The Frontstretch: The Rise and Fall of UPS in NASCAR-And Who They Took Down With Them by Amy Henderson -- Friday October 28, 2011

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The Rise and Fall of UPS in NASCAR-And Who They Took Down With Them

Holding A Pretty Wheel · Amy Henderson · Friday October 28, 2011

 

Be careful what you wish for.

In 2001, NASCAR was on an upswing. The sport enjoyed tremendous growth in the late 1990s, and before the 2001 season began, signs of its vibrant health were everywhere. The stands were full (at one point, Bristol motor Speedway had a waiting list for tickets so long that some estimates said it would be a generation before some people saw a seat, the race fields were competitive, full of entries from a wide variety of race teams, and sponsors were lining up to sponsor racecars as they saw the massive potential for return on investment. A look at the finishing order from the Daytona 500 shows a list of fully-sponsored cars from a variety of businesses: from General Motors to Dodge, from Budweiser and Coors to Miller, from K-Mart to Lowe’s and from Kodak to Kodiak to Pfizer. Everyone wanted a piece of the action back then.

Among the sponsors in that Daytona 500 was a company that was known to everybody but new to NASCAR. The numbers were not released, but reports at the time suggested that the company had paid the highest premium ever to put their name on the hood of a racecar. The sponsorship included an aggressive advertising campaign with a series of television and print advertisements highlighting the racecar driver and the company’s most iconic symbol. You probably remember it: everyone wanted Dale Jarrett to drive the Big Brown Truck.

When UPS came onto the NASCAR scene a decade ago, they brought with them more money than most teams had ever dreamed of. They wanted a name, and they got one in Dale Jarrett and Robert Yates Racing, a team that had won the championship in 1999 and was regarded among the best in the game, a true title contender. And UPS went all in. Money buys speed, they say, and in 2001 UPS believed every word. Only a top team would do. The company had negotiated with the Tyler Jet team a year earlier to sponsor driver Johnny Benson, but that didn’t pan out. In February of 2000, Dale Jarrett passed Tyler Jet driver Johnny Benson in the closing laps of the Daytona 500 for the win, and the rest, as the cliché goes, was history. A team like Tyler Jet wasn’t good enough for the shipping giant, and they turned their interest to Jarrett’s No. 88 team.

Despite an astronomical price tag, success was fleeting for both Dale Jarrett and UPS during their lengthy partnership.

Despite bringing that reported highest-paying sponsorship to Yates, despite the popularity of the commercials and the huge amount of airtime those dollars bought the success UPS hoped for didn’t follow. A 30-second commercial slot for a race broadcast cost roughly a quarter of a million dollars (more for the Daytona 500), so a sponsor looks at a race like one long, extended commercial. If 30 seconds of airtime was worth $250,000, and it cost them $500,000 to sponsor the car for that race, they would need a minute of airtime to break even. But running up front would ensure much more airtime; if the logo was shown on air for five minutes over the course of the broadcast, it was worth nearly two million dollars of advertising to that sponsor. Sponsors and teams lived and died by those numbers (and still do, though running up front isn’t the guarantee of sponsor success it once was, nor is running up front the guarantee of a driver finding a sponsor. Times have changed.). UPS bought in-all in.

And as it goes in racing, if one team had $18,000,000 in sponsor dollars, other teams felt they would have to have that to stay competitive, too. When their contracts were renewed or new sponsors signed, the ante went up with each and every contract. A fair estimate of the inflation is that it probably costs twice as much to sponsor a competitive team than it did a dozen years ago. A $12 million sponsor at the turn of the millennium meant a competitive, winning team, a championship contender if there was enough luck to go with the money. $12 million today no longer buys wins and championship dreams. Mixed with the same amount of luck, it could mean an occasional top 10 finish, but in general, it means a mid-pack team.

But in 2001, UPS was sitting pretty. Jarrett won three of the first eight races and took two poles as well. It looked as though UPS was on the fast track to the championship they seemed to take for granted would come. But it never did come. Jarrett led the points off and on and took one more win at Loudon that July. After that, the finishes were feast or famine: following his fourth win of 2001, Jarrett managed three top-5 finishes, with eight finishes of 25th or worse in that same span. UPS saw their title hopes slip away as Jarrett faded to fifth and Jeff Gordon won his fourth title.

