NASCAR 101: Why is NASCAR Struggling to Keep Sponsors?

Lowe’s leaving NASCAR came as a big surprise to many NASCAR fans. The brand has been associated with one of the greatest drivers of all-time, seven-time Monster Energy NASCAR Cup Series Champion Jimmie Johnson.

The brand association was a synonymous as Richard Petty with STP and Dale Earnhardt with GM Goodwrench. But it seems to be a growing trend in NASCAR that the big-time sponsors are pulling out of the sport. Why would that be? Are the companies struggling?

Not entirely. Lowe’s has been a consistent top-60 company on the Fortune 500 list since 2004, with an increase to 40th in 2017. Lowe’s has also seen the benefits of acquiring Canadian retailer Return of Net Associates (RONA) in the past year. This move has helped Lowe’s make great strides in Canada. And with the rapid change in retail experience of the past few years, Lowe’s is no exception.

It appears that Lowe’s, as well as many other past sponsors who have moved on from NASCAR, are looking to adjust to the times, leaving NASCAR in the rear-view mirror.

Lowe’s’ main competitor, The Home Depot, left NASCAR after the 2014 season. Since the home improvement company joined NASCAR in the late 1990s, sponsoring two-time MENCS champion Tony Stewart, it rose from 50th to as high as 13th from 2003-2005 on the Fortune 500 list.

In the years since, The Home Depot dropped to 35th, and the high price of upwards of $20 million to sponsor a top-tier NASCAR team like Joe Gibbs Racing.

NASCAR may have fallen down the list of priorities for its advertising dollars, leading to The Home Depot pulling out of the sport. The extra money saved from sponsoring NASCAR allowed them to purchase Interline Brands in 2015, according to Fortune.

The transition allowed them to create more commercial exposure in hospitality and healthcare, a market that has a higher spending size than that of the average NASCAR fan. As a result, The Home Depot saw a boost in sales growth by 5.6 percent in same store sales, and a year record of sales and net earnings in 2017. The home-improvement chain has risen back up to 23rd on the Fortune 500 list.

Then, we have Target, another company that saw a decline on the Fortune 500 list during its points of sponsorship with NASCAR. The store brand pulled out of NASCAR following the 2017 season, after sponsoring Chip Ganassi Racing since the 2002 season. Target deals with the highly competitive market of consumer faced companies that deals with high employment necessities. But that doesn’t mean they are less willing to spend the money for sport-sponsorship.

According to USA today, a big reason why Target left NASCAR and IndyCar was to pursue a major sponsorship with Minnesota United, a Major League Soccer team, while becoming a corporate sponsor for the league. With soccer being the biggest sport in the world, and U.S. interest increasing, it seems as if Target saw more value in soccer.

Reasons could include the brand exposure to younger fans, who are quicker to pick up a copy of FIFA and are less interested in cars. NASCAR believes that promoting young hot-shot drivers will help raise younger, new fan interest in the sport.

With that being said, Target, which sponsored Kyle Larson, a driver with extremely high potential and media coverage and had one of the highest valued sponsorship deals in NASCAR, totaling about $111 million. The company did not see that price being worth the increased promotion and brand exposure from Larson’s media coverage, and pulled out of the sport.

Dollar General decided to leave NASCAR despite being attached to Matt Kenseth, who at the time of the announcement, was a championship contender in 2016. Similar to Target, the reason the company left could be due in part to the large price of sponsorship in NASCAR, according to Sporting News.

National Guard spent $32 million to sponsor Dale Earnhardt Jr. It’s hard to believe that Dollar General was paying a signifigantly less number to sponsor one of the sport’s top teams. Dollar General is not at all struggling either, they have seen a solid rise up the Fortune 500 list since 2008, increasing from 274th all the way up to 128th on the list in 2017.

