The Frontstretch: Dollars and Sense: Ganassi Racing and the "Value" of Creating "Value" by Tony Lumbis -- Friday September 24, 2010

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When the checkered flag flew ending the Air Guard 400 at Richmond, the 2010 Chase field was set and there was not an Earnhardt Ganassi Racing driver to be found in the top 12. Jamie McMurray and Juan Pablo Montoya finished 14th and 16th in the “regular season” standings, respectively. However, the last thing this season can be considered is a failure for Chip Ganassi and his organization. Both his drivers won races, with McMurray taking what many consider to be NASCAR’s two most prestigious events; the Daytona 500 and the Brickyard 400.

The success doesn’t stop there, however. Dario Franchitti, who drives for Ganassi in the IZOD Indy Car Series was victorious in the Indianapolis 500 in May, which helped give his owner the first ever “trifecta” (Daytona 500, Indy 500 and Brickyard 400). As if that weren’t enough, Team Ganassi also took home the 2010 GRAND AM Rolex Sports Car – Daytona Prototype championship with drivers Scott Pruett and Memo Rojas while setting a record with nine victories.

Achieving success in one racing series takes hours of hard work and preparation. Replicating that success in three divisions in the same year can only be achieved by a first class organization that recognizes opportunities in any environment. Steve Lauletta, president of Chip Ganassi Racing and Earnhardt Ganassi Racing explains that the achievements of this race team are possible because of the owner’s management style and the organization’s abilities to build synergy between the units.

Racing has become so advanced that it has evolved from a sport into an industry. Gone are the days where drivers and mechanics could still race competitively at the nation’s highest level on the side while holding down other jobs. To be on top of the game in today’s day and age, one must eat, sleep and breathe racing. That is exactly what this organization has in Chip Ganassi. “Racing is all he does” said Lauletta, referring to his boss. “He doesn’t own car dealerships or other companies. He thinks about racing 24 hours a day, 7 days week, 365 days a year. If he’s not at one of our facilities, he’s going to be at one of the race tracks.”

A continuous presence alone is no enough to warrant the kind of success Ganassi has enjoyed, but rather it is the quality of time that is put in to the organization. “Everybody in our company is looking to do one of two things; win races and championships and deliver value to our sponsors” explained Lauletta. “It’s about finding people who want to focus on those type of things like Chip does.”

Finding those type of people who fit the culture of the team is one thing, keeping them is another and apparently for Ganassi, having them want to come back is an entirely different category as well. Lauletta said creating an environment where people want to come to work starts at the top. “It goes back to Chip again. He has the relationship with the drivers that make them want to drive for him. Montoya left for F1 and came back. Jamie left for another team and came back. Dario came to our team on the NASCAR side, and when it didn’t work out, moved to our Indy program where he’s won a championship and the Indy 500.”

While Ganassi has a keen eye for talent, putting the right people in the right places is only half the battle. Even the most talented drivers can’t run competitively in sub-par equipment and having fast race cars comes at a very steep price. In recent years, sponsorship dollars have become more essential to a team’s success due to increasingly sophisticated technology, and at the same time, harder to come by because of the economy. For Ganassi and his management team, more is better as they use all three of their teams as a point of differentiation over other teams when they pitch to sponsors in a very crowded market.

While Jamie McMurray’s triumph in the Brickyard 400 was a boon for BASS Pro Shops and CGR’s NASCAR team, the entire Ganassi organization was able to enjoy and benefit from the victory.

Lauletta states that the key to their selling strategy is using a “one team” approach. “If you’re a partner with us on the NASCAR side like Bass Pro Shops, and the Indy Car team wins the Indy 500, we want you to feel as much a part of that victory as when we won the Brickyard 400. It also cast a wider net for our partners. For example, we can do something for them in Utah, where our GRAND-AM team races but not NASCAR.”

Such an advantage has never been as evident as was the case with one of Ganassi’s rivals, Penske Racing and its new 2011 sponsor Shell Pennzoil. The oil company announced earlier this season that it was leaving RCR and then championship points leader Kevin Harvick for Penske to take advantage of the opportunities both in and out of NASCAR that Roger Penske could provide them. It is those very reasons why Lauletta and his team are always sure to look beyond sponsorship with just one team when pitching to a potential partner. “After we talk about motorsports, we talk about our team, Chip Ganassi Racing, Target Chip Ganassi Racing, Earnhardt Ganassi Racing and what all those opportunities mean to a potential partner. When you become a partner of ours, your become a partner of everything.”

