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 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.
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