Cost vs. return key factor in series title sponsorship

According to published reports, the Busch Series is still seeking a title sponsor to replace longtime backer Anheuser-Busch for 2008 and beyond, and while there are still several suitors from which NASCAR can choose, at least one of them said the price was too high.

According to The Sporting News, KFC bowed out of the running to replace Busch beer after emerging as a strong candidate. Company spokesman Rick Maynard said KFC had completed a review of the proposed deal and "while it might have been attractive, it didn't fit into the company's 'spending priorities over the next several years.'"

That's corporate-speak for the price is too high.

While companies like Subway, Dish Network, Dunkin' Donuts and Wal-Mart have reportedly been interested in replacing Busch, there is the little matter of the $30 million price tag NASCAR is asking for the series, second only to Nextel Cup in popularity among U.S. race fans.

What makes it more intriguing, besides the fact that KFC was pretty open about its reasoning, is that it was acting on the advice of Octagon Racing Group, the same company that advised Nextel when it stepped in to take over from R.J. Reynolds' Winston brand in 2003.

When you think about it, $30 million to a company like KFC is really not all that much money. A primary team sponsorship in Cup these days is creeping ever closer to that level right now, and that's just for one car on a top-flight team.

The sticking point seems to be what the company will get for its investment. There's the outlay for the rights to the sponsorship, and then there are related costs like marketing, personnel, signage and more.

There's a difference between series sponsorship and team sponsorship, mostly in scale. KFC has sponsored cars before, most recently in 2004 when the company funded a one-off deal with Dale Earnhardt Jr. in the Busch Series that included KFC partners Long John Silver's and Taco Bell.

Interestingly enough, KFC, Taco Bell and Long John Silver's are part of the Pepsico umbrella.

To help understand why this is a difficult process, you must first apply the economics against the potential for return.

NASCAR's asking price for the Busch Series sponsorship is a little less than half what Nextel pays for the Cup Series, which is an estimated $70 million a year for 10 years.

The outlay for the Busch Series sponsorship will likely be around $300 million over a 10-year period. Chances are the terms won't be much less than 10 years -- continuity is a big deal these days to NASCAR.

According to its research, there are 75 million NASCAR fans in North America, and that number has been static for the past six years. That suggests that the sport is maturing, and while it gains new fans every year, the overall number hasn't gone up very much.

A company looking to get into the NASCAR arena will look at that and measure potential value against the numbers and come up with the following equation: invest $300 million for the right to market to 75 million fans over 10 years, and add in the associated costs.

It didn't make sense to KFC, but it likely will to one of the other companies on the list.

The Busch Series, which celebrated its 25th anniversary last season, has grown by leaps and bounds alongside the Cup Series during the past 15 years or so, and is a valuable sports property in its own right.

In addition to running many combo events with the Cup Series, the Busch Series has stand-alone events across the country. It also has the only two races on foreign soil, in Mexico City and Montreal.

The Busch Series also fills the role of test pilot when NASCAR officials consider expanding the schedule. Mexico City and Montreal are the first steps in that expansion, and a potential race in Asia is probably next on the list.

One of the key drawing points for the Busch Series, and a factor that the new sponsor is likely to consider a big plus is the fact that so many Cup drivers use the Busch Series to experiment with the cars and the track for the following day's race.

How that will change with the advent of the Car of Tomorrow -- which isn't planned for the Busch Series for a few years -- is anybody's guess, but seat time is seat time. Newcomers to the Cup Series will also use the Busch Series to get track time.

KFC has bowed out of the race to replace Busch, but there are other companies interested enough to keep talking. Look for an announcement in the next 90 days or so.