It seems that this “largest small box retail” chain could have seen NASCAR’s high viewership through the mid 2000s as a great way to promote their brand. However, with the 2010s seeing a steady decrease in ratings, Dollar General may have seen it as a sign to use their growing revenue elsewhere. “Our strategy to reallocate our future marketing assets into new programs is strictly a business decision to align our priorities to better serve our customer in this rapidly changing retail environment,” the company said in a statement given to ESPN.

Current primary sponsor of the Cup Series, Monster Energy, seems to be treading lightly with the extension decision deadline approaching (a deadline that has been extended twice already) to keep the naming rights to the Cup Series in 2019 and 2020, according to Sports Business Daily.

The beverage company has its hands in a couple of auto racing baskets. The Monster Energy Supercross series has seen a 50 percent increase in the 18-34 demographic as of April 2017, according to Power Sports Business. With a combination of a simpler sponsorship activation negotiation with Supercross, as well as the complicated nature of activation negotiation in NASCAR between the tracks, teams, and media partners, Monster seems to be taking extra care in making the right decision as to how to spend their advertisement dollars.

While the negotiation extensions seem ominous, there does appear to still be interest from Monster to stay with NASCAR. If there were little interest, then both sides would have left the negotiation table by this point.

Former primary sponsor of the Cup Series, Sprint, has seen a decrease in stock price recently, according to Fortune. The wireless phone company ended its NASCAR relationship following the 2016 season. A publicized interest in merging with T-Mobile could have played a role in the business decision to leave NASCAR. After that transaction failed in November 2017, a change in CFO has caused the stock price to drop. This current situation for Sprint, as well as the current landscape of NASCAR sponsorship, does seem to make a revitalized association with NASCAR out of the question.

Another problem that NASCAR is facing with sponsorship is the associations of competing companies. It was highly publicized that Subway left Daniel Suarez and NASCAR as a whole in 2017, because of a NASCAR on NBC broadcast where the Joe Gibbs Racing driver helped promote Dunkin Donuts, a company that was a deemed as a Subway competitor.

With the landscape of sponsorship in NASCAR, teams will work with as many big name sponsors as they can for the ad revenue. Subway did not want to move forward knowing that they would have to associate with competitors.

Farmers Insurance is another small example. The Insurance company increased sponsorship throughout the 2010s with former Hendrick Motorsports driver Kasey Kahne. The deal with Rick Hendrick’s MENCS team was the sponsors only deal within NASCAR. Farmers Insurance, while not the biggest name in homeowners insurance, did briefly appear on the Fortune 500 list in 2015, ranking 264th.

Speculation by Sport Business Daily indicates Farmers left NASCAR because of discomfort with sponsoring a team that also sponsors its competitor Nationwide. This factor could have lead their interest in pursuing other avenues of brand exposure. A company that still has some ground to make up behind the Nationwide’s of the world, look to pursue avenues where they are the sole insurance sponsor.

With NASCAR sponsorship becoming more of a problem for the sport it is safe to assume that the issue does not fall on the sponsors themselves, but with the sport of NASCAR as a whole. The economy seems to be performing well, and these sponsors are doing well enough in the eyes of Fortune. Thus leads the question why has sponsorship in NASCAR become a problem?

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kb

I dunno, if memory serves wasn’t the decision from TARGET to drop NASCAR came around the time when the last Presidential Administration and apparently TARGET felt it was OK for men claiming they “felt” like women to invade women’s restrooms? Did the PC idiots at Target, not think of that financial impact. And they did face a huge $$$$$$ impact (which is still going on from what I have seen), which in turn impacted (IMO) a NASCAR team. They no longer support a NASCAR TEAM, after so many years! Sad.

janice

target also had a huge data breach a few years ago that cost the company shoppers once their identities were stolen. home depot has also had a similar problem.

kb

Correct Janice. Forgot about that. Target imo piled it on for a sane consumer..they broke em’! And they are paying.

Russ

Bottom line is simply that companies can find better uses for their money elsewhere. Consequently when you see the blurb announcing that the Acme Racing Team has sponsorship its from a company few have ever heard of.
But its where we are. The “sport” and this includes nascar as well as the teams is pricing themselves out of business with sponsors.

