Alex Meshkin

It is not possible to predict the road NASCAR will travel by the time we reach the final 2019 checkered flag, but it will be entertaining to speculate.

This decade begins as NASCAR tail spins in the wrong direction it’s a sharp contrast to the beginning of the last decade when NASCAR viewership, attendance and corporate interest were all surging. Today, all of those trends are in reverse, and this decade will truly define whether NASCAR remains as a mainstream sport or becomes another fledgling motorsport series.

I believe the major stories and events that will affect NASCAR in the coming years will have little or nothing to do with on track racing. So let me begin with a few predictions before we take our first green flag of 2010.

Everyone is aware that a severe sponsor recession is hitting the NASCAR industry. But many are blaming the broader economic crisis as opposed to examining the dreadful trends eroding the NASCAR value proposition. NASCAR is facing a steady drop in television viewership, race attendance and overall fan interest, and the costs to operate a Sprint Cup team has almost tripled since 2002. Today, the top three teams – Hendrick Motorsports, Joe Gibbs Racing, and Roush Fenway Racing— are seeking complete season sponsorships between $22 million to $25 million. With the going rate per race anywhere from $500,000 to $750,000 – is there ANYONE who believes there is a ROI for sponsors at these prices? I don’t believe so.

Another alarming business trend, is that now, most sponsors want single-year deals. These days, a six-race package for $3 million qualifies as a “big deal” in Sprint Cup circles. The marquee free agent among sponsors is Ask.com, which spent about $4 million on its team deal with Hall of Fame Racing for the 2009 season and likely won’t spend more than that on the next deal, if indeed, the search engine decides to stay in the sport. Big name sponsors Allstate, DeWalt, Jack Daniel’s and Jim Beam will leave after this year, choosing to save that money or spend it elsewhere.

And of course, we are all aware of the market forces pushing the automakers to reduce their financial exposure to NASCAR – so I will ask the same simple question I have been asking for two years.

Why isn’t NASCAR doing anything to help the teams to ensure the long term viability of the sport?

I think the answer is pretty simple – they don’t feel they need too. And instead, want to continue pocketing the vast majority of the sports’ lucrative television contracts. And why, you may ask, has NASCAR (France Family) been able to dominate teams? I believe it is because NASCAR teams haven’t united into an association or partnership demanding the right changes to the sport. Just look across the pond to Formula 1 – while they face their own unique challenges, they do have a much more fair and logical business model. The teams are part of an association (Formula One Teams Association – FOTA), that collectively negotiates on financial matters and the adoption of rules affecting competition in their sport.

Whereas, when you look at NASCAR, you have a dictatorship run by Brian France, who I believe most will agree has single handedly undone many of the incredible accomplishments of his late father and grandfather. But as a former NASCAR team owner, I know the teams feel powerless. But it the truth be known, NASCAR is nothing without the teams. Now is the time for the teams to stand up and make a stand – the team owners are the only hope to save NASCAR. Teams must unite on common principles:

• Increased competiveness: major changes are required to the Car of Tomorrow to ignite fan interest
• Reduced operating expenses: less personnel at the track and NASCAR needs to follow the lead of Formula 1 and require race engines to be used at more than one event
• Modern technology: embrace fuel injection and alternative fuels/energy sources to make NASCAR an R&D platform for the automakers.
• Greater Revenue Sharing: Demand an equal share of the television revenues split between NASCAR, Race Tracks and Teams.

These 4 basic principles could reduce annual corporate sponsorship prices from $20 million down to $10 million – a marketing budget that could be justified to corporate executives. Plus, these changes would reignite the automakers interest in investing in the sport and most importantly, bring back the on-track excitement that race fans expect.

If teams do not take a united stand, but rather chose instead to continue to run around in circles spinning their wheels – they are facing certain annihilation.

Rumors are running rampant that Danica Patrick is going to jump from IndyCar to NASCAR. Is this a negotiating tactic with Andretti Green Racing and Chip Ganassi Racing or is she seriously considering a move to stock car racing? One must wonder why the poster child of IndyCar Racing would take the risk and make a move to NASCAR, which undisputedly, is crumbling as I speak. I can image NASCAR dangling HUGE financial incentives and prepackage endorsements, but why take the risk?

