Mid-level teams feeling a full-sponsorship crunch

Six years ago, Andy Petree's organization was the little team that could. From a shop in out-of-the-way Flat Rock, N.C., he employed more than 100 people who built cars that contended for race wins on NASCAR's premier series. In the 2001 season, both of his entries reached Victory Lane.

One year later, the sponsorship was gone and soon after, Petree, a former championship crew chief, was out of the team ownership business altogether.

"The last year we had two teams, we won races with both of them, and we still were not able to find sponsors that we could put on those cars to keep them going," he said. "I guess one of the issues is how much money it takes to make it work. That number today, I guess, is no less than $10 million, and maybe $15 million or more to make these things work. It's so hard to find companies that are willing."

Petree, now a television analyst for ESPN, was a victim of the sponsorship shortage that gripped NASCAR earlier this decade, when the financial slowdown following the Sept. 11, 2001 terrorist attacks on New York and Washington led corporations to slash their marketing budgets. But now, the economy is relatively healthy. The Dow Jones industrial index on Wednesday was above 13,000. And yet mid-level teams on the Nextel Cup circuit still sometimes find themselves unable to procure the levels of sponsorship necessary to compete with larger, better-funded organizations for race wins.

That lack of sponsorship has helped drive the wave of mergers and partnerships sweeping across NASCAR, as teams with less financial means look to align with teams with more. Robert Yates Racing, which last week partnered with the Newman/Haas/Lanigan open-wheel team, essentially has one company -- MasterFoods, which makes both M&Ms and Snickers candies -- backing both its Nextel Cup cars. And Ginn Racing was absorbed by Dale Earnhardt Inc. after being unable to find sponsors for two of its three racecars.

Would the merger have happened had Ginn been able to find sponsorship? "Probably not," admitted Jay Frye, the Ginn team's former general manager. For teams without sponsorship, it's a dangerous cycle. They need to be able to run well to impress potential sponsors, but it's hard to run well without financial backing. And the worse they run, the more difficult those sponsors are to attain.

"It's almost like which came first, we didn't have enough money so we didn't run well enough, or we didn't run well enough so we didn't get money?" Petree asked. "It's so difficult to be competitive when this sport is changing and everything is developing so fast. You have to be able to stay ahead of the curve when you can't put the money to it. Bobby Ginn tried to do that, but when the sponsorships don't come through, what do you do? You have to scale back, and performance suffers, and morale suffers."

Even mid-level teams that have sponsors feel the crunch. The consensus within the garage area today is that teams need three to four fully-funded cars to make their financial model work, especially with NASCAR's four-car limit looming. Everybody has eyes on expansion. But gone are the halcyon days of the late 1990s, when sponsorships were a relative bargain, and the rocketing success of NASCAR was good enough to convince companies to put their name on almost any car. Then came Viagra and UPS, which considerably upped the ante. Then came the post-9/11 slowdown, which drove a host of companies like McDonald's, John Deere, Amoco and Exide out of the sport.

Now, with it costing between $15 and $20 million to back a racecar, companies are much more selective. "The prices have risen to their choking point," said Max Muhleman, a consultant and marketer who specializes in motorsports. (Continued)