NASCAR Sponsors Scaling Back Investment

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NASCAR is a sport known for its blazing speed, but these days sponsors seem to be jumping ship nearly as fast. (AP)
NASCAR is a sport known for its blazing speed, but these days sponsors seem to be jumping ship nearly as fast. (AP)

By Scott Graf

After the last race of the season, Tony Stewart held up the 2011 Sprint Cup and thanked his many sponsors, including Office Depot, Mobil 1, Chevrolet, Tornadoes, Quicken Loans, GoDaddy, Ritz, Oreos and Coca-Cola.

Without all those sponsors, Stewart wouldn’t have enough money to race. Yet even Stewart - the series champion - needed more time than usual to secure sponsors for next year. NASCAR's Jill Gregory - whose job it is to help teams find sponsors - admitted her work is difficult these days.

"Given the economic times, companies are just having to be very prudent and take some time to really figure out what they want to do with their marketing dollars," Gregory said.

Gregory pointed out that no sport is more closely tied to the success of its sponsors than NASCAR. After all, teams use those dollars to directly fund most of their operations. But as the economy has suffered and companies have slashed marketing budgets, fewer companies are willing, or able, to sponsor a top level team. Teams used to get $25 million or even $30 million from a primary sponsor.  Now, it's more like $18 or 20 million.

"The sport did get expensive. Costs rose," said John Driscoll, of motorsports marketing company JMI. "I would liken it to the housing market where the cost of housing rose to the point where there's been an adjustment."

Driscoll said companies that signed big contracts before the recession hit are in some cases leaving NASCAR now that those deals are up.

NASCAR has implemented several cost-saving rules, such as the elimination of on-track testing, to help teams get by with less. Teams are taking their own steps - like reducing worker pay and benefits. They're also eliminating jobs altogether. Roush Fenway Racing, home of Carl Edwards and Matt Kenseth, laid off workers right after the season ended in November. The team won't give specifics, but there are reports the layoffs totaled 150.

"It's an unbelievably tough situation," said Steve Newmark, president at Roush Fenway. "I think it's something that you have to do with care and sensitivity because every one of these people put their blood, sweat and tears into it and we have a great appreciation for that."

It's hard to say just how many NASCAR workers have been laid off.  Teams rarely disclose the numbers of jobs they cut. NASCAR doesn't keep track of - or at least make public - those records, either. Talk to a higher-up in NASCAR and they'll tell you this: Yes, there are sponsorship issues. But for the first time in a few years, NASCAR has some momentum. Those TV ratings were up. It will take time for sponsorship to catch up, but there is reason to be optimistic.

But it's also clear NASCAR is a shrinking industry.

"I've never seen so many people out of work and so many teams shut down  in one year, until this year, in my entire career," said Scott Ward.

Four years ago, Ward was making over $100,000 a year as a tire changer for Chip Ganassi Racing. Ever since, his career has been a cycle of contract work and layoff notices. He makes half of what he used to. Now, he's collecting unemployment. At least four Sprint Cup-level teams that raced last year, won't in 2012. Numerous teams in the Nationwide and Camping World Truck Series have also folded.  Ward says contraction has made life difficult for many NASCAR workers.

"Maybe all they know how to do is paint a car or be a mechanic," he said. "If you don't know people or aren’t in the right clique, you're not gonna get a job. So how do support your family?"

Ward says morale among workers is terrible. If employees are lucky enough to get called back to work, they might be asked to take a significant pay cut.

So at 34, Ward has had it. He wants to quit the industry and find more stable work - even if it means less money.

And while those way up the NASCAR food chain say it's only a matter of time before more sponsor dollars make their way into the sport, few would be willing to say that Ward and others like him are making a poor career move.

(Scott Graf is a reporter for WFAE in Charlotte.) 

This segment aired on January 7, 2012.


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