On the flipside to NASCAR’s continued problems with retaining the support of the automakers, IndyCar Racing is poised for a significant rebound in sponsorship demand and automotive support in the coming years. There is widespread speculation that Volkswagen/Audi, and possibly Toyota, BMW and Mercedes-Benz may join the IndyCar series in 2012. This is the result of IndyCar’s long-term vision and planning to strategically position itself as a “green” marketing platform for the automakers. A few of years ago, a move to NASCAR may have been considered a “step up” – but one most wonder if that still holds true today. Two of the most prolific IndyCar racers in this past decade struggled (and I am being kind) in their attempt to cross over to NASCAR. Dario Franchitti, the 2007 Indy 500 and IndyCar Champion failed miserably in his 2008 NASCAR foray and Sam Hornish continues to struggle. I don’t mean to be disrespectful to Danica – but she couldn’t remotely keep pace with Sam Hornish or Dario Franchitti in IndyCar, so I don’t expect her to be any more successful than Dario or Sam in NASCAR (Note: Dario and Danica were teammates 2006-2007). The odds are clearly against her if she makes the move.

My sources indicate that NASCAR, led by Brian France is offering significant guarantees to lure Danica to NASCAR. So if her primary motivation is money – we should expect her to make a debut later this year in preparation for the 2010 NASCAR season. A more intriguing question remains – why is NASCAR focused on attracting one driver, when the entire sport, (namely race teams), are facing financial annihilation? This not only is short sighted, but outrageously blind to the real problems facing the sport.

Many believe Danica is NASCAR’s bandage to stop hemorrhaging sponsors, fans and other commercial interest. I remain skeptical. While I agree she would drive a short term bump in ratings- the fundamentals of NASCAR racing is spiraling out of control – and no amount of estrogen is going to stop the bleeding. NASCAR needs to focus on fixing the business model challenges for teams and improving the COT – so the on-track racing can return to what fans deserve and expect.

Treating NASCAR like an amusement park and adding a new “attraction” may seem like a good idea – but in the end, it will only disguise the fundamental challenges that may devastate the sport that many still love. And Danica, well, she may be just another bump in the road for NASCAR – and at the end of the day, regret her move in the wrong lane.

The Associated Press (AP) has reported Brian France, CEO of NASCAR, has directed his management to work with teams in developing new business models that can help them withstand the current economic crisis. As we are all aware, NASCAR teams rely on corporate sponsorship to fund the majority of their operating budgets, which is substantially different than any other major sport. Whereas, NFL, NBA, NHL and MLB teams participate in higher levels of revenue sharing as a result of a franchise business model.

“We’re trying to do more with less. That’s the difficult part of this economy,” France said following his state-of-the-sport address to media at NASCAR’s Research and Development Center. Just back in December, NASCAR issued a statement stating that NASCAR heading into 2009 was “strong”.

This outlook is a rather quick reversal, but perhaps the gravity of the current economic climate and mass sponsor deflections is making an impact.

Doing more with less? Working with teams to develop new business models? I apologize, but in my humble opinion, it’s a little too late for a half-baked plan. But even worse and what is frustrating is NASCAR’s continued unwillingness to restructure the distribution of television revenues to rightly supplement teams’ operating budgets.

What NASCAR needs is a business model which more closely replicates Formula 1 or a franchise structure like every other major sport. As a fervent advocate for team rights, I have repeatedly voiced the need to develop a franchise model that would enable teams to weather macroeconomic difficulties; and subsequently, become less cyclical and more stable during recessions and economic turmoil. The time for leadership, sacrifice and decisive action on behalf of the France Family is NOW. But to the contrary, the Brian France plan is nothing more than reinforcing their past strategies of working with teams to help locate and secure sponsors. While his intentions may be honorable; they are nevertheless naïve when considering there is a global economic recession; and specifically, when the NASCAR industry is in a depression of historic proportions. At this moment, I don’t believe there is a single corporation that is considering spending $15-$30 million required to fund a primary sponsorship program for a NASCAR Sprint Cup team. So I am rather befuddled with Brian France’s simplistic strategy to save the sport, which unfortunately in its current form will contribute to the sport’s certain collapse.

