 2008. We want to take this opportunity to expand on various wishes in order to explain why we “hypothesized” the way we did. Keep in mind that the “wishes” are based more on the business side of NASCAR than the racing side.

Here are three wishes.

#10: No “three-peat”. Las Vegas bookmakers give #48 a 4 to 1 chance of three-peating as Sprint Cup champion. It’s only been done once. We think NASCAR would like to see a close championship but with a new face (or even familiar face) in order to stimulate greater fan interest in the Race for the Chase as well as the Chase itself. An analogy would be the Chicago Bulls, UCLA under Wooden and even the Pittsburgh Steelers. Fans of those teams loved their dynasties but others were turned off by their repeated success.

#9: #88 makes the Chase. He’s been the most popular driver the last several years but has had his ups and downs. What better way to stimulate fan interest than to have Dale Jr. make the Chase — or even better, to win it all? Given all the off-season hype about Jr. winning races and making the Chase, fans would be sorely disappointed if after Richmond in September, he’s down in 14th or 15th place.

#8: TV ratings and track attendance improve. Of course, NASCAR wants these to happen but not simply to point to the sport’s popularity. Rather, sponsors and TV network exec’s would be thrilled at the possibility of greater exposure — and that’s why they pay big bucks for television contracts and bright logos on the race cars.

Stay tuned for further elucidation.

Jon

Posted by at 1:28 PM | Permalink | Comments (3)

After several years at the helm of NASCAR, Brian France said last Monday that NASCAR will minimize the number of changes it makes this year. His rationale was that NASCAR needed to bring back lost fans. I (and others) couldn’t agree more that the rapid changes he instituted did dampen the enthusiasm of many fans toward the sport they love(d).

However, there should be one change instituted as quickly as possible — the elimination of the “top 35 rule.” Joe Menzer in his NASCAR.com column on Tuesday called for the rule to be eliminated. Jeff Burton has indicated that sponsors for teams outside the top 35 are few and far between since there is no guarantee their teams will make the race. Even Darrell Waltrip was quoted in Menzer's article acknowledging that the “top 35 rule” has drawbacks as well as benefits to the sport.

Last year I wrote that the “top 35 rule” was patently unfair and in effect was creating “franchises."

If we’re not going to eliminate the rule entirely, how’s this for a compromise: top 12 must qualify on time (with so many past champions probably in the top 12, the chances of those drivers not making it are miniscule), positions 13-25 are guaranteed starting spots, and 26-42 (26-43 if no past champion’s provisional is used) qualify on time. That gives teams that have faster times than those in positions 13-25 a much better chance of making the race and not having to pack it in for the weekend at great expense.

Then again, I’m probably “spitting into the wind” on this one!

Jon

Posted by at 3:02 PM | Permalink | Comments (2)

Last week Mike and I hosted, through our Department of Management, a panel discussion on “The State of NASCAR”. On the panel were reporters David Caraviello, Gene Laverty, Dustin Long, and Nate Ryan — names I’m sure you’ll recognize if you read newspapers and the .com’s that deal with NASCAR.

One of the topics that arose dealt with the “F” word—“franchising” of NASCAR. Opinions differed on whether NASCAR would ever consider franchising, mostly because of some loss of control if it did.

Dustin, however, opined that there are many forms of franchising and in fact, the “top 35 rule” is virtually a “franchising” of sorts. It gives drivers in the top 35 in points a virtual “franchise” by assuring them a place in the race. A question was raised about whether the “top 35 rule” was good for the sport, given that if my driver isn’t in the top 35, there’s a good chance he won’t make the race and I’ll be disappointed.

David quickly pointed out that this rule has nothing to do with racing but rather everything to do with guaranteeing sponsors they will have their car in the race. I’ve written previously about my dislike of this rule but I now have a different perspective on it.

I still don’t like it.

Would you prefer your driver to “get in” the race based on qualifying time or based on who the sponsor is? Granted, the drivers still have to earn their “franchise” but those who don’t have a franchise are at a disadvantage if they can’t get in the race — even if their qualifying times might be better than someone in the top 35 — in order to earn points toward the “top 35 franchises."

Just thinking out loud.

Jon

Posted by at 3:44 PM | Permalink | Comments (4)

I have been in Europe for awhile so as you might expect it has been mostly F1 coverage for me. NASCAR there is much like an alien being (think X-Files) to many, but not all, Europeans. We are an oddity -- racing yet not quite real racing.

