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Racing sponsors now at a crossroads of performance, ratings and ethics

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The last several weeks have seen sponsor stories take over from on-track ones as the dominant players in the North American racing news.

NAPA, of course, has made the biggest announcement with its decision to leave Michael Waltrip Racing at the end of the year, in the wake of the controversy at the NASCAR Sprint Cup Series regular season finale at Richmond. 5-Hour Energy, additionally, seems displeased with the action the organization has taken in a statement it has released.

Other sponsors are on the move, which is normal in racing, but noteworthy in their timing after Richmond. Valvoline leaves Roush Fenway Racing for Hendrick Motorsports; Jimmy John’s goes with driver Kevin Harvick from Richard Childress Racing to Stewart-Haas Racing.

Castrol made the jaw-dropping decision earlier this year to leave John Force Racing at the end of 2014 in NHRA after 29 years.

And then there is the report this morning that GoDaddy is re-evaluating its role as a primary sponsor in IndyCar with Michael Andretti’s team, citing low television ratings as the impetus for a potential move out of full-time primary sponsorship there.

It all adds up to a fascinating question: Which part of racing do sponsors prefer most? Is it on-track performance, ethics, or ratings?

To borrow a term from NASCAR President Mike Helton, the “ripple effect” of the last few weeks has changed the corporate game in a way we haven’t seen for quite a while. Sponsors often come-and-go from racing but it’s become increasingly apparent the Richmond saga has made a bigger impact on all forms of motorsport than we might have realized in the immediate aftermath.

If it’s on-track performance you crave, ideally, IndyCar would be the best bang for the buck. It costs substantially less – think in the $4 to 8 million range – for a season-long sponsorship (by comparison to $15 to $20 million in NASCAR). A sponsor can advertise itself at the Indianapolis 500, the largest single-day sporting event in North America, and have the chance to win a variety of different circuits.

That said, the marketing and promotional aspect of the variety apparently does not justify the ROI as it stands now. Roger Penske, for instance, has had to put together a consortium of sponsors to field Helio Castroneves and Ryan Briscoe’s cars since Philip Morris tobacco money exited at the end of 2010 (livery was withdrawn at the end of 2009). Elsewhere around the grid, teams have become increasingly reliant on drivers bringing sponsorship to secure a seat. There’s still plenty of talent on the grid, but the days of fully-funded rides without bringing a dollar are drawing to an end.

NASCAR, meanwhile, can offer better TV ratings on the whole, with the performance aspect secondary. It’s why Danica Patrick, for instance – long seen by this writer and others as a good-but-not-great driving talent who has made most of her career via marketing – can afford to run 25th to 30th place every week, but maintain the GoDaddy support for the awareness and buzz she creates off-track.

Now, though, NASCAR faces an ethics crisis the likes of which it has rarely seen. If NAPA’s departure is the tip of the iceberg in terms of corporate America withdrawing its dollars, it could create another “ripple effect” – to borrow Helton’s words again – where more sponsors depart and hundreds of families see jobs go away. That might be an extreme way of looking at it, but it is certainly possible if sponsors don’t see the value in the tens of millions of dollars invested and the PR too damaging to their brands.

A good take from the Sporting News’ Bob Pockrass, linked here, suggests NASCAR needs to implement a “grand plan” to soothe sponsors and their concerns. Pockrass notes there are elements where NASCAR is already involved in direct communication with sponsors – notably via Chief Marketing Officer Steve Phelps – but that needs to expand in the wake of the Richmond controversy.

As a fan, you want to see sponsors – regardless of series – do the job of activating and creating a connection that spurs you to root for said sponsor and buy more of their product. As a sponsor, you ideally want to be successful in all three aspects of performance, awareness and moral standards.

Depending on the fallout the rest of 2013 as it relates to sponsor movement, we’ll see which of the three takes precedence in the motorsports landscape.

Pirelli nominates soft, medium, hard tires for British GP

xxxx during the Formula One Grand Prix of Great Britain at Silverstone Circuit on July 5, 2015 in Northampton, England.
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July’s British Grand Prix will feature Pirelli’s three hardest compounds – like Spain next weekend – with the tire manufacturer confirming the soft, medium and hard compounds for Silverstone.

The British GP nominations come on the heels of the Austrian GP nominations, where Pirelli will run its ultrasoft, supersoft and soft compounds.

That will tie for the biggest race-to-race tire compound change this season. From Spain to Monaco later this month, there will be the step from the same soft/medium/hard combination to the ultrasoft/supersoft/soft run. The ultrasofts – Pirelli’s new ultra sticky, short-life compound – make their race weekend debut in Monaco.

Arrivabene: Ferrari not giving up on F1 titles in 2016

during final practice ahead of the Formula One Grand Prix of China at Shanghai International Circuit on April 16, 2016 in Shanghai, China.
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Ferrari Formula 1 chief Maurizio Arrivabene is refusing to give up on either the drivers’ or constructors’ championships in 2016 despite the Italian marque’s poor start to the season.

Ferrari entered 2016 hoping to challenge Mercedes for both titles and end its recent run of dominance, only to score just 76 points in the first four races – less than half the total of its rival – and suffer a number of issues on its car.

Nico Rosberg has won all four of the opening races and enjoys a 43-point advantage over the field, with leading Ferrari driver Kimi Raikkonen sitting a further 14 points behind.

However, Arrivabene is refusing to give up on the titles, believing that anything is possible with 17 races still to run.

“If I have to define the championship, we love the fight,” Arrivabene told the official F1 website. “We are looking for big challenges! What has happened is part of the DNA of racing.

“I don’t think things can be explained as bad luck. There are mostly human mistakes behind the story. I prefer to have these kind of problems now instead later in the season.