Is it possible that the past success of NASCAR is blinding Brian France from seeing the light? Reflecting back to 60 years ago to the earlier days of NASCAR, Bill France Sr. (Brian France’s grandfather) executed a flawless business plan to convince the then stock car racers and event promoters to become part of his newly formed organization and sanctioning body (NASCAR), whereby he gained complete control over stock car racing. The foundation of NASCAR’s “business model” problems ironically stem from the grand success of Bill Sr. and his unilateral control of a racing empire, including control over the majority of racing venues (International Speedway Corp) and the stock car sanctioning body. Over the past half-century, teams competing in NASCAR relied almost exclusively on corporate sponsors to fund their operations – enabling the France Family to retain a majority of the sports revenues and amass a large network of racing venues, and establishing NASCAR Holdings, an incredibly profitable wholly owned private company.

Those times have dramatically changed and for too long, NASCAR teams have tolerated the exploitation and willingly bore the total burden to exclusively fund their operations through advertising and sponsorship. The rapid increases in costs of racing and teams’ operating expenses of the past 5 years, combined with the minimal increase in sponsorship value – have brought the teams’ very existence into question.

One must wonder, how long can the France Family continue their racing monopoly? Historically, race teams have avoided conflict with the France Family; and the only entities to challenge the France Family’s monopoly have been race track owners, such as Burton Smith and Speedway Motorsports. Even through the France Family has weathered many possible anti-trust challenges with settling most disputes outside the judicial system; I believe the current financial crisis and advertising recession is about to test the resolve of the France Family and their prehistoric business model.

In a stark contrast to the past decade, NASCAR is falsely promoting an image of growth and strength by stating that 15 new organizations have applied for licensing to compete in the Sprint Cup Series. What they fail to mention and what many novices are unaware – almost all of those “new” teams are merely opportunistic racers attempting to profit by a method called: “start and park”, which allows them to collect sizable race winnings (in comparison to their expenses) with a team and car specifically built to just run one or two laps, enabling them to collect profits – all without adding ANY value to the sport. What a sad day it is for the diehard NASCAR fan.

As many of you know, I was the founder of Bang Racing which was NASCAR’s most successful first year team in history. At the young age of 23, I built and operated this highly successful team and we made history finishing 2nd in our first race (Daytona) and winning our 13th race (Michigan International Speedway), which was the first win for Toyota in NASCAR history. While all this is now historical facts found in the archives of NASCAR history, what is typically not understood is that even as a very competitive team, our business model was fundamentally flawed because generating a profit was nearly impossible. Simply put; the cost of running a NASCAR team far exceeds its sponsorship/advertising revenue potential and without significant “business model” changes by the France Family, teams are doomed for failure.

NASCAR must be the only sport where the most profitable teams are the biggest losers’ and where finishing dead-last or not even attempting to win makes more money than being a top competitor. Something is dreadfully wrong when the most competitive teams with great on track performance cannot survive because the costs of running their teams far exceed their revenue potential. The problem is clear: without teams receiving a larger share of the sports’ multi-billion dollar television contracts – there will be no strategy that can make viable a long-term solution for the sport – that is the simple reality.

However, being the “optimist”, I hope Brian France and will realize quickly that his family has the unilateral ability to deliver the change in business model the teams and sport require to survive.

Sources are telling me that instead of focusing on reinventing themselves, NASCAR is anticipating a future without automotive sponsors. Is this an omission from NASCAR that they lack a value proposition? Regardless of the poor economy or slump in automotive sales – if NASCAR sponsorship has a positive ROI, automakers would not be consider jumping ship. The reality is simply the ROI for the automakers are far below most other mediums and NASCAR may finally be getting the message. But unfortunately, it may be too late for NASCAR to adjust and to keep the financial support of the Big 3 and Toyota, but surely it’s worth a more concerted effort to evolve their business model and objectives to try and retain the majority of their automotive partners.
NASCAR today must be more than just a marketing platform. It needs to become a technical platform and support R&D objectives for the automakers. Evaluating NASCAR in the most cynical viewpoint, one could argue that the archaic technology, i.e. the use of carburetors, instead of fuel injection, is continuing the public persona that the Big 3’s product portfolio is less than innovative. It’s time for NASCAR’s leadership to make the necessary changes in the best interests of their lifeblood – their teams and automakers.