TheNASCARJeff

This really is not about racing anymore… it is about money, and lots of it too. Its about how much you can get, how much you can spend, how much you can make and how much you can get your fans to throw at some shame “foundation” so the drivers can have a tax shelters and keep as much of it as possible.

I blame one car owner for this and he is about to lose a sponsor because it now cost to much to compete in this sport. The owner in question came in and after almost failing started another team with Tim Richmond, then another team with Darrel Waltrip. Then down the line he had four teams as well as did Jack Roush. So to compete with these two mega owners the team count went up as well as the price to go “racing.”

So I go back to my original statement, this is not about racing anymore, it is about money. Which is to bad because in the 80’s and early 90’s before all these mega teams happened the racing was pretty good.

Chris

I agree Jeff. Back when Roush and Hendrick started their mega-teams there was a article in the “Winston Cup Scene” as to how these teams would affect the future of the sport with most of the articles participants stating that it would be great for the sport. I emailed the writer of the article that I disagreed with the overall assessment as these large teams (just like large corporations) would drive out the smaller teams (small businesses) which is pretty much what happened over time. With NASCAR just seeing dollar signs they didn’t care too much about the smaller teams at that time although in my opinion the smaller teams are what made NASCAR in the first place.

Then to make matters worse the mega-teams started getting into the Busch series which at that point had a roster of their own drivers that liked racing in the Busch series (Randy LaJoie for one). At that point Cup drivers racing in the Busch series weren’t like it is today. The Cup drivers that did race in the Busch series drove for a Busch team, not a Cup satellite team in the Xfinity series like it is now with Cup pit crews and all that.

In my opinion the move to large teams back in 98′ – 99′ is one of the contributing factors as to why NASCAR is in dire straits now. Keep in mind that with Brian France at the helm there are a lot of contributing factors at this point.

Echo

How about the king Petty holding a bottle of whiskey for sale at the petty family foundation. One lady tried to say Richard has his own foundation but he doesn’t. Try to find it, it’s melted into the family foundation. This family foundation business is really catching on and a very smart move for many reasons. Taxes for sure plus asking for donations for your own family. The king selling whiskey, he really sold his soul.

Bill B

If the cost of sponsoring a car had decreased proportionately to the ratings drop each year (for the last decade) there wouldn’t be a problem because the value would still be there. Unfortunately ratings and attendance are down a high percentage over the last 10 years and the cost of sponsorship has remained static. Something has to give.
It should be real interesting to see what the next TV contract looks like.

Mike

Random thoughts:

-Seems as if bzf, team owners, et al have forgotten that the return on investment (in terms of $ for tv exposure; people with xyz corp merchandise tied to a driver; and outright sales of product) has to be significantly greater than the amount being invested to justify such a high dollar campaign.

-Aforementioned have forgotten that good cars + good tracks + regular guys being themselves = good racing. Good racing = butts in the stands and butts in front of the tv. All of which would make an exec at xyz corp take the high dollar risk in the first place.

Mary

The racing has become B-O-R-I-N-G. A car will get out front and “set sail” as the announcers like to say. Way too much aero and not much close racing. It’s gotten so I record races then FF through most of it. I’ll listen to driver interviews during and after the race. There’s better things to do on Saturday and Sunday afternoons.

Echo

NASCAR attendance is dropping. NASCAR tv ratings continue to decline YOY. And Fox continues to only target up front cars in Cup. In Xfinity races all the field is shown and talked about. The world is tired of DW so they are dropping out. Why would a sponsor pay big bucks for any car running out of the top ten consistently when their logo and car are seldom mentioned or seen on tv. Answer, they won’t and it’s showing they won’t. I bet the field continues to drop from 36 cars as the year rolls on. Next 34, then 32…..
NASCAR could talk to Fox about covering the field but they won’t. Sponsors will continue elsewhere for more bang for the buck.