Today, team marketers are placed in the difficult position of trying to extract millions of dollars from companies that are downsizing and watching every penny in the process. To successfully build a partnership, teams must be able to provide the value sponsors need for them to write a check for the amount of money it takes to keep the cars competitive during a race weekend. By building a racing empire, Ganassi puts his team in a great position to do just that.

“You’ve got to be aggressive and our approach is what we can provide on and off the track, it’s not about price” explained Lauletta. “We try to avoid the conversations involving how cheap of a price can I get for putting the logo on the car. Our positioning allows us to offer more and keep the integrity from a price aspect.”

Such positioning allows the team to weather the rough spots and continue to deliver value to its sponsors when the race results are not ideal. For example, even though Montoya has a win at Watkins Glen this year, the No. 42 team is well off the pace of its 2009 run that was good enough to give the Colombian his first ever Chase birth. Lauletta referenced the mid-year results of brand visibility by driver to explain this point. “Montoya is ninth on that list even though he is much lower in the points. That means he is ninth in terms of delivering value to his sponsors such as Target and TUMS. That helps because it shows that we’re doing all the right things from a PR standpoint and with our activation programs to get their brand up front.” Lauletta realizes that in the sport of racing, nothing is a guarantee and you have to adequately prepare for it. “You could be on top of the world one year and struggle the next. So you need to work out how to balance those goals both on and off the track.”

There are a lot of moving parts that go into running a multifaceted race car team such as the one overseen by Ganassi. To keep all those pieces in order, teams now rely on executives with marketing and business backgrounds to run their programs, such as Lauletta, who spent 11 years as director of sports marketing for the Miller Brewing Company. “I’ve worked with properties such as the Dallas Cowboys, the Chicago White Sox and the L.A. Lakers and now I do the same things from the other side. If I’m not successful understanding their business and then applying the knowledge that we have on the racing side to develop the program that helps them succeed, then it’s going to be a short lived relationship.”

Top level teams in all forms of racing need to work just as hard off the track as they do on it in order to be successful. Winning races and championships are no longer enough to persuade a sponsor to fork over the big bucks needed to achieve that success. Owners are challenged with hiring the right people who share their vision and have the skill set to implement it while creating value for sponsors that extend beyond a logo on the hood or wing of a car.

Chip Ganassi has accomplished both of those things by putting the likes of Montoya, McMurray, Franchitti and Pruett behind the wheel and experienced executives like Lauletta in the front office. He has developed three completely different race teams that compete in various markets and appeal to a diverse group of fans. Yet all presented as one team, his organization is giving potential sponsors a multitude of opportunities under one marketing agreement. While racing in America has endured its challenges over the past decade and the economy has been on a wild roller coaster ride, one thing is for certain and that is Chip Ganassi has positioned his teams to not only so survive but thrive through it all.

Friday on the Frontstretch:
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Down For The Count: Fading Dreams Of A NASCAR Independent
The Blessing Won’t Stop Until The Chase Is Gone
Dialing It In: Who And What To Watch At The Monster Mile
Driven To The Past: Being Blessed

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farmer
09/24/2010 12:51 AM
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How much did ‘ole Chip pay for this commercial?

Rufus
09/24/2010 07:51 AM
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Farmer, would you have made the same comment if this article had been about The Felon Rick Hendrick instead of Chip Ganassi? I doubt it!

Jacob
09/24/2010 09:28 AM
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Since when did winning races across different disciplines become a trifecta? Are there actually competitions tracking this? Isn’t Chip Ganassi the ONLY car owner capable of winning this fabricated honor?

I correctly bet on the Superbowl, Kentucky Derby, and NBA Finals, can I have a shout out on MY trifecta as well?

I wish I had something not sarcastic to say about this article, but I will admit that I stopped reading it the second I realized this was nothing more than a stroking of Chip’s ego.

I was hoping for some deep and probing questions: “Chip, why have your cars and drivers been so SLOW in becoming serious contenders?”, or; “Chip, why can’t Juan seem to run consistently?” How about, “Chip, do the Dodges really suck that badly?”, maybe; “Chip, do you wish you hadn’t bought Felix Sabates’ shamefully non-competitive team, and bought into a top team from the start?” NOPE, none of that. Just, “YAY, Chip, you are the most awesomest car owner ever! Tell me how you got all those racing smartitudes.”