Still, Jarrett’s fifth-place points finish was enough to convince UPS that their NASCAR investment was worth it. The championships would come in time, they figured. But they never did. Jarrett’s fifth-place run would be his best points finish for the rest of his career. Still, UPS figured if they threw enough money into the right team, the wins and the championship would come. Along the way, the company scooped up the chance to be the Official Express Delivery Company of NASCAR, giving them exclusive rights to make deliveries to race teams in the garage during a race weekend. And all the while, the cost of sponsorship went up.

While it would be a mistake to pin the outrageous explosion in sponsorship costs solely on UPS, it would be equally remiss to exonerate them from any blame. Coming into the sport with the biggest check of the day certainly played a role in driving the costs into the stratosphere-and that rocket-ship ride, bought at the height of a boom time for the sport and the country, has eliminated many teams from the sport outright and forced others into unsavory positions like starting and parking to pay the bills or running partial schedules, which are still better than staying home. Of the 23 teams in the 2001 Daytona 500, just eight still had cars in that race ten years later. Fifteen race teams, including Robert Yates Racing, have ceased to exist in that time frame, some bought out, most driven out by the skyrocketing cost of the sport and lack of sponsorship.

For UPS, the money continued to flow, but the success never happened. The company moved on to Michael Waltrip Racing with Jarrett in 2007, but the pastures (and the money) were no greener. Jarrett would retire before the 2008 season without bringing them the coveted championship. UPS stayed on at MWR with David Reutimann for a year, but it was becoming clear that the wins and the title were getting harder and harder to achieve even as the cost went up.

So in 2009, UPS moved to Roush Fenway Racing and a young driver, David Ragan, who, everyone agreed, showed great promise. Teams and sponsors were shifting to younger drivers consistently in the late 2000s as television broadcast time dropped through the floor for all but a select few teams. Sponsors had to buy a face as well as a name, and the young Ragan represented that shift for UPS. And all the while, the money flowed, and the cost went up. UPS’s original $18,000,000 was no longer top-of-the line. Ragan, though young and enthusiastic and polite, lacked the star power on the racetrack and among fans to make the investment pay off.

On Thursday, UPS announced that they will leave Ragan’s No. 6 team at the end of this season, opting instead to re-up with NASCAR as the Official Express Delivery Company and to take on associate sponsorship with Carl Edwards’ team, still looking for that elusive championship a decade after joining the game. Only it’s a different game now, one that UPS played a major role in changing. And the change has not been for the better.

The No. 6 team, once Jack Roush’s flagship, will likely shut down after Homestead, unless a sponsor can be found in the eleventh hour. If the trend continues, how many of today’s teams will still be around for the Daytona 500 in 2021? The picture isn’t a pretty one; in fact it’s as bleak as the brown UPS paint scheme. UPS has themselves to thank for helping to drive the cost so high that even they can’t afford it, and NASCAR is more than happy to collect their share in exchange for that “Official” title, even if it means that the competition on track suffers.

In 2001, UPS got greedy when they ponied up a huge amount to sponsor the No. 88, abandoning a small team with whom they nearly reached an agreement in their wake (that team wasn’t around for the 2002 Daytona 500). In 2011, NASCAR’s greed is pulling sponsors away from the teams who need them if the on-track product is to remain worth watching to race fans. In the middle, more than 15 race teams have fallen victim to what UPS, NASCAR, and a few other sponsors continue to exacerbate: nobody can afford to play the game. And the game suffers.

At the start of the 2001 season, NASCAR was at an all-time high. Sponsors wanted in, and they were willing to pay more than other sponsors if it meant a competitive racecar. There was money in it for them, because there was television coverage for the entire field that gained enough advertising time to pay for their investments and turn a profit. Everyone wanted to be a part of NASCAR, and the sanctioning body was able to take on the “Officials”-everything from the Official Express Delivery Company to the Official Snack Food and everything in between. Fans were clamoring for tickets as races sold out. Teams were funded and competitive. Nobody needed a guaranteed starting spot, and nobody had to park early because there wasn’t enough money for tires. Everyone wanted and expected more.