But this post isn't really about Europeans, Americans, or any other group - it is about brands and consumers.

According to Kevin Roberts (Saatchi and Saatchi --- see krconnect.blogspot.com ), people want to know the following:

1. How can I buy stuff and feel good about it?

2. Why does choosing have to take up so much of my time and attention? The Economist tells us that two-thirds of consumers feel constantly bombarded. Bombardment is a twentieth century idea. Connectors will ignite growth in the twenty-first century.

3. What can you offer me beyond price? Wal-Mart’s shift in focus from “Always Low Prices” to “Saving people money so they can live better lives” is huge. It’s smart, forward-looking and brave.

4. What do you really know about me – and what do I know about you? The human thirst for authenticity is intense. It is pushing brands far beyond their comfort zones of smart market segmentation and savvy PR. People talking to people. That’s where we are headed.

5. What have we got to talk about? This is where it gets personal. A lot of brands have nothing interesting to say. They can talk about themselves and be the bores we all avoid, or they can work hard to become the relevant, fun, connected friends we want.

6. Can you keep up with me? This is where it gets tough, fast and tactical. Consumers are way ahead and they never stop pushing. Cool stores, new games, the latest mobile functions. If they can dream it, brands have to try to do it.

I learned that Budweiser and Dale Jr. will soon part ways and -- I yawned. So, did I just commit a NASCAR heresy? Maybe I was just tired from traveling or perhaps I am getting more cynical as I age, but in my opinion this is not a big deal.

Brands and drivers part ways on a more or less regular basis. As loyal as NASCAR fans are (and they are mighty loyal) I question whether a fan of Dale Jr. who also happens to enjoy Budweiser will stop liking either. Budweiser has such a powerful image that they can choose most any driver and retain/develop a fan base for that driver.

The larger problem lurking in the weeds isn't the parting of the ways between two popular 'brands' (yes,Dale Jr. is a 'brand') but rather a slow, yet steady, decline into the darkside of driver 'sameness'.

Just examine those six questions -- I think NASCAR probably has. When the day arrives that questions such as these cannot be answered to the satisfaction of the fans, NASCAR will have a real problem.

So now is the time to consider the future and I am betting it is far beyond issues such as the Car of Tomorrow.

That's the (somewhat hazy) view from here.

Michael

Posted by at 10:28 PM | Permalink | Comments (0)

Confirmation that Budweiser will not sponsor Dale Earnhardt Jr.'s car next year because of sponsorship commitments Hendrick Motorsports already has in place.

Posted by at 10:25 AM | Permalink | Comments (0)

Apparently, the “powers-that-be” at Sprint felt that NASCAR fans could handle the name change going into 2008. In fact, if enough publicity is given over the course of the remainder of this race season, the switch-over next year will probably be quite smooth.

However, I question why Sprint waited so long in making the change. Yes, it was the Nextel Cup series for only one or two years before Sprint took over so there might have been confusion for some not-so-knowledgeable fans.

The issue of AT&T taking over the “new” Cingular, so that it’s just one company name and logo, might also have played into the equation.

In any case, I like the image of “sprint” in the series name — hope nobody starts confusing the series with the “sprint” cars that currently run!

Jon

Posted by at 3:24 PM | Permalink | Comments (0)

The Sherman Antitrust Act according to Wikipedia:

"The Act was intended to prevent arrangements designed to, or which tend to, increase the cost of goods to the consumer. It was not specifically intended to prevent the dominance of an industry by a specific company, despite misconceptions to the contrary. According to Senator George Hoar, an author of the bill, any company that 'got the whole business because nobody could do it as well as he could' would not be in violation of the act. The law attempts to prevent the artificial raising of prices by restriction of trade or supply."

It has been questioned by none other than Alan Greenspan in that does it reward ineffiicent entities at expense of larger (and thus more efficient) ones -- thereby hurting consumers. While he was talking more about products,etc., that never saw the light of day, it will be interesting to see how AT&T's lawyers do the spin. Perhaps they can argue that cellphone,etc. consumers have been denied brand 'access' because they were unable to follow that logo at 200 mph.

In all seriousness, this is important in that the government is now the elephant with its trunk under the tent -- and we all know where that can lead.

So be very careful NASCAR, even the Hilton family loses now and again.

