Call it a recession, call it an economic downturn, call it whatever you like. We’ll let the economic pundits argue over the technicalities, or tea leaves if you will, of where the economy is heading.
The marketing departments of the corporations that breath life into the NASCAR Sprint Cup series don’t care what we, or the economists think it is. If the corporations believe its anything even close to ominous, NASCAR is going to feel the pinch for far longer than one might think.
Anyone can clearly see the wagons circling among the Super Teams of JGR, Hendrick and Roush. How? They’ve begun to consolidate the most marketable drivers who are available and, if necessary, helped these drivers extricate themselves from contracts that are nearing an end.
The losers in this consolidation are clearly the satellite operations such as Yates and other teams that have become second and third tier teams such as Ganassi, DEI and, though it seems ironic, Penske. Dodge has an apparent power-plant problem and the introduction of a new engine this year is still debatable as to what success that might bring the teams who are sticking with the marquee.
What of the newly formed Stewart-Haas team? If Stewart doesn’t choose a marketable driver or drivers and produce relatively quick results, the sponsors won’t remain. The news that GM is cutting costs doesn’t bode well for this team, other than GM has heavily invested in Stewart. GM cannot afford to pull out of Sprint Cup under the perception that Toyota has chased them out. Forget “Win on Sunday, Sell on Monday”, its more a perception of defeat that would further push GM into a financial hole.
However, Troy Clarke, President of GM North America, stated: Motorsports "have not gone without scrutiny. I'm not going to get into specifics about NASCAR. But there will be modifications-changes in our marketing footprint-in this area." He added, "NASCAR, SCCA club racing-we are looking at where we need to be." Funding a championship-winning team such as Chevy's Hendrick Motorsports and drivers of the caliber of Jeff Gordon, Jimmie Johnson and Dale Earnhardt Jr. costs GM at least $30 million a year.
Very few of the best of the rest have the sponsor or investor power to hang on, Red bull is one that has deep pockets in the person of Dietrich Mateschiz, the owner of Red Bull who fully intends to bring Vickers, Allmindinger and now Scott Speed to the front. Mateschitz does not like to lose and his Formula One efforts have proven that he will spend the money, direct the resources and stay the course until he succeeds.
At the very bottom of this sponsorship crisis lies the basic truth that when a corporation sponsors a team they have to extraneously spend $2 for every $1 they give the teams in order for the investment to pay off in sales, branding or shareholder value. It’s called activating a sponsorship and very few corporations can spend the additional $30-60 million to convert that investment into profits.
On the other hand, make no mistake this isn’t all doom and gloom as NASCAR has seen harder times than we have now. The 1970’s and 1080’s had their share of difficulties with limited manufacture involvement, less expensive sponsorships and, yes, less intensive competition among teams. NASCAR will change, but it will survive.
The pressure to win is great, the pressure to make the Chase is almost unbearable, but the pressure to win the Championship is beyond anything we’ve seen in any of the past years. Toyota has seen to that, thus validating Jack Roush’s cries of more support from Ford.
Roush’s ride through the streets on horseback shouting ‘The Japanese are coming! The Japanese are coming!’ have come true and his early campaign aimed at increased Ford support paid off. Chevrolet stayed the course, introduced a new engine and carefully consolidated its efforts under Hendrick and now Tony Stewart.
Dodge has, unfortunately, found itself painted into a corner as only Gillett-Evernham has risen anywhere near the top. Penske can only skirt the outer reaches of the Chase. Dodge has a great deal of development to do in order to keep from collapsing in its NASCAR efforts. That scenario isn’t so far fetched as the controlling interest in Chrysler is a private equity firm called Cerberus.
Private equity firms have one thing on their minds and that is cost efficiencies. If GM has put their racing programs on the block, imagine what Cerberus might do.
What’s the answer? There is none. The old adage that only the strong survive will be the order of the day and no one will actually have answers about who will be absorbed and who will go away until the Chase is over. Once that happens the silly season we’ve all become used to talking about will seem very small in comparison to who is left standing when we turn our thoughts to Daytona 2009.
Rob D'Amico and Michele Rahal from Race Day On Fox Sports Radio ( www.RaceDayOn Fox.com )
ROB: Simple he loves Music & Motorsports! Rob has spent his entire business life in the exciting world of radio. From programming to on-air talent, Rob is one of the industries most professional personalities . Putting together the best of both worlds, Music & Motorsports he created the future of racing entertainment ....RACE DAY!
MICHELE: Michele Rahal began his career as a professional racing driver in the United States driving for such top road racing teams and owners such as Tom Gloy Motorsports, Lever Brothers and the Championship Group. Rahal's racing career spanned 1980 to 1987. The Rahal Family has been an active part of American auto racing since 1954.