I want to enforce my statements in my post on July 21st:

NASCAR has a real opportunity for leadership – and can provide automotive manufacturers a real marketing platform that demonstrates alternative energy as performance cars – that are viable, affordable and energy efficient – and return NASCAR to its roots as “stock car” racing at its best.

NASCAR is standing at the crossroads, where the wrong decision could be the final nail in the coffin. Their choice may be a future of IROC style racing or one of a balance of innovative technology with the proper cost controls in place to secure the long term stability of all stakeholders. Unfortunately, if NASCAR becomes the next IROC, I am afraid their future will most likely be rather bleak.

Ad Sponsors Peeling Away From NASCAR, Too

Looking to catch a NASCAR wreck? Here’s one: The racing association’s sponsors are pulling out, NASCAR CEO Brian France told a Reuters summit. France insists he’s talking to potential new sponsors, but wouldn’t name names.

NASCAR saw a $150 million gain in sponsorship revenue in 2008, a gain France says won’t be repeated. “The question is, are we going to back up,” he said.

Frustrated over the lackluster excitement of the 2008 NASCAR Sprint Cup Series – I feel I am not alone. The racing was bland, personalities were muffled and there was not a compelling reason to watch most races. I tend to be a traditionalist in my view of the sport and the championship points system – but times have changed; and subsequently, their needs to be a dramatic adjustment to ignite fan interest.

We all agree that NASCAR has a lot of problems. Simply but, this may be an example of the “chicken or the egg” syndrome. The fundamental metric which must improve is fan viewership. While this is not the end all solution – it would significantly improve teams’ ability to attract more corporate sponsors. At the same time, increasing fan viewership alone will not fix the sponsorship depression and teams’ ability to finance their operations. NASCAR needs resurgence – and if fan viewership is a MUST to reverse the current trend to drive more sponsor interest – then HOW do they make it happen?

Unlike any other major American sport – NASCAR rewards consistency over victory. So basically, under the current points system – you could finish second in every race and pretty much be guaranteed the Championship in the Sprint Cup Series. I don’t know about you but I have never celebrated my favorite driver’s runner-up finish. The famous philosopher Ricky Bobby once said, “If you ain’t first, you’re last”. Or, as legendary driver Dale Earnhardt put it, “Second place is just the first loser”. It’s time for NASCAR to incentivize and reward winning! Fans celebrate winning drivers and sponsors reward winning teams – the Championship and monetary system needs to reward “winning” and not “staying out of trouble”.

I’m curious – is there anyone else out there wondering why a driver can win the Sprint Cup Championship without a single race victory? It doesn’t make sense to me! And furthermore 4 of the 12 that qualified for the 2008 Chase for the Cup didn’t even win in the regular season. Sorry guys, while I have the greatest respect for Jeff Gordon and Kevin Harvick – honestly, you didn’t win in the regular season (or the Chase for that matter) – so you shouldn’t have the opportunity to be the Sprint Cup Champion.

So here are the basics of my proposal to increase on-track excitement and create more fan interest:

• You must win a race during the regular season to be a part of the Chase for the Cup and the Chase should be limited to a maximum of 10 drivers.

• The Chase Contenders should have a completely different points system which makes the championship more competitive and puts an emphasis on race victories.

• Redistribute the championship fund year-end bonuses to individual race victories. For example, if you were to take $20M from the year-end points fund and add $550K to each race victory – that would increase the average race winnings for 1st place to about $1 million per race. This would encourage drivers to take risks and forgo their “points racing” mindset which is ruining the sport.

NASCAR’s failure to act and evolve – if continued down this slippery slope – will result in further sponsor deflections, which could cause an irreversible contraction in all aspects of the sport we all love.