Michael

Posted by at 9:33 PM | Permalink | Comments (0)

Well, NASCAR has filed a countersuit against AT&T, seeking $100 million in damages as well as the legal privilege of tossing AT&T — and all telecommunication companies other than Nextel — out of NASCAR in 2008.

Notwithstanding that $100 million is a sizable chunk of change for anyone, the real story is the second one — the right of NASCAR to toss anyone out of sponsorship. It seems to me that NASCAR has welcomed a variety of sponsors into the sport, although sponsorship deals are between owners and the sponsors. What NASCAR is now seeking — and if successful, could do the same to any sponsor — is the ability to cancel sponsorship contracts even though it does not negotiate those contracts for owners.

Can you imagine the MLB commissioner telling the Tampa Bay Devil Rays that the team needs to change the name of Tropicana Field or ordering the Colorado Rockies to drop “Coors” from the name of its playing field? (AT&T today extended its sponsorship of Jeff Burton's car.) In essence, that’s what NASCAR is seeking. Makes one wonder whether Sprint/Nextel is the driving force behind NASCAR’s countersuit or whether NASCAR is in a snoot because it didn’t get its way earlier.

We’ll know on August 2!

Jon

Posted by at 4:35 PM | Permalink | Comments (0)

Everyone who follows NASCAR knows that fan loyalty to NASCAR sponsors is the highest for any major sport. We shop at The Home Depot, drink Coca Cola and drive Chevys.

So what about the drivers? How much loyalty do they have for their sponsors? I would suppose a great deal.

So let’s look at a situation where a driver chooses to NOT race in support of his sponsor. Everyone likes Mark Martin, the current “dean” of drivers. After announcing his retirement last year, he turned around and signed a deal to drive for Ginn Racing — although on a limited basis. Well, as luck would have it, Mark sits in first place in the standings after the first four races. Yet, rather than continue to drive his 01 U.S. Army car, he has chosen to sit out the next two races and allow a rookie to take over.

I wonder if Joe Gibbs would allow Tony Stewart to continue driving if Tony decided to take a couple of weeks off?

Although not driving full time was part of the agreement with Ginn Racing, Martin seems not to recognize the responsibility to his sponsor and team owner that others would deem required, especially given his place in the standings. It appears Martin has placed himself as “01” instead of the U.S. Army and Ginn Racing. As a result, upon returning to the 01 car for the Texas race in April, he’ll be no better than 36th place.

So much for loyalty.

-- Jon

Posted by at 2:46 PM | Permalink | Comments (3)

Top 10 Fearless (but not ones we are betting any cash on ) Predictions for 2007:

10. Staten Island - DOA; Hello, Seattle!

9. The rising cost of attending a race drives fans away.

8. Introduction of Toyota--what will be the reaction, one like Jack Roush or more like Brian France? (We know, we know, it is more of a question than a prediction)

7. New demographics-- Montoya's entree into Nextel and Busch's points race in Canada lead to new viewers

6. COT confuses fans who don’t want IROC-style racing.

5. JPM finishes well and two more F1/INDY drivers follow.

4. New Busch Series Sponsor -- big deal or non-story, and will there be a "target" on the new sponsor?

3. The fines just keep on a coming

2. Toyota wins by seventh race. (Ensuing controversy good for solving item # 9).

1. No one can replace Benny.

Big stories of the Week:
"Just in time for Valentines...The Candymen deliver"

1. David and Lazarus are appropriate monikers for the front row holders of this year's Daytona 500. By providing Yates Racing and Masterfoods, Inc., the front row for this Sunday's classic, perhaps the folks at Snickers can place into their rearview mirror their strange Super Bowl commercial.

2. The only question left to be answered is the "water into wine" miracle for Michael Waltrip (perhaps we should say "mystery liquid into 'oil' "). Hey Matt, that should show you that a few misplaced holes are not that exciting.

3. On the other front we are guaranteed that for the first time since 1963 -- when Smokey Cook ran an MG (yes, you read that correctly) at Bowman-Gray stadium in a 200 lap event won by Junior Johnson -- a foreign entry will run in a NASCAR points race. Wonder what took them so long?

4. James Hylton age 72 looking relaxed and ... well, need we say more ?

5. New life for Chip Gnassi !

Overall: Score a -3 for the Toyotas and a +1 for candy.

--- Jon and Mike

Posted by at 9:03 AM | Permalink | Comments (3)