TheNASCARJeff

Oh DW has no idea how these cars of today race and is way Way out of his element, the sport passed him by when he was abusing the “Champions Provisional” to make races which was in the late 1990’s.

If you watch the pre-race show with Myers, Gordon and DW see how out of place plust Jeff Gordon carries the interviews. DW is there to make folksy comments and refer to when he was driving which I am sure no fan who came into the sport after 2000 knows about or cares.

Also DW agrees with whatever is popular because he has no idea of what is actually going on and proof of this is with Danica Patrick. She was popular so he kept talking her up and when he realized her performance started to effect her popularity he stopped, now he is high on Kyle Larson.

FOX needs to stop this “Boogity” sh*t, it makes the sport look like a bunch of dumbass rednecks. I am sure if FOX got rid of DW and focused on racing in the pack ratings would go up. Jeff Gordon has to go to since he has a conflict of interest because he is an owner at Hendrick Motorsports but that is a different column all together.

Echo

DW wants Bubba to be his next Danica. But that’s hard to do when bubba hasn’t been able to finish any of the last 3 races on the lead lap.
Watch Sunday as Mikey makes a beeline straight to bubba s car. DW will try to mention bubba bubba bubba early this week, before he gets a lap down.

Bill B

Actually, if Bubba continues to finish a lap down then he IS the next Danica.

Russ

While performance wise I agree that he and RPM are the new Danica, the reaction by some is Danica like as well. Anybody that doesn’t appear to fit the mold will receive the same treatment.

Echo

Kaboom home run. Mikey ran to bubba and friends and nobody else. Told y’all

Al Torney

How in the world could you write this article and totally ignore one of the most important aspects of sponsoring anything in NASCAR? Attendence and tv ratings have been on a downward spiral since Brian France took the helm of the ship. Why would i pay the same amount of money to sponsor a race team today to race in front of half of the fans they did five years ago? It’s called bang for the buck. And NASCAR just plain doesn’t have it anymore. Who wants to jump on a sinking ship? The first four races this year’s saw tv ratings lower then last year. Not good. It’s high time NASCAR started looking inside instead of blaming outside reasons for the decline. When Winston came on board it started a period of unparalleled growth. Nearly all rule changes had to do with safety. The sport was not broken. Then someone decided that the sport needed to be fixed. It needed to be micro-managed.. The excitement of the race had to be created. The list of foul ups by the NASCAR leadership has gotten so big over the last ten years a volume could be written about it. And it continues to grow. Just like now. Approving a car to race and then saying it was illegal three days after the race and allowing the finish to remain is ludicrous. I could go on and on but the officials at NASCAR obviously do not pay any attention to what the fans have to say in these blogs. Otherwise they would think twice before making some of their decisions. And the people who take the time to offer opinions to these articles are the ones who care most about the sport.
You know what a good race is to a fan is? His driver laps the field and leads every lap. You know what pisses a fan off? His driver leads the entire race and a fake debris caution occurs at the end and causes his driver to lose a race to a driver that never led a lap. Think about it.

Lynne

A “good race” to a fan is NOT his driver lapping the field. A good race is competitive racing with multiple lead changes, differing pit strategies, trading a little paint, and having it come down to the wire, that’s exciting!

Bill B

I agree with you Al. A fan does want unadulterated competition. And if that there is a driver who showed up with a car than can lap the field then that’s the way is should be. Would I want it to happen more than once or twice a season, no, but if the only way to keep that from happening is to throw fake cautions (or have built cautions with stages) then the price is too high. The chase was originally my biggest gripe but the wave around rule has replaced that as my number 1 (although I still hate the chase). Nothing is worse than seeing a car lap all but 8 cars and then have multiple cautions towards the end of a race and, all of the sudden, there are 30 cars back on the lead lap. It cheapens the competition and makes the whole race a joke. It also robs those top 8 cars of a guaranteed top 10 finish.
The last race I remember where the field was almost lapped at the end of the race was the spring race at Dover in 1999. Bobby Labonte won and Jeff Gordon was the only other car on the lead lap when the race ended. There were 4 cautions that day.