“But of course we need to make sure that it doesn’t happen again. Concerning the championship: we are not giving up! The team won’t give up and we will put all our energy from now on into the next 17 races!

“There are still 425 points to be taken. So by only winning the next five races everything is wide open again.

“Nothing is lost and we’re not giving up!”

Arrivabene is confident that the recent updates made to the Ferrari power unit will give the team a boost heading into the European leg of the season, starting next weekend in Spain.

“I trust that our performance is much better than what we’ve shown until now,” Arrivabene said.

“The characteristics of the tracks that are coming now, and because of the tokens that we’ve spent, will help us.

“Of course the others are not sleeping or waiting for us, so we have to fight.”

Verstappen: Surprise Red Bull promotion ‘an amazing opportunity’

SOCHI, RUSSIA - APRIL 29:  Max Verstappen of Scuderia Toro Rosso and The Netherlands during practice for the Formula One Grand Prix of Russia at Sochi Autodrom on April 29, 2016 in Sochi, Russia.  (Photo by Peter Fox/Getty Images)
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Max Verstappen called his surprise promotion to a race seat at Red Bull Racing for the Spanish Grand Prix “an amazing opportunity” following the team’s announcement on Thursday.

Verstappen, 18, has made a significant impact on Formula 1 since becoming the youngest driver in the history of the series last year when he made his debut with Toro Rosso.

Following Daniil Kvyat’s calamitous start to last weekend’s Russian Grand Prix, Red Bull took the decision to demote him back to Toro Rosso as of the Spanish Grand Prix.

Verstappen moves up to Red Bull in place of the Russian, marking his first opportunity to race with a top line team in F1.

“The next step in my relatively short career so far is an amazing opportunity,” Verstappen wrote on his official website.

“I really want to thank Red Bull Racing and Dr. Helmut Marko for the confidence they have in me. I’ll have the chance to learn a lot from the top team that is Red Bull Racing.

“I’m also looking forward to work with an experienced and proven team mate like Daniel Ricciardo.

“I can’t thank all the people at Scuderia Toro Rosso enough for all their hard work. Everyone back at the factory in Faenza, and Franz Tost in particular, have made an amazing contribution to get me this far in my career. We’ve had an amazing time together.

“Together with Red Bull Racing we’ll do everything to prepare me as best as possible for my first laps in the RB12 Tag Heuer, next week in Barcelona. I cannot wait for that special moment to happen.”

Verstappen will fly to Red Bull’s factory in Milton Keynes, England later this week for a seat fitting before completing some simulator work and getting to know the team ahead of his debut in Spain on May 15.

Vote in our poll below whether you love or hate the move.

Verstappen promoted to Red Bull, Kvyat back at Toro Rosso from Spanish GP

SOCHI, RUSSIA - MAY 01:  Max Verstappen of Netherlands and Scuderia Toro Rosso talks with Red Bull Racing Team Consultant Dr Helmut Marko in the Paddock ahead of the Formula One Grand Prix of Russia at Sochi Autodrom on May 1, 2016 in Sochi, Russia.  (Photo by Clive Mason/Getty Images)
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Red Bull has announced that Max Verstappen will take the place of Daniil Kvyat at its senior Formula 1 team for the Spanish Grand Prix.

Verstappen, 18, swaps seats with Kvyat, who returns to Toro Rosso – Red Bull’s junior team – having made his debut with the Italian outfit back in 2014.

Kvyat came under fire following the Russian Grand Prix after hitting Ferrari’s Sebastian Vettel twice on the first lap and ruining teammate Daniel Ricciardo’s race.

Red Bull team principal Christian Horner and team advisor Helmut Marko had face-to-face talks with Kvyat this week, before taking the decision to demote him to Toro Rosso.

“Red Bull Racing will have a new driver line-up from the Spanish Grand Prix,” a statement from Red Bull read.

“Max Verstappen will be joining the team to drive alongside Daniel Ricciardo. Daniil Kvyat will continue to drive for Red Bull and will re-join sister team Scuderia Toro Rosso.”

Horner was pleased to give Verstappen the opportunity to race for the senior Red Bull team after an impressive rookie season in 2015.

“Max has proven to be an outstanding young talent,” Horner said.

“His performance at Toro Rosso has been impressive so far and we are pleased to give him the opportunity to drive for Red Bull Racing.

“We are in the unique position to have all four drivers across Red Bull Racing and Toro Rosso under long term contracts with Red Bull, so we have the flexibility to move them between the two teams.

“Dany will be able to continue his development at Toro Rosso, in a team that he is familiar with, giving him the chance to regain his form and show his potential.”

The immediate response to the news was that of shock, given that barring his errors in Russia, Kvyat has enjoyed a strong stint with Red Bull.

The Russian beat the highly-rated Ricciardo across their first year together as teammates in 2015, and charged to third place in China just three weeks ago for his second podium finish in F1.

Red Bull has been known to make cut-throat decisions in the past though, with the likes of Jean-Eric Vergne, Jaime Alguersuari, Sebastien Buemi and Sebastien Bourdais all being dropped from the energy drinks giant’s F1 programme in the past.

Bourdais was the last driver to be replaced mid-season in the RBR/STR setup, dropping the Champ Car legend after the 2009 German Grand Prix.

Verstappen now has the chance to prove his mettle and make the best of a top-line seat, but at just 18 years old, he still has plenty to learn.

As for Kvyat? It is difficult to see where his F1 career goes from here, at least with Red Bull. The sport is enjoying a boom in Russia and he is the face of it, yet being sent back to the ‘training ground’ of Red Bull is nothing short of humiliating.

Time will tell whether this was a canny move by Red Bull or a snap decision all parties will come to regret.

Vote in our poll below whether you love or hate the move.