Money woes ease in NASCAR, sponsors seek bargains
And they can do so at the relative bargain-bin prices found in NASCAR's second-tier Nationwide series.
In happier economic times a few years ago, the possibility of such a deal would have triggered a stampede of potential sponsors tradin' paint with briefcases as they raced from the boardroom to the track. But as of this week, the Earnhardt family's JR Motorsports team had sponsorship contracts in hand for only 12 of 35 races for its main No. 88 car; the team has struck separate deals for Danica Patrick to run a part-time schedule in a second car.
Earnhardt Jr.'s sister Kelley, who leads the team's sponsorship search, is frustrated but not surprised at how difficult the process has been.
"When you are knee-deep in it and talking to your sponsors, I am not surprised, if you listen to them talk about what they are up against," she said. "They want the return (on investment). We as a sport, I think we've had some checks and balances of what they are paying for — how much it is to sponsor one of our cars versus the return they get."
Economic woes haven't completely chased corporate America away from NASCAR. There are some signs that interest is picking up after sponsors cut back significantly or left the sport last year.
But in sharp contrast to the go-go mid-2000s, when top teams regularly reeled in eight-figure sponsorship deals, companies now are demanding more for less.
"It's still a fabulous investment, and JR Motorsports gets more attention than a lot of Cup teams do," Kelley Earnhardt said. "But we're having to change the way we approach it."
That means taking a crash course in learning to use social media such as Facebook and Twitter for sponsorship exposure purposes.
"It used to be you could talk about (traditional media) impressions and TV ratings, but now they want actual physical people they can touch," she said. "Now we sit in meetings with potential sponsors and talk about Facebook and Twitter. They ask, 'How many Facebook friends do you have?' They want actual bodies to touch."
NASCAR chief marketing officer Steve Phelps says it's only natural that companies want more for less in today's economic climate. And Phelps sees better things on the horizon.
"Everything was (about) the economy last year," Phelps said. "Now the concentration is clearly on racing. That's where the fans would want it to be. We'd obviously want to see it there. You can't ignore the economic impact of what was happening last year. But it's flipped — if it's not 180 degrees, it's 160 degrees."
It's a sense of guarded optimism Phelps acknowledges the sport "just didn't feel" heading into last season.
Driver Jeff Burton says some drivers, team owners and sponsors panicked in 2009 — with good reason, because nobody knew where the sport's financial free fall might bottom out.
"I think last year, everybody was kind of shell-shocked a little bit," Burton said. "I think now that everybody's had a little time to step back and understand the situation that we're in a little bit better, I don't there's quite the fear that was here."
Automakers General Motors and Chrysler faced urgent questions about their very existence last year and were in no position to increase their financial support of the sport. Racing teams consolidated and contracted. Sponsors cut back or went away. At-track attendance slipped, as did TV ratings.
"Who knows if this financial correction, or the economy, was the pin that pricked our Internet bubble?" former driver Kyle Petty said. "Maybe we had grown out of control and we didn't know why, and all of a sudden, boom! ... and we've settled where we're at."
But Phelps says there could be an upside to lower sponsorship prices. Potentially, companies paying reduced rates to teams could have more to spend on NASCAR-themed television commercials, in-store promotions and at-track hospitality.
"A little bit of a market correction, it's probably not, candidly, the worst thing that can happen," Phelps said.
Phelps expects companies to spend more freely on those extras this year, another sign of the sport's rebounding economic health. He sees more corporate hospitality at Daytona International Speedway this year, after some companies were criticized for spending money on client entertainment at sports events last year.
"We absolutely saw pressure on that, or the tracks did from a corporate hospitality standpoint," Phelps said. "And it's unfair that people would characterize (hospitality) as a dirty word, or a 'boondoggle,' or whatever. It moves business, and that's why they do it."
In general, Phelps says the economic outlook in NASCAR is in step with the rest of the country: Things might look a little better than last year, but they're still not out of the woods.
"I think we're mirroring where the country is as a whole, and where corporate America is as a whole," Phelps said. "Fortunately for us, this thawing of the economy is dovetailing pretty well with some exciting changes that are happening at the track."
AP Auto Racing Writer Jenna Fryer contributed to this report.
Last updated: 12:58 pm Thursday, December 13, 2012