Pete

I have to agree with most of these posts. Brian France has always had a dream to be a big time sports guy. And now with the races being follow the leader and Nascar fining teams for the stupidest stuff, no wonder fans AND sponsors are fleeing. No body likes dull racing and having so many rules. Just let these guys run what they brung and make racing like racing should be. There is just too much BS. Yeh you need structure, but sponsors want there cars on the track. Not being held back with some dumb rules infraction and fine. PLEASE give us back RACING and not a car show in circles.

Upstate9fan

The fad of NASCAR wore off with the Great Recession. In turn, the ratings and attendance declined and the sponsorship declined. The cost of running a top team has not. The big teams still have hundreds of employees and small armies of engineers. Their initial reaction was to piece together multiple sponsorship deals to cover a season. Now that is becoming increasingly difficult. Unless NASCAR wants to scrap the “independent contractor” model for teams, I don’t see how the sanctioning body will control costs. The RTA is going to need to have a “come to Jesus” meeting with this members or this will continue. NASCAR needs to focus solely on improving the product. At some point they need to introduce a new generation race car that is built with low-downforce from the ground up to reduce “areo-push”. Track owners need to step up and do more than improve “fan amenities” at tracks. They need to start reconfiguring cookie-cutters to be more competitive and unique. I give SMI credit, they are starting to do this with the repaves at Texas and Kentucky, and using the Roval at Charlotte. ISC should bulldoze Chicago when its time to repave and rebuild it as a 1 mile Rockingham clone.

Bill B

The fad might have worn off with the Great Recession, but the Chase and COT soured the faithful. A double wammy.

Dave

I think if someone started an AUTO RACING ASSOCIATION where they raced CARs you could buy off a lot – just cars dealers had in STOCK, it would have NATIONAL audience FOR it.

Ozark_Lee

There is plenty of blame here. NASCAR had its zenith when it had a rebel, outlaw, image. Brian obviously doesn’t like to get made fun of at the high society parties so what do we have, “The Green Initiative”, suspending drivers if their ex girlfriend gripes, etc. All P.C. all the time.

The sponsors themselves should also shoulder some of the blame. If a driver does anything the least bit controversial the sponsors threaten to leave. The result is that you have a bunch of boring drivers that are afraid to say or do anything. All P.C. all the time.

Then we get to the TV coverage with half year splits, DW, and dopes like Rutledge Wood. Mike Joy is a consummate professional who knows when to shut up and let the action speak for itself. The pit reporters do a great job but everything goes downhill from there. Rick Allen does a good job for NBC and Burton is great – he would be even better if they let him say what he really thinks. Maybe Jr will be great but I have my doubts. I like the guy but stringing together a coherent sentence isn’t his strong suit.

Jeff Johnston

They turned there back on the core fan making them feel like they should be ashamed of there Southern Heritage with all this political correctness crap and what do you expect? I’m not ashamed and old school fans are sick n tired of being ridiculed and treated like trash so good bye Nascar and Brian France. Most blue collar fans don’t put up with that bullshit and r smarter then they think. Nascar screwed themselves and there’s no turning back.

Kurt Smith

Brian France owns this sport’s decline 100%. The Chase being implemented over the loud objections of fans was the biggest infraction, but a whole slew of attempts to “create excitement” have tried and failed to reach everyone outside NASCAR’s existing audience. Every year Brian spouts his efforts to add more excitement to the sport. If the CEO doesn’t think the sport is exciting, what are fans supposed to think?

Of course sponsors are pulling out. Of course attendance is declining. You can only ignore the people who brought you to the dance for so long. NASCAR repeatedly disregarded the longtime fan in favor of the ADD fan, who has already moved on because that’s what ADD people do.