Over the past several weeks, I have been inundated with inquiries about a variety of topics that I have discussed about the state of NASCAR and the sponsorship crisis. I feel compelled to address and clarify some of my previous statements and respond to a recurring theme of certain readers’ comments.
Many of the NASCAR faithful have repeatedly stated: “the sky is not falling NASCAR has a larger television audience today than in 2001”. While this may true – it has little to do with the enormous problems facing NASCAR today. The problem is one of economics that simply don’t add up.
As a former team owner, I can speak to the fact that there is an alarming disconnect between the highly profitable NASCAR Corporate; and the costs of operating a team and the corresponding costs to sponsor a team. It is NASCAR’s “disconnect” and perhaps even ignorance to the fact that NASCAR teams are facing a sponsorship depression that is the fundamental problem – and it is this blindness that will ultimately cripple NASCAR if they continue down this same pathway.
On Sunday, Brian France, Chief Executive Officer of NASCAR was asked; Are you certain you’ll have 43 car fields next year?

We’re pretty confident about that. I said before to many of you, you know, we’re also criticized for having too many cars.

I don’t know if he is taking lessons from the former Iraq Information Minister – Baghdad Bob.

But unless he is counting on Dave Marcus and Morgan Sheppard – having 43 competitive cars is extremely unlikely.
Just like the global financial crisis, the problems were not created overnight and may require the governing body to stimulate the NASCAR economy. But NASCAR needs far more sweeping changes than just the teams receiving a larger share of the television revenues. A variety of topics that must be addressed include; dramatic cost savings for the teams, incentives which drive fan interest – larger focus on winning -- less on consistency, and greater shares in revenues so teams can sell sponsorship packages for considerably less -- increasing the value proposition for corporate sponsors.
The basic message which seems to be lost in the entire dialogue over the sponsorship crisis – is not that companies haven’t wanted to become involved in NASCAR marketing – it is just cost prohibitive; too much risk and the ROI is difficult to measure. If we withdraw ourselves from the current economic crisis and rewind the clock to 2007; and if teams could have marketed Sprint Cup primary sponsorships for $10 million – do you think we would have the dramatic sponsor shortage of today? I don’t think so – the problem is primarily the price not the product.
Now I want to be clear – the product needs innovation and a fresh approach to bring die-hards back into the fold and make the sport more interesting to all sports’ enthusiasts. However, Brian France has only focused on the latter; and subsequently, by attempting to reach out to non-core fans he not only failed to grow the fan base, but he alienated many loyalists which has diluted the value proposition for many NASCAR sponsors.

Over the past several months, as the advertising market has become increasingly more challenging, I have written numerous posts about the need for NASCAR and Sprint Cup teams to evolve and innovate to stay competitive in the corporate boardrooms. In my posts NASCAR 2.0 and NASCAR Sponsorship 2.0, I discussed opportunities to generate revenues and exposure through digital media.

My unique perspectives are a result of “one of kind” experiences which are vastly different than any other thought leader in the NASCAR industry: a web 1.0 entrepreneur, NASCAR Team Owner (Bang Racing), and today, an executive in the current social and digital media industry. While there are unlimited opportunities for NASCAR to leverage digital media technologies and corresponding social/digital business models; I have a specific proposal for NASCAR and specifically Paul Brooks, President of NASCAR Media Group.

I know from my personal experiences in working with Paul Brooks at NASCAR, he is one of the most forward thinking executives at NASCAR and I hope he embraces the following proposal. For those unfamiliar with NASCAR’s approach to partnerships and licensing; NASCAR has historically required substantial licensing fees to pursue any type of business relationship, which in all fairness has generated significant profits in the past decade. However, moving forward in the dynamic digital economy and facing the challenges to continue to grow their audience and fan base, NASCAR must now look to tap into emerging technologies and unlock entrepreneurial ingenuity to develop innovative business models to increase fan exposure and create new revenue sources.

The first initiative I believe NASCAR should pursue is to open up access to the racing data acquired through the on-board computer/black box. Just to be clear, I am not suggesting that NASCAR should allow live telemetry for the racing teams, but I am proposing an online database which could be accessed for technology entrepreneurs, game developers, media, and entrepreneurs and racing teams. By enabling open access to the racing data that could be parsed and leveraged, businesses and entrepreneurs could bring forth innovation to drive new revenue sources and digital media exposure for NASCAR and its teams.