A word of warning to sponsors who put up the most in hopes of beating the best; to team owners who demand more from those sponsors than the next team has; to a sanctioning body that is happy to take sponsors away from the teams that make their final product; to all of us who thought the ride would never end: be careful what you wish for. Getting it is only the tip of the iceberg, and it can drag you down before you know it, but long after you could have turned back. Be careful what you wish for.

Contact Amy Henderson

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Gordon85Wins
10/28/2011 07:46 AM
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Boy—I was just thinking, what if David Ragan had paired up with Denny Hamlin in the FedEx car at Talladega? Think he might have gotten a message on his radio?

HankZ
10/28/2011 07:52 AM
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“In February of 2000, Dale Jarrett passed driver Johnny Benson…”
Passed? More like punted. DJ hit him three times coming out of turn two with two or three laps to go. Haven’t been a fan of his since.

Jim Ricci
10/28/2011 08:22 AM
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Thank you for having the nerve to print what most knowledgable folks understand is happening to their sport. If the trend of “stealing sponsors DOES NOT STOP the end is near!

autryvilleracefan
10/28/2011 08:47 AM
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Sponsorship in NASCAR is like the real estate bubble – costs have far exceeded the means of even big sponsors to afford. That bubble needs to bust. Costs need to be brought back down. We may see teams rise and fall, but the sport may be better off.

The Mad Man
10/28/2011 08:48 AM
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NASCAR has been poaching sponsor from teams for years and will continue to do so at the detriment of the teams.

And with the exclusivity deal in place with a lot of NASCAR’s own sponsors, it’s not going to get any easier for teams to find sponsorship. Tire companies, gasoline producers, and a lot of telecommunications & cell phone companies are banned because of the exclusivity deal leaving numerous teams without sponsorship.

You have to wonder how many active brain cells there are in the Ivory Towers of Daytona.

AncientRacer
10/28/2011 09:20 AM
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@autryvilleracefan has half of it. UPS bought in at the height of the Earnhardt bubble, though they could not have known that any more than real estate speculators knew it with the housing bubble or dot com speculators knew it with the dot com bubble. The only difference with the Earnhardt bubble was that it was tied directly to the fortunes of one man — a fact that became apparent after he died.

The part left out was the deleterious effect of our currrent friend and maximum leader, BZF after he assumed the throne. No good has come from his reign except safety improvements and while these are in all ways good (except for the identical excreeable COT cars where what exists for safety under the skin is all that is good — the rest sucks).

Ed Inman
10/28/2011 09:39 AM
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Man you hit it right on the head. NA$CAR has been takeing sponsors for a long time. I use to buy what ever product suported the sport. But not any more because I know their product has got to be less quality for all their money is going to Na$car. Official Na$car means nothing to me. And to Jayski how long before they get you dude? So far you have been geting away with it man. Money will take you out also.

Sue Rarick
10/28/2011 09:40 AM
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It’s not all that long ago that the big dog in US auto racing was the Indy cars. Then greed took over and it became CART and IRL and that led to the Indy cars on Versus…Now you have NASCAR with the same “we know better than you” mentality and heading down the same path (was Talledega even 1/2 sold out?)

Ed Inman
10/28/2011 10:21 AM
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Amy, this was the best article I have ever read in my 55 years of being a race fan.And from a female, how about that? You must not get to go to the races at all, because you are not like the male reporters. You see they will not say any thing at all bad about Na$car for they will lose their plush reporter seat and all that goe’s with it in the press box. Oh the many ways they get bought out. You go girl buy you a ticket and set with the real people.

Russ
10/28/2011 11:35 AM
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Great article, and right on the money.
But another part in my opinion is that the world has changed. I can have my ad (a racing parts business) on one of the blogs that appears on Jayski for $250.00. That site alone gets well over 100,000 hits. So why should I continue to sponsor a friends race car for $1000.00 per race?

In my opinion, even Nascar is preparing for the future with Nascar Productions and the Casino in Kansas.

But what do I know.

Kevin in SoCal
10/28/2011 12:42 PM
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Ed Inman, Jayski sold out to ESPN a few years ago. It says so right on his site.

