Ganassi's partnership with Sabates began mergers

In 2001, Indy Car team owner Chip Ganassi got into NASCAR. He did it by merging with Felix Sabates, whose cars had won races and challenged for championships. The deal itself was, at its core, very similar to the Roush Fenway and Gillett Evernham mergers that have dominated the news of late.

As this type of transaction becomes more prevalent in today's NASCAR, teams are being forced to deal with the transition from somewhat of a hobby sport to big, big business, which is why you're seeing team presidents being culled from the herd of sports marketers and business marketers that abound outside the sport.

Ganassi has done both, merging with Sabates and hiring Steve Lauletta as president of the team, so he's probably the foremost expert on the trend.

"In those days, I just felt that sooner or later ... I had been talking about getting involved in NASCAR for a year or two and I just felt like the time was right to get involved," Ganassi said. "Things were priced at a level ... it would be awful hard to do the same deal today that I did then.

"I was fortunate that I ran into someone like Felix."

The reasons were the same as for Fenway and Gillett and the others that will come later, he said.

"If you were talking about value in racing, it was obvious to me that value, in terms of other teams, was somewhat nebulous," Ganassi said. "The value of a NASCAR team, whether it's the TV deal or things like the prize money or the programs or the availability of sponsorship at the time, you'd say it was a better value proposition."

Ganassi also said that motorsports business is not widely understood at the basic level.

"Sports is the only business that has two bottom lines. You have wins and losses and you have profits and losses," he said. "That's what your average businessman may not understand. You can have a poor year on track and a good year off track, all in the same year, and that will turn into a good year off track the following year, and you should be able to maintain your good year on track. The trick is to level it out, instead of having peaks and valleys."

There's your explanation for the merger mania sweeping the sport. Leveling out the peaks and valleys between what works and what doesn't is the key to a successful business that lasts, and the mechanism that powers it is cash and the management of it.

Enter Lauletta, a veteran of Miller Brewing Company who oversaw Miller's sponsorships in NASCAR, the NHRA and the NFL. He's a high-level marketing professional whose job it is to seek out and obtain that power through sponsorship, activation and all sorts of other market-based applications.

Like Max Siegel at DEI, Lauletta has the 10,000-foot view of the race team as a whole, and he makes his moves accordingly, having been on the other side of the fence with sponsors. The days of being in racing because the CEO liked it are long over, he said. It's a business from the word go.

"A lot of it goes back to competition, the expense to be involved, the continuation of sponsors, who are becoming more savvy and more ROI-driven and more brand-driven," Lauletta said. "The days of a company getting involved in anything, be it NASCAR or golf, because the CEO likes it have really gone away.

"You have to make sure every penny is accounted for," he added. "Activation becomes the key. The idea of 200 mph billboards, you really don't hear about that anymore. That's not why companies are getting involved in the sport. They're getting involved to bring their brand to life. To do that, from the team side, it takes resources and people, three- and four-car operations ... to have an owner who used to be focused more on the competition side, let's say, or more on the business side, it's hard to do both as effectively as it may have been in the past because we're talking about 400-, 500-person businesses with a multi-million-dollar investment. That's why, to be honest, a little later than I would have thought it was going to happen, you get people like Fenway Sports Group and Gillett and more classically trained sports marketers, business marketers, to now be asked to come in and take the lead on continuing the growth."

Ganassi said the trend would continue, because at the end of the day, he who runs the business the best is going to stay in the sport. Those who don't, won't.

"These [race teams] are getting so big and cumbersome," Ganassi said. "We're not that many years away from just a group of guys that enjoyed working together. When you get 300-400 people, you run into other issues. You have real human resource issues, you have real challenges and real families that are counting on you and depending on you as a business operator. They're real-life challenges that real businesses have, and make no mistake about it, this is a real business. They didn't used to be, 20 years ago, they were hobby businesses. Back then, there weren't many people approaching it as a real business, and they're not doing so hot now.

"At the end of the day, no matter what, if you're racing cars or selling ice cream cones or you're manufacturing flat-screen TVs, it's even more important today than ever that you run your business in a manner that is, on all fronts, fiscally responsible. At the end of the day, the guys that run the best businesses will survive any downturns. He'll be able to take advantage of the upswing and not be damaged in a downturn.

"I remember the day in racing when I just wanted to do everything I could to make sure I was there next year. That was the first order of business, to make sure you were there next year. You can back up from there, and then let's start winning races."

Six years into the first NASCAR mega-merger, Ganassi is keeping up with the trends he helped begin. Hiring Lauletta to watch over the business and marketing side was just the latest move. As NASCAR moves toward larger teams and larger businesses, it will be interesting to see what happens next.