Technically speaking – NASCAR needs to publish a set of Application Programming Interfaces (APIs) which could be available for commercial and non-commercial use that could create the opportunity to unlock the creativity of technology and digital media entrepreneurs and leverage the private equity markets to develop business models to reignite the excitement and consumer interest in NASCAR.
Even though my current business focus has little to do with NASCAR or motorsports, I strongly believe that NASCAR must embrace new media business models and techniques. Paul, if you are interested to speak regarding these ideas -you know how to reach me. Best, Alex Meshkin.

The global credit crisis may be slowing the M&A markets of Corporate America, however, mergers and acquisitions remain all the buzz in NASCAR. Back in July, I wrote Team Consolidation on the Horizon and it appears more likely than ever that Michael Waltrip Racing (MWR) led by Robert Kauffman will acquire Chip Ganassi Racing.
Additionally, speculation is running rampant – Gillette Evernham Motorsports (GEM) will acquire Bill Davis Racing (BDR). With BDR having yet to secure a replacement for Caterpillar for the #22 Toyota Camry, the value proposition of the proposed acquisition appears to be strictly around the coveted partnership with Toyota Motorsports and BDR’s ownership in Triad Racing Development. So it appears that if both transactions are completed; and Gillette changes from Dodge to Toyota – Dodge Motorsports will be left with just Penske Racing and Richard Petty Racing. Furthermore, I suspect at the root of Gillette’s motivation to acquire BDR is the reality that Dodge is looking to leave NASCAR all together. As my readers know, earlier this month Dodge announced their plans to leave the NASCAR Truck Series and with the founding Dodge Sprint Cup Team (Evernham) possibly joining the Toyota camp through the BDR acquisition – I think this will be most definitive indication that Dodge is saying “bye bye” to NASCAR.
It’s rather apparent, that in 2009 the pit lane of the NASCAR Sprint Cup series will be dominated and owned by just a few organizations. One must wonder – will NASCAR reverse their policy to limit teams to just 4 cars? – Because in 2010, Roush Fenway Racing will be required to “sell” one of their teams which is expected to be transferred to Yates Racing. However, NASCAR may reverse or postpone plans to prevent any additional sponsorship deflections.
With primary sponsors becoming increasingly elusive and operating costs continuing to soar, the benefits of team consolidation may be the only way for the NASCAR teams to have a fighting chance of survival. The fact is clear: The economies of scale and integrated marketing advantages are vital to remaining competitive on the track and attractive to the few remaining potential sponsors.
Is there any hope for NASCAR’s future? Yes, but not without some major changes and “redistribution of wealth”. NASCAR’s unfair revenue model and overall lack of innovation are the primary contributing causes to the sponsorship crisis for race teams. NASCAR needs to immediately revise the distribution of TV revenues to fairly compensate the race teams – or face the reality that the life expectancy of many NASCAR race teams are limited at best and more teams will continue to close their doors.

The first domino has fallen in the shakeup with the Big 3 automotive manufacturers’ involvement in NASCAR. The exit announcement by Dodge is the latest blow to the NASCAR Craftsman Truck Series which has yet to find a title sponsor to replace Craftsman in 2009 and beyond. In 2009, Dodge will not provide any financial support to any teams in the series. Dodge Motorsports senior manager Mike Delahanty said,

“We’ll have no factory-funded teams.”

Delahanty told ESPN.com,

“When times are tough, there are certain things that are lower on the priority list than others.”

This leaves us to ponder: Are the other series next? For years, rumors have circulated that Dodge would pull out of NASCAR- is it finally happening?

Earlier this decade Dodge was a powerhouse in the NASCAR Truck Series, winning 46 of 99 races from 2001-2004 and championships with drivers Bobby Hamilton in 2004 and Ted Musgrave in 2005. This year, Dodge scaled back its involvement and provided manufacturer support only to Bobby Hamilton Racing-Virginia. However, Dodge informed the team that its factory support would end this season. Delahanty said the manufacturer’s involvement with the Sprint Cup and Nationwide Series is unaffected.

