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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.

Takuma Sato formally confirmed with Andretti Autosport

HOUSTON, TX - JUNE 27: Takuma Sato of Japan, driver of the #14 ABC Supply A.J. Foyt Racing Dallara Honda sits in his car during practice for the Verizon IndyCar Series Shell and Pennzoil Grand Prix Of Houston at NRG Park on June 27, 2014 in Houston, Texas (Photo by Chris Trotman/Getty Images)
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Takuma Sato will join Andretti Autosport for the 2017 Verizon IndyCar Series season, and complete the team’s four-car full-season lineup.

The 39-year-old Japanese driver will begin his eighth season in IndyCar next year, in arguably his deepest opportunity yet driving the team’s No. 26 Honda.

“I am extremely excited that we were able to work out a deal with Michael and Andretti Autosport,” Sato said in a release. “With Honda an integral part of Andretti Autosport, it seemed like a great fit. The team has proven year after year that they are ultracompetitive on all types of circuits.

“Particularly the speed that team has shown in recent years at the Indy 500 were just incredible. I am also very impressed on how aggressively they have addressed their needs for 2017, and am really looking forward to working with my new environment and can’t wait to get started.”

Sato spent his first two seasons with the KVSH Racing team (then called KV Racing Technology), a year at Rahal Letterman Lanigan Racing and the last four at A.J. Foyt Enterprises.

Sato delivered Foyt its first win in more than a decade when he won at Long Beach, 2013, and also has scored five poles in his career. While he’s yet to finish better than 13th in points, Sato has long been one of the more enjoyable drivers to watch in the series for his aggressive, “no attack, no chance” style.

Sato joins the returning trio of Ryan Hunter-Reay, Marco Andretti and Alexander Rossi within the team.

Team principal Michael Andretti said Sato’s results over his IndyCar career to date really haven’t done his talent, ability or development work justice.

“We’re excited to have Takuma; we think he’ll surprise and turn some heads,” Andretti told NBC Sports. “I think he’ll be in a situation that should help him a lot.

“With three good teammates, I think he is personally excited. This will be his best chance to get results since being in IndyCar.

“To me I really believe he’s one of the fastest guys in the paddock. When it comes to qualifying… it’ll help us in that area. It’ll be good in that feedback. I’m real happy with having him on board. He’s such a great kid, he won’t upset the chemistry. It’s a positive all the way around.”

Andretti also noted how key it was to have all four full-time entries confirmed this early in the offseason. The Rossi car with Andretti-Herta Autosport was only finalized in late February last year.

“I don’t think it’s ever been done since I’ve owned the team,” Andretti admitted. “Where we have all four cars this early, it helps us in terms of putting it together. It’s not a last-minute thing. That makes it a better effort.”

Garrett Mothershead, who worked with the departed Carlos Munoz at Andretti last year, will be Sato’s race engineer. Munoz now replaces Sato at Foyt next season.

Andretti said he expects to see commercial partnerships for Rossi and Sato’s cars announced in mid-January.

Nico Rosberg’s F1 retirement came as no surprise to Lewis Hamilton

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Lewis Hamilton says he was not surprised by Mercedes teammate and Formula 1 World Champion Nico Rosberg’s retirement announcement on Friday.

Hamilton lost out to Rosberg in the battle for the 2016 drivers’ championship, finishing five points shy of a fourth title in Abu Dhabi last weekend.

Rosberg announced on Friday ahead of the FIA prize giving in Vienna that he would be retiring from F1 with immediate effect, sending shockwaves through the sport.

However, Hamilton said that the news came as little surprise to him, given he has worked with Rosberg throughout his career and knows the German well.

“The sport will miss him but I wish him all the best,” Hamilton said at the press conference in Vienna, as quoted by F1i.

“I’m sure it was a surprise to many people. I’m probably one of the many people that it was not a surprise for but that’s because I’ve known him for a long, long time. But this is motor racing.

“This is the first time he’s won in 18 years, hence why it was not a surprise that he decided to stop. But also he’s got a family to focus on and probably wants to have more children. Formula 1 takes so much of your time.”

Rosberg’s decision brings an end to his fierce rivalry with Hamilton during their four years together as Mercedes teammates.

The two enjoyed a number of clashes both on- and off-track, but Hamilton said that he would miss not having Rosberg to go up against.

“We started karting when we were 13 and we would always talk about being champions,” Hamilton said.

“When I joined this team Nico was there which was something we spoke about when we were kids.

“It’s going to be very, very strange and for sure it will be sad to not have him in the team next year.”

Verstappen, Mercedes joke about vacant seat after Rosberg’s retirement

ABU DHABI, UNITED ARAB EMIRATES - NOVEMBER 27: Max Verstappen of the Netherlands driving the (33) Red Bull Racing Red Bull-TAG Heuer RB12 TAG Heuer leads Nico Rosberg of Germany driving the (6) Mercedes AMG Petronas F1 Team Mercedes F1 WO7 Mercedes PU106C Hybrid turbo on track  during the Abu Dhabi Formula One Grand Prix at Yas Marina Circuit on November 27, 2016 in Abu Dhabi, United Arab Emirates.  (Photo by Clive Mason/Getty Images)
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In the wake of Nico Rosberg’s shock retirement announcement on Friday in Vienna, nearly every Formula 1 driver has been named as a possible replacement for the World Champion at Mercedes in 2017.

Fernando Alonso? Sebastian Vettel? Pascal Wehrlein? Esteban Ocon? Or how about Max Verstappen?

Ah, Verstappen. The young upstart who has turned the F1 world on its head since making his debut as a fresh-faced 17-year-old in 2015. Fast-forward to the present day, and he is the youngest ever grand prix winner (and still very fresh-faced).

While a move to Mercedes is, in reality, out of the question for 2017 given the nature of his Red Bull contract and status as one of F1’s hottest prospects, Verstappen was more than happy to engage in some banter on Twitter with the German manufacturer.

Verstappen notably had the chance to join Mercedes’ junior program back in 2014, but decided on a move to Red Bull instead after it promised him an F1 drive with Toro Rosso for 2015.

Stunned racing world reacts to Rosberg’s retirement on social media

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It is fair to say that nobody saw this coming.

Nico Rosberg’s decision to retire from Formula 1 just six days after clinching his maiden world championship has already sent shockwaves through the racing world.

To see a professional athlete bow out in such fashion is rare, particularly when they’re nowhere near retirement age. Alas, it seems that one world title was enough for Nico.

Here’s a round-up of how the racing world has reacted to Rosberg’s retirement on Twitter.