AnnieMack
10/28/2011 12:46 PM
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Nascar should not be able to accept “official” sponsorships for anything. Period. They are the sanctioning body and the teams who race should be able to partner with anyone who wants to sponsor them. This crap about only one gasonline company, and one cellphone company, etc. is bull.

This is absolutely a Nascar bubble and it will break and soon. When they allowed multi-car teams, they asked for it. When they started mandating car parts to control the racing on the track, they asked for it. When they started buying up every independent track on the circuit, they asked for it. When they built more seats than the eye could see, they asked for it.

Yep, they asked for it and I will be personnally very gratified when they finally get it. Hopefully someone can pick up the pieces and bring us racing the way it was meant to be.

Good article, Amy, I really enjoyed it.

"Rooster" Cogburn
10/28/2011 01:18 PM
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Amy, This is one of the best NASCAR articles that I have read over the past 60 years of being a race fan. You are an absolute credit to your profession. THANK YOU..!!

ddsbstrb
10/28/2011 03:12 PM
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Amy, this is a most interesting, informative and thought-provoking article!

Thanks for sharing your thoughts with all of us.

Russ
10/28/2011 03:36 PM
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AnnieMack, about the seat issue.
If they make a capital investment to put in seats, I assume they take a deduction for part of the cost.
THEN, after a period they take them out and replace them, or not, wont they get another deduction?
Hmmn.

Mary in Richmond
10/28/2011 08:38 PM
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My gosh I miss those UPS ads with Dale Jarrett.

Matt L
10/28/2011 11:58 PM
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Nice article. Can’t believe the #6 may not be on the track next season.

Andy De
10/29/2011 12:36 AM
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This is an excellent article, informative and well written. However, I think the problem began when STP hooked up with Richard Petty.

Ed Inman
10/29/2011 09:38 AM
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Amy, it is another day and I am still reading your story. Have showed it to every one and read it over and over.Every body loves your write up and agree. I am just worried about you now, you have gone way out of line with this story and told the truth, their is no telling what is going to happen to you. Be carefull it is just not real anymore anyway. The guys have been geting away with these useless stories for a long time and they are all ARE on the take. Call there selvs reporters. YA!

Shayne Flaherty
10/29/2011 11:37 AM
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Unfortunately, a driver’s ability behind the wheel isn’t the first priority in NASCAR anymore. This is what BZF’s marketing scheme has created. Most of the sponsors listen to erroneous facts and figures presented by incompetent dolts that don’t have a clue about actual racing. David Ragan shouldn’t be driving the #6 car in the first place. David is a nice guy, but we’ve got plenty of “nice guys” in the sport now. NASCAR is desperate to change into something that isn’t NASCAR. A pretty face, a black driver, or a GLBT team doesn’t mean squat when the racing sucks on the track.

SHOEMAN
10/29/2011 02:15 PM
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>HankZ: I have been a Johnny Benson fan since before he became the ASA Rookie of the Year in’91. Some of his other accomplishments: ’93 ASA CHAMP,‘94 BUSH Serise Rookie of the Year,‘95 BUSH Champion, ’96 WINSTON CUP Rookie of the Year, 1 win in CUP at Martinsville (02),‘06 CRAFTSMAN TRUCK Champion. And voted Most Popular Driver in the CRAFTSMAN TRUCK Serise ’06,‘07 and ’08. I heard that JB will be back racing trucks next year. I hope so.

COJones
10/29/2011 03:44 PM
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There’s only one place to put your blame, and it is spelled NASCAR and not UPS.
Unless, of course, you’re the “Official Journalist of NASCAR”.
In my opinion, you demean not only UPS but all their drivers.

 

Contact Amy Henderson

Recent articles from Amy Henderson:

Earnhardt Ganassi Racing Announces Partnership with Cessna, Textron
Fans To Decide Format of Sprint Unlimited at Daytona
UNOH and Kentucky Speedway Extend Sponsorship Agreement
Earnhardt Out For Charlotte and Kansas After Talldega Concussion
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Want to know more about Amy or see an archive of all of her articles? Check out her bio page for more information.