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Corporations Still Bailing Out Of NASCAR

An Opinion



August 2, 2009

By Kim Roberson

Kim Roberson
It has been a week of decision-making across multiple fronts in NASCAR…and “either-or” seemed to be the thought-making process used while making those decisions.

The economy has been rough over the last year, not just for us fans, but for many of the companies that take part in NASCAR. We’re not just talking the car manufacturers, but sponsors and track operators as well. And the recession is leading to many executives to take a look at their bottom line and think “I’m either going to have to chose this or that to spend my money on.”

It was announced on Monday that last weekend was the final “Allstate 400 at the Brickyard”. Allstate, who tells you that you are in good hands when you use them for your car, boat, or home, decided the palms of their hands weren’t broad enough to carry the cost of naming rights for a race at one of the most famed tracks in the country, if not the world.

"The contract was up and we're always reviewing our properties and how they perform," explained Allstate spokesman Raleigh Floyd. "We enjoyed working with them, and the fans are probably the most loyal in sports, but our other sponsorships were just performing a little better." This was their either-or scenario: Keep sponsoring NASCAR, or use the money and put it towards sponsoring the Olympics. "Resources that are freed up from this decision could very well go toward that." Floyd said.

Also this week, Richmond International Speedway announced it was not going to host an IRL race in 2010.

“After reviewing (prioritization of promotional spends, track resources and efforts, along with fan and industry feedback) and due to increases in cost, including IndyCar Series fees to host an event, we have made the decision, in conjunction with ISC, to not host the IndyCar event at Richmond International Raceway in 2010.” Announced track president Doug Fritz Thursday. “This was a very difficult decision but given all the factors considered, one that we’re confident will help us to continue providing the best entertainment for our guests, while at the same time meet immediate needs to position Richmond for long-term success.”

In this case, it was keep the IndyCar series, or use the money to improve the fan and racing experience on their NASCAR events. In this case, NASCAR won out, and while they will be taking to the track in May and September of 2010, the IRL will be looking elsewhere to race.

On Friday, it was announced that Lowe’s had made their either-or decision. According to a report by Michael Smith with the Sports Business Journal, Lowe’s told Speedway Motorsports Incorporated (SMI) that they would not be renewing the naming rights to Lowe’s Motor Speedway (LMS) for next year. This partnership, which 11 years ago changed the name to LMS from the original “Charlotte Motor Speedway”, was the longest running naming rights deal for a track in NASCAR. The original 10 year deal had Lowe’s paying $3.5 million to have their name on the front of the track, and last year a one year extension was added while the two parties involved worked on hammering out a new contract.

The deal isn’t set in stone, and the powers that be at LMS are still hoping to work things out.

“Both companies have benefited as strategic partners for 11 years and we are finishing a one-year extension.” explained Marcus Smith, president and general manager of Lowe’s Motor Speedway. “Currently, we’re still working on and discussing the components of another extension to continue our relationship. Those components have not been finalized, but the process is moving along and we are confident to have this completed in the near future.”

In this case, the either-or involved “keep the name on a track that sees NASCAR races 3 weekends a year, or on the 48 car, which has won three Championships in the last three years, and is looking for its fourth?” It appears with the way that Jimmie Johnson has been running it was a no-brainer. The Lowe’s contract with Hendrick Motorsports isn’t up until the end of next year, but it is pretty obvious that Rick Hendrick sits in the catbird seat when it comes to striking a deal to have a sponsor on the hood of that particular car. Plus, Smith’s report states that SMI was looking to at least double, if not more, the cost of the naming rights for the track. As a result, it appears that LMS will be reverting to Charlotte Motor Speedway at the end of the season.

Keep in mind; these deals aren’t changing because NASCAR isn’t a great sport. Yes, ratings and attendance are down across the board at tracks, but they are also down across all sports. The problem these companies are facing is that they are running on less money than before, just like the rest of us. While it used to be good business practice to throw money at sports venues and hope to pick up new customers, keeping money and hoping to provide the same level of service to old customers while working on a smaller budget is becoming even more of a priority.

I am sure this isn’t the last sponsor change we’ll be facing before we hit the tracks in 2010. DeWalt, who has sponsored the #17 Ford driven by Matt Kenseth since he joined the Cup series, announced they would not be coming back. DuPont, who has the longest running sponsorship deal in NASCAR with the #24 Chevrolet driven by Jeff Gordon, told HMS they couldn’t afford to sponsor the car full-time next year, and asked to have another sponsor brought on board to lighten their financial load.

It is beginning to look like the most valuable thing to a team these days isn’t necessarily a Championship…but a sponsor to help pay the way to earn a Championship.



You can contact Kim at.. Insider Racing News
You Can Read Other Articles By Kim


The thoughts and ideas expressed by this writer or any other writer on Insider Racing News, are not necessarily the views of the staff and/or management of IRN.

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