Now you might ask: why hasn’t NASCAR attempted to “fix” the Truck Series value proposition to raise its “priority” with Dodge and the other manufacturers – the answer is part of the problem for NASCAR – with unprecedented sponsorship deflections in the Sprint Cup Series, the Truck Series is a low priority for NASCAR.

As the former owner of Bang Racing, Toyota’s first NASCAR Team to compete in the Truck Series and the leading competitor of Dodge Motorsports, it is a sad day for the entire NASCAR community. As I have predicted, it is only a matter of time before all of the Big 3 reduce their involvement in NASCAR. The writing is clearly on the wall – the inverse proposition of marketing costs versus benefits is an alarming trend and appears to be continually ignored by the NASCAR leadership.

Instead of squarely addressing the concerns of corporate sponsors and automotive manufacturers’ – NASCAR seeks new automotive partners to rejuvenate the floundering Truck Series. In 1999, Dodge Motorsports announced their plans to enter the Truck Series and, at the time, were widely credited with saving the series. In 2003 the Truck Series was still floundering andfloundering and the Big 3 began scaling back yet again, but Toyota Motorsports and Bang Racing soon entered the the Truck Series and delivered an unprecedented amount of media attention which fueled substantial increases in technical, financial and marketing spending from the Big 3 manufacturers in the Truck Series. But now times are tough; and with the uncertainty and questionable sustainability of the Truck Series, combined with plummeting light-truck sales; the odds of NASCAR finding new automotive manufacturer partners is rather slim. Sadly, it appears NASCAR will attempt to solely treat their symptoms and leave the underlying problems unresolved.

Two brands and two industries synonymous with NASCAR – Coors Light (Coors Brewing) and Texaco Havoline (Chevron) have in subsequent years cut ties with Chip Ganassi Racing and ultimately vacated NASCAR team sponsorship. The association and sponsorship of these two industries – Beer and Gasoline/Oil companies with NASCAR have by far the greatest value proposition; and yet they are leaving NASCAR? What is going on here? Even for someone like me who has been writing about the difficult NASCAR sponsorship market is surprised and concerned with Texaco pulling the plug on its storied NASCAR sponsorship program.

What is the root cause of these two prominent and long-term sponsors leaving NASCAR? The answer is simple: there are too many compelling alternatives which have a greater ROI and offer far less risk. Let’s be honest, primary sponsors are asked to commit up to $25 Million to purchase “so called advertising” without any meaningful guaranties of consumer advertising impressions. Sounds rather ominous, right?

Of course, sponsoring Dale Earnhardt Jr. and any of the other top performing drivers offers a unique value proposition: residue value through their brand loyal fans, merchandise and alike. But the vast majority of sponsors are receiving a diminishing ROI by virtue of the rising costs of NASCAR sponsorship and decreased television viewership and race attendance. Since 2004, the cost of becoming a primary sponsor of a top performing Sprint Cup team has soared by over 60% while television ratings have dropped by about 10%. The dichotomy of rising sponsorship costs and decreased television exposure is a disturbing trend which is primarily affecting the worst performing teams but could soon start to challenge the most elite NASCAR teams. The change in corporate sponsors’ attitudes towards NASCAR sponsorship shouldn’t surprise anyone.

However, NASCAR and its Teams have either refused or do not understand how to evolve in the digital age where advertisers can purchase measureable and interactive advertising with far less risk and much greater ROI. Unlike, most “traditional” businesses that reinvent themselves and innovate; NASCAR has failed to bring forth any meaningful innovations that can directly increase sponsors’ exposure and ROI.

Chip Ganassi Racing has had and continues to be one of the best performing open-wheel racing teams; and clearly delivers on and off the track performance for Target in the IndyCar Series. But unfortunately, Chip Ganassi’s foray into NASCAR has been a bitter disappointment. In 2006, Chip Ganassi secured Juan Pablo Montoya to pilot the #42 Texaco Dodge in the Sprint Cup series and hoped the media attention of the former IndyCar and Indy 500 Champion would ignite the performance and success of his NASCAR team. But excluding a few promising races (mostly on road courses) Montoya’s NASCAR career has underperformed. It appears Chip Ganassi Racing may be another victim of the sponsorship race; and soon join NASCAR’s elite defunct team list.