1,000,000% DRIVEL, you should be ashamed to turn in such a sloppy article

Tony L. - FS
09/24/2010 12:52 PM
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Jacob – It looks like you completely missed the point to this article. “Dollars and Sense” is a piece that debuted this past summer which focuses on the business aspects of racing. It is to appeal to those who want to learn more about what goes on in the front offices of race teams. It just so happens that Chip Ganassi and company have done a very good job running not one but three solid race teams across three different series. They also have managed to maintain one of the longer marketing relationships in motorsports with Target. Those items alone make this a relevant topic for Dollars and Sense.

Furthermore, one of the main storylines in 2010 was Shell Pennzoil leaving the No. 29 team, right in the middle of a very successful run for Roger Penske because of the several business opportunities that The Captain can provide and RCR could not. Those type of models will become more relevant in today’s economy where sponsors are looking for much more than a decal on the hood. This is another reason why Chip’s method of business is one that is deserving of further analysis.

As to the questions you have presented, I hope that my explanation of the point of this article has helped you to understand why they are both irrelevant and inappropriate for a piece such as this. Furthermore, please remember that if there are topics you do want us to cover, there are more constructive and productive ways of bringing them to our attention. We have a “Contact Us” e-mail, fan forums, Facebook and Matt Taliaferro’s “Fanning the Flames” article where he answers reader’s e-mails directly. Please consider those methods the next time you have an opinion on what we should be covering. It will get you much further than a rant about your betting habits. Thanks!

Rephil
09/24/2010 01:39 PM
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Hey Jacob, stick to betting on the other crap sports you like. Ganassi, from downsizing to buying out Sabates then to merging with Earnhardt hasn’t seen enough turnaround? Sticking with nascar and finding a couple of good-very good drivers shows something about him-dies it not? Congrats on the trifecta I wanna see someone else try it and still have the class Chip has through all the nonsense over the last few years.

Jacob
09/24/2010 03:35 PM
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@ Tony: Thank you kindly, for that explanation. Now my question has to be, “Where are the probing and informative questions?

If the purpose of this article is about what goes on behind the scenes of the front office in a major racing operation, where are the examples of that? This article (I have now read the entire thing), reads like you took the Chip Ganassi: A Franchise You Can Believe In pamphlet and fleshed it out to 1000 words.

All of the questions I posed in my first post are even MORE relevant in light of your explanation. Although maybe not as bluntly stated. “Chip, what are some of the difficulties that you didn’t foresee when you brought a world-class open wheel driver into NA$CAR?” “Chip, what were the behind the scenes issues that were involved in bringing Felix Sabates’ stuggling Cup teams up to speed?” “Chip, Penske is the last powerhouse team to run a Dodge. Their performance increased significantly when Dodge pulled out of the sport. Do you think that Dodge’s engineering division supported NA$CAR adequately?”

So the cheerleader tone of the article is still doing absolutely no justice for the topic that you wish to cover. You start out with the idea that running a race team isn’t a part time job anymore. True enough, it hasn’t been since the mid ’80s. Not exactly news. Then you go on to their 2010 accomplishments, that offers no insights into the successful running of a race team. From there it’s on to the Ganassi marketing plan of one team in 3 or 4 divisions, and there is very little substance. Just a commercial for somebody looking to invest anywhere from a few thousand to several million dollars.

In the end, I know nothing more about the operations of a front office in racing, than I did before I read your article. What was the purpose of the article again? Oh yeah, to educate me about the intricacies of running a race team. Job NOT done.

Jacob
09/24/2010 03:47 PM
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@ Rephil: I never said that Ganassi’s operations don’t deserve to be lauded as successful. I am saying, “ask the difficult questions.” For some reason, journalists today seem to think that grilling an interwiewee is a crime. Why?

I have been a fan of Ganassi’s IndyCar teams since long before the split. I am dying to hear the reason why Chip had so much trouble finding speed in stock cars. Am I the only one? If an article is about “The value of creating value“ shouldn’t at least a part of the article be devoted to the DIFFICULTIES of creating value in a struggling racing operation? Apparently not!!! It’s just supposed to celebrate the fact that he made it, and not examine the work that it took.

That’s idiotic!!!

laxbro
09/25/2010 04:23 PM
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it seemed to me the point of the article was more to talk about his over arching owner formula of having three successful smaller teams in three different series was a better plan to get sponsers and be successful instead of one all or nothing big team like hendrick (who is having trouble finding sponsership for Gordon). And the quotes were from Lauletta, they weren’t interviewing Ganassi.

I do admit that those questions would be great and I would love to see an article that discusses those with Ganassi himself.