And as a result, that longtime fan…that 50+ demographic that NASCAR keeps insisting won’t grow the sport…is now shunning the sport and finding something else to do with their kids and grandkids…who would have eventually become big fans of the sport in the past. And it can all be laid at the feet of a CEO who believes that his marketing genius could better sell the sport than the product on the track.

NASCAR needs to remove Brian France by any means necessary at this point. Pay him $100 million, whatever, however much it costs will be worth it. Get an “Under New Management” sign on the door and the ratings and attendance will start to pick up again.

Russ

I wonder is nascar/isc not approaching the same point that a lot of mature companies reach. The long established “customers” are leaving and wont be back. Partly because they don’t have the same interests, partly because of mistakes by management, and also inevitably because Father Time takes his toll year by year. And they are struggling trying to find the magic answer to bring fresh faces thru the turnstiles. Whether they are successful in the long term is the question. (although I along with many long time fans wont be around to see the answer)

But two things I must say. First I can’t believe that a true race fan doesn’t watch or attend races because of the way the points championship is determined. A race is a singular event, I suspect few people attend to see how point standings are at the end of it. That said it is something to talk about, argue over, whatever. And whether you love, or hate the “Playoffs”I think nascar has achieved their goal. It gives people something to talk about during the week.
Then there is the statement “that 50+ demographic that NASCAR keeps insisting won’t grow the sport…”. Actually they are correct, that group of people wont grow the sport, at best they can keep it level. Their children are grown and if they arent already race fans they never will be. And that group itself isn’t growing, its shrinking as I mentioned above.
So what is the answer? Durned if I know, and I don’t think anyone else does either. If BZF was removed it would have to be by his family. And since they haven’t we can suspect that they are OK with the direction hes taking them. But it is fun to speculate on that eventuality. Maybe the real answer is the obvious one, that less and less people find it interesting enough to invest their time and money on their weekends.

rg72

Yes, a true race fan may not solely make their based on how a champion is determined. However, the way a champion is being determined now has created a lot of consequences.

Let’s say your driver wins early in the season. Between then and the 26th race, the team may pick spots where they treat the race as the NASCAR equivalent of resting the starters. Don’t get me wrong the driver is trying to win each week but the team’s race preparation may differ depending on whether the track (one similar to it) holds a playoff race.

In addition, races near the cutoff have been dramatically impacted by the Chase. The Bristol night race has been neutered into something that is a shell of what it used to be. Too many guys driving around not wanting the stigma of ruining the playoff hopes of someone 18th in the standings. Same with Richmond in its old spot on the schedule. Case in point the year a drunk guy climbing a fence was the most action at the “Action” track.

This leads into the last ten races. Too many times the race winner is an afterthought compared a battle for 16th place. Last year, one of the Xfinity drivers had to justify racing a championship contender hard late in the race at Homestead. The next day, the opposite happened when a driver with by far the best car backed off going for the win so that Brian’s Game 7 moment wasn’t ruined.

Russ

rg72 I really don’t totally disagree with your points but I ask, if you are correct who is to blame? Is it the much maligned (with some justification I might add) BZF? Or is it really the teams and their top employee, the driver? After all the cars seldom break these days, so why act as you say? After all half the field won’t make the “playoffs” and I dont see them acting markedly different.

Bobby

I agree with absolutely everything above especially two things…

Brian France f@@@ed NASCAR up… He’s tweaking here and screaming anywhere…. that gold there in them hills ( actually his families pockets ) made him search for it all over the country… let the boys be boys became let the PC police control our minds…

And I can’t quite put my finger on it but when did Racing become Show?… oh I remember now when every single car became the same Beast with no competition, no trading paint, and very little drama…

Hell the last great race I saw was in 2003 at Darlington with Ricky Craven and Kurt Busch putting each other into the wall, bashing each other and passing each otjer to the finish line…

Echo

Kaboom, home run. Mikey ran straight to bubba and friends and nobody else. Told y’all. Now listen for DW and bubba this bubba that.

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