There is an old adage that sports are recession proof. Whether or not that is true is a big topic of debate in sports business right now. What is sure though is as the economic and financial sectors have spiraled downward in the last several weeks people are sure to tighten their budgets. With that, discretionary spending will almost certainly decrease.
NASCAR up to now has been largely unaffected by the economic downturn. While there are sponsors leaving the sport at the end of the season, there is no mass exodus, and in fact this season has seen increased spending by some existing companies. Likewise ticket sales have not been as battered as they could be.
The only sponsors slated to leave the sport this season are Navy, AAA, and Texaco/Havoline. Certainly lighter than in years past. Last year, for instance, saw the exit of Ameriquest, Burger King, GM Goodwrench, Dominos, GMAC, Garnier and Levi’s. Another 6 left the sport in the year before that. In that same time period though, over 20 new sponsors entered the sport.
Last month Sports Business Journal did an article about the struggle small teams are having with sponsors. They used Richard Childress Racing and Bill Davis Racing as examples of two organizations on either end of the spectrum. As you’ll recall Caterpillar left BDR, who they had been with for many seasons, for RCR. This phenomenon is occurring all over sports as sponsors are reevaluating the effectiveness of their multi-million dollar deals. Sometimes it is worth it to pay a little more to be with a different organization in order to gain better exposure. Obviously this is true in NASCAR.
One area that has seen decreases is event ticket sales. There were some fluxuations throughout the summer as gas woes forced consumers to re-think vacations. As the economy has further gotten worse the affect is becoming evident on Sunday. To find evidence of this one need only look as far as the broadcast from Talladega this past weekend. As the camera panned the front stretch there were obvious holes low in the grandstands. The back stretch was even worse. Track officials said attendance figures were down from the spring.
In an effort to help boost ticket sales and make going to races more affordable for a family, Lowes Motor Speedway has created the ‘Circle K Family 4-Pack.’ The package comes with four tickets, drinks and hot dogs for $159. This package not only gets people to buy more tickets, but wraps it all up in a sponsorship deal that benefits all parties involved.
Depending on who you are listening to, this economic downturn can be expected to continue through the at least the first quarter of next year. Some analysts are saying it could go longer. This unfortunately means tough decisions for fans who are accustomed to attending multiple races every year.
The long-term affect this will have on NASCAR and sports as a whole is yet to be seen. Whatever the case for my sake and for your sake, here is hoping the adage weathers the storm and proves true.
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on Oct 8th, 2008 at 4:19 am
Clearly there is cause for concern and I wouldn’t approach it lightly.
The question is how deep are the sponsors pockets and what is their business philosophy. Shifting demographics and bang for the buck will determine the short term future of Nascar sponsorships I do believe.
Slightly off topic (ok, maybe more than that) is my growing concern (given the state of the world) of the massive amounts of non-renewable resources the sport goes through each weekend…and I’m not even a tree hugger.
on Oct 8th, 2008 at 12:32 pm
Is it really a matter of sponsors ditching the sport, or are they simply not getting enough return on their investment? Look at Burger King and MWR, it would have been insane for BK to keep sponsoring a car that was not even making races.
The military sponsorships stick in my craw as well. It’s out tax dollars sponsoring the cars, I think that money could be better spent elsewhere.
It seems to me nowadays a driver such as Paul Menard that has sponsorship willing to back him no matter what can go just about anywhere. Let’s face it, if Paul’s dad didn’t write out big sponsorship checks would he even be racing in the cup series? I really doubt it.
on Oct 8th, 2008 at 2:33 pm
It appears that around 30 Cup teams will be fully sponsored in 2009, with another dozen teams appearing to have partial-season deals. Therefore, Cup looks reasonably healthy.
However, the team sponsorships in the Nationwide Series look pretty shaky for 2009, especially if NASCAR insists on forcing the “new car” on the teams. Rumor has it that, if they have to run the new car, a full season NNS (competitive) team sponsorship could break the $10M barrier. Meanwhile, the “bang for the buck” in NNS is questionable, with TV ratings and fan race attendance on the decline.
The near-term future for the Truck Series looks grim, too, with the loss of Craftsman and Dodge.
on Oct 8th, 2008 at 9:45 pm
The economy has already hit me. I just allowed my 3-year subscription to NASCAR Scene to lapse. I am also considering not renewing my 2-year DirecTV Hot Pass subscription to lapse next season as well. The length of the season and the season of Kyle Busch has taken its toll on me.
Left Coast Kenny
Alameda, California