Sponsorship a case of 'haves' and 'have-nots'

CONCORD, N.C. -- An index of leading economic indicators dropped .2 percent in March, but the folks in NASCAR don't need some financial consultant to tell them times are tough.

Sponsorship has been difficult to find since the economy took a downturn, especially since the Sept. 11 terrorist attacks. Television ratings for Winston Cup races have remained relatively stable, and NASCAR executives have said the economic state of the sport is fine.

	BAM Racing has a partial sponsorship deal this year. Credit: Autostock

Of course, R.J. Reynolds is looking to end its long association with NASCAR as title sponsor of the top series. So far, only rumors have circulated about a possible replacement.

Drivers, team owners and sponsors are only slightly worried about the NASCAR economy. And how worried you are depends on how solid your contract is with your current sponsor.

Beth Ann Morgenthau, who co-owns BAM Racing with her husband Tony, doesn't have a full-time sponsor for driver Ken Schrader. But the No. 49 car will run the full schedule this season, and Schrader has already had some good runs in 2003.

"Tony loves to tell a story about negotiating with a man a few years ago," Morgenthau said. "The deal came down to $10,000. Tony asked him, 'Is $10,000 a lot of money?' The man looked at him and said, 'Depends on whether you have it or not.'

"That's the economy in the sport, not just these days but every day. If you have a sponsor, it's a good year. If you don't, it's not. It doesn't matter what everyone else is doing or not doing."

The majority of Winston Cup teams do have sponsors, but the fields in the Busch Series and Craftsman Truck Series have been weak, at best. Andy Petree fielded a two-car Winston Cup team two years ago, and both of his drivers them, Bobby Hamilton and Joe Nemechek, won races.

	Andy Petree

But Petree lost one backer for 2002 when the sponsor went bankrupt and then lost the other for 2003.

"The state of the economy in NASCAR, or anywhere else, pretty much depends on where you are sitting at the time," Petree said. "It's like the old line -- if your neighbor is out of work, it's a recession; if you are out of work, it's a depression.

"Plain and simple, it's tough finding sponsorship out there right now. I really believe marketing through motorsports is of great interest to a lot of companies but because of the perceived price tag and the unknowns as far as the economy as a whole right now, a lot of companies are waiting. They are waiting to see what the economy does, what happens to their companies, where sales head, things like that.

"If you have a sponsor, you work hard to hold onto them. If you don't have a sponsor, you have to keep working hard and being patient. We have a lot of companies we've talked with and who are talking to us, and we feel we're close on some things. But until they sign on the bottom line, we have to wait."

With the price tag for a top-line Winston Cup sponsor as high as $15 million a season, a lot of companies are simply scared off.

"In my opinion, the motorsports economy, especially in Winston Cup, is not very good," said Derrike Cope, driver/owner of Quest Motorsports. "The market is overpriced for where we are right now. I think you are going to see a lot of teams scrambling, if they are not scrambling already. A lot of sponsorships come up at the end of the year, and these teams are going to be trying to come up with something. The way the market is right now, I don't think those $10-12 million deals are going to be too plentiful in the near future."

But that doesn't mean sponsors will avoid NASCAR.

	Derrike Cope is running a limited schedule with Friendly's. Credit: Autostock

"Frankly, there is a good opportunity for sponsors to get into the sport at a lower rate, and that's going to start showing up in the second half of the year," Cope said. "You've already seen some things. There are a lot of people out of jobs. Teams have pulled back. Payrolls are dropping. By the end of the year, this is definitely going to be a sponsors' market, and sponsors will be able to get a good value for a lot lower price.

Cope and his team have worked to find regional sponsors, like Friendly's, a restaurant chain with locations along the Eastern seaboard. Granted, it is for less money, and Cope's team probably won't win any races any time soon. But for Cope, it works.

"By putting together some regional sponsorships with (Friendly's), we have been able to get into a position where we can run a lot of races," Cope said. "For Friendly's, it's less money invested and a better return. That's been our goal with our process -- price sponsorships in a way that they are getting the best possible return on their investment, and do it so smaller companies can get in the sport."

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The smaller companies haven't given up on NASCAR, either. But race teams and sponsors have had to work harder since Sept. 11 to keep the bottom line from going red.

"We've put a lot of faith in motorsports, but we believe in it," said Clean Control Corporation president Steve Davison, whose company sponsors Busch Series driver Stanton Barrett through its OdoBan Odor Eliminator product. "Our thinking is branding. We want people to think OdoBan Odor Eliminator. That yellow and green on the side of Stanton's and Jack Roush's Fords in the Busch Series is in front of a lot of people.

"The business-to-business aspects are important for us too. We have been able to do some of that through this team and through Roy Hill's NHRA Pro Mod, too. It just requires a lot of work and a lot of marketing support, not just from our company but from Roush Racing and Roy Hill, too."

Sponsors still need to sell products. That won't change, even in a bad economy. The trick is trying to find the best way to market those products. For Davison, the Busch Series is a better way than Winston Cup.

But bigger companies need a bigger audience. And Winston Cup provides that. Kyle Petty, CEO of Petty Enterprises and driver of the No. 45 Dodge, said even though the public is watching money a little closer than before -- which means money for entertainment decreases -- the NASCAR economy has leveled off.

"No matter what the economy is, people are still going to be drinking Coca-Cola, eating Cheerios and cleaning it all up with Brawny paper towels," Petty said. "Life goes on regardless of what the economy is doing. We can still help market to those people for our sponsors, and our sponsors still need to make and sell their products.

"Essentially, I think we've leveled off as far as a NASCAR economy is concerned and now we're just waiting for the U.S. economy to pick back up, figuring ours will pick up not long after that."

	Stanton Barrett

When will that be? No one can predict, not even the financial whizzes who talk about "leading economic indicators." Until the economy does get better, people in NASCAR will just have to work harder.

In addition to his driving duties, Barrett recently started a marketing agency for motorsports.

"The key thing for all of us is remembering just painting a name on the side of the car and hoping for the best is over," Barrett said. Sponsorship marketing is a full-time effort. The corporation has a lot of work to do, but the team has to do everything it can do as well.

"Maybe we all got fat and happy there for awhile but it takes a lot of hard work to bring sponsorship to the table, and to make things work well once they are there. The overall economy is down right now, true. That just means everybody has to work harder to make motorsports marketing work."