How's the economy doing? The racecars tell the story

The last time the United States suffered through an official economic recession, beginning in late 2001, the downturn was evident every time NASCAR's premier series took to the racetrack. Teams that had won races a season earlier found themselves without primary sponsorship and in danger of shutting down. A host of companies slashed marketing budgets and left the sport. Cars at the rear of the field took the green flag backed by the likes of Lotto South and J.J. Baker Custom Homes, if they managed to find sponsors at all.

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Competing in a sport that depends on sponsorship dollars carries with it an inherent risk, one potentially much more damaging than hitting the wall at Darlington or running out of fuel at Michigan. Beyond the skill of a driver or the imagination of a crew chief, it can be the whims of Wall Street that determine whether a race team succeeds, fails, or even leaves the shop to begin with. There's no need for a thick report from the Department of the Treasury -- one look at the starting grid for a Sprint Cup event can provide a startlingly accurate snapshot of the economy as a whole.

And right now, the developing picture is a worrisome one. With little more than a week remaining until the 2008 season begins, there are no less than nine cars still looking for full-time primary sponsorship, and several others trying to close gaps in patchwork deals. We're not necessarily talking about back-markers, either; David Gilliland, who won the pole for last year's Daytona 500, doesn't yet have a primary sponsor for his No. 38 car. Neither does reigning Indianapolis 500 champion Dario Franchitti, debuting this year in Chip Ganassi's No. 40. Neither does former Formula One champion Jacques Villeneuve. Neither does Patrick Carpentier, or Travis Kvapil, or Regan Smith, or Jeremy Mayfield, or Ken Schrader, or Michael McDowell.

Several others, from Scott Riggs to Robby Gordon to the combination of drivers who will pilot the No. 21 for the Wood Brothers, have partial deals but are still trying to piece together a full season's worth of backing. Then there are all the teams on the Nationwide and Craftsman Truck circuits with little to no sponsorship. At least they're still operating -- the same can't be said of three-time Daytona 500 winner Morgan-McClure Motorsports, which shut down after 24 years because it lost sponsor State Water Heaters to Haas CNC Racing. Yes, it's reached the point where a water heater company decides who survives. That's not a pretty picture.

Because of its inherent reliance on corporate sponsorship, NASCAR is the canary in the economic coal mine. We saw this in the slowdown following the 2001 terrorist attacks, when the market tanked and a number of companies -- Kmart and Kodiak among them -- suddenly saw their race programs as unnecessary expenditures. Even winning races, as former team owner Andy Petree discovered, wasn't enough to justify the multi-million-dollar investments that companies had to make to stay competitive in NASCAR. His team eventually shut down, as did Travis Carter's and Junie Donlavey's, and as did Morgan-McClure this year. The times may not be quite as dark, but the parallels between 2001 and today are clearly there, evident in blank hoods and closed shop doors.

To those in the trenches, trying to find sponsorship is an exercise in patience. Max Jones, co-owner of Yates Racing, is the man tasked with finding companies willing to back Gilliland's No. 38 car and Kvapil's No. 28. Right now, he's still optimistic -- he has five agencies hunting down sponsorship leads for him, he's held several meetings with potential sponsors, and the feedback he's getting isn't entirely negative. But Yates is still "a ways" from locking up a full-season primary, he said, and in this economic environment companies aren't keen on the idea of signing a multi-year deal.

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"I've never been in the business of beating the pavement to find money, but I've been in the sport, and I know how hard it is to find money," said Jones, who co-owns the team with Doug Yates. "From where I'm sitting, I don't believe it's a lot different than it's ever been. There was a time when people were wondering if NASCAR was a good value or not, and we've gotten through that. Everything's a cycle, but it's always hard. It's just as hard to find money as it is to make your car turn in the corner. You've just got to work really hard at it."

The big concern he senses right now is the uncertainty -- will there be a recession, and how bad might it be? Just like consumers, corporations begin pinching pennies when economic indicators start to point south. When he meets with potential sponsors, Jones said, he doesn't sense the gloom and doom he reads in the newspaper and on the Internet. The executives he talks to are not averse to dialogue. They're not to the point of slashing marketing budgets like they were in the aftermath of 2001. But they're also not signing on the dotted line, either.

"They're consciously watching what they spend, no different than you and I are," said Jones, whose team has even started a Web site, sponsoryates.com, in an attempt to generate interest. "But they still have to do business. They still have to advertise, they still have to market. This is one of the things they still believe strongly in, or they wouldn't be having the meetings."

Those who are strongest now are the same who were strongest in 2001 -- teams that can enhance the value of a sponsor's investment through performance, and sponsors that see racing as not just a part of their overall marketing strategy, but the linchpin of it. Companies like Lowe's and Home Depot and even Yates' old sponsor, UPS, stick it out through tough economic times because NASCAR has become a part of their very identities. But in some ways this is an atmosphere that teams and sponsors helped create, as organizations pushed the price of competition upward and corporations opened their wallets to pay for it. Before the 2001 slowdown, sponsorship in NASCAR was one expensive game of "can you top this," a mentality that still exists to a point, even though there aren't as many players who can afford to buy in.

One day the cycle will reverse itself, and the housing market will improve, the mortgage crisis will ease, and the numbers on Wall Street will start to climb consistently northward again. When that happens, 43 cars will converge on Daytona with shiny corporate logos painted on their hoods. But to get there teams must persevere through the current economic climate, the severity of which is clearly evident with one glance out on the track.

The opinions expressed are solely of the writer.