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field Helio Castroneves and Ryan Briscoe’s cars since Philip Morris tobacco money exited at the end of 2010 (livery was withdrawn at the end of 2009).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.

First batch of ‘Dinner with Racers’ season three drops today

Photo courtesy Dinner with Racers/Continental Tire
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In what’s quickly becoming an offseason tradition, the “Dinner with Racers” podcast launches its newest season today with season three – and the level of guests are staggering.

Co-hosts Ryan Eversley and Sean Heckman have ridden once again on a newly wrapped Acura MDX, on Continental Tires (the Continental Cross Contact LX Sport), in a 13,000 mile journey over 34 days to record 29 episodes.

As the co-hosts so accurately put it in their release via Continental, there’s “a remarkable guest list that includes everything from Formula 1 World Champions, to NASCAR Monster Energy Cup champions, Indy 500 champions, and Ryan Lewis.”

The teaser video is below and if you’ve ever heard any episodes from the first two seasons, you’ll know there’s a lot of inside jokes and memories brought back via this video.

Here’s the full list of this season’s guests. The first batch comes out today and the second in December.

Releasing Now:
Dario Franchitti
Dr. Jerry Punch
Scott Dixon
Doug Boles
Robin Miller
Dorsey Schroeder
Ryan Lewis
Craig Hampson
Brian Till
Mario Andretti
Parker Kligerman
Scott Tucker

Coming in December:

Jeremy Shaw
Alwin Springer
Cole Pearn
Paul Tracy
Lyn St. James
Willy T. Ribbs
Alex Bowman
Ryan Blaney
Tony Stewart
Chocolate Myers
Robby Gordon
Jeremy Mayfield
Shane Hmiel
Tommy Byrne
Doug Boles
Brian Redman
Josef Newgarden