Earlier this week, ESPN expanded its motorsports digital content business through the acquisition of Racing-Live.com. Racing-Live.com covers Formula 1 (F1-Live.com), Moto GP; Superbike (Moto-Live.com), Rally (Rally-Live.com), off road Rallies (Raid-Live.com), Endurance Sports-Cars and Kart racing.

This announcement follows the acquisition of Jayski, a NASCAR gossip site in 2007. Racing-Live.com strengthens ESPN’s global business and provides a digital avenue to monetize Formula 1 racing through the site’s three million unique users per month.

I’m delighted that ESPN now offers sports fans world-class online coverage of football, rugby, cricket and motor racing, said Lynne Frank, Managing Director of ESPN, Europe, Middle East and Africa. Racing-Live.com is a leader in its category and has built a solid base from which to further develop our digital motor sports offering. We are particularly pleased that Racing-Live.com joins ESPN in the middle of another fantastic Formula 1 season.

It is going to be interesting to observe how ESPN integrates Racing-Live into its portfolio of digital media businesses; given Racing-Live isn’t the first digital media acquisition made by ESPN. Since the acquisition of Jayski in 2007, very little has changed and even its website has remained almost identical since its inception in 1996. The business model of Jayski is very different than traditional media sites and focuses primarily on unofficial team generated content – basically translated; employees’ of race teams share gossip, rumors, opinions and often lies about their employers and/or competitors. This model has created a very sticky site and thus was a procuring reason for ESPN acquiring Jayski.

Some may wonder if the Jayski model would be successful in Formula 1. I seriously doubt it and this is why: NASCAR is a unique culture with the rumor mill driven primarily by the close physical proximity of all the race teams. Speaking from personal experience; if I had lunch with a driver from another team – it would instantly be posted to Jayski …”hearing XYZ driver may be headed to Bang Racing.” While there is an element of truth to the “gossip”- it is usually twisted with an element of fiction.

Because the culture of NASCAR Sprint Cup is clearly trending more towards Formula 1 than vice-a-versa; and with the super teams becoming more self-sufficient and less reliant on vendors to support the sponsorship development process; it is likely that Jayski’s sources will be minimized at best and rumors and the like will become less prevalent.

With that said; don’t expect to see ESPN exporting the Jayski business model over the pond; but maybe expect to see Racing-Live expanding into mainstream American motorsports.

In my posting NASCAR Sponsorship 2.0, I previously discussed how teams have a real opportunity to leverage their “content” through digital channels creating supplemental advertising revenue to offset their losses in traditional on-the-car sponsorship. Some may ask, is there really an opportunity in digital advertising for NASCAR teams? A recent report from eMarketer, projects online advertising for sports sites will double from 2008 to 2012 – to $2 billion.

The sports site online advertising market is mostly untapped by NASCAR and remains a huge opportunity for race teams to tap into and ensure their continued viability in these difficult economic times.
While the most dedicated NASCAR fans are not your typical early adopters of online services; there still remains a tremendous opportunity to harness the power of the loyal demographic who embraces the internet as a regular source of news and entertainment. According to Quantcast, NASCAR.com generates approximately 3.7 M monthly unique users and peaks at over 6.5 M during the beginning of the season. So while the audience may be limited in numbers, the unmatched advertiser loyalty provides a desirable market opportunity to distribute content directly to fans through digital channels for racing teams such as Hendrick Motorsports, Roush Fenway and Joe Gibbs Racing. Unlike the franchised sports teams of the NFL, NBA, NHL and MLB; NASCAR Teams have complete autonomy of their online presence and content. This provides a significant value proposition where teams can leverage their content through a variety of online business models to create interaction with fans and ultimately new sources of advertising revenue. This would likely result in considerable exposure for their existing sponsors; and consequently create a new advertising inventory that would be measurable and provide a clear Return on Investment (ROI).
As a former NASCAR Team Owner, Sports Marketer and Digital Media Entrepreneur; I have succeeded in bringing new sponsors such as eBay and Toyota into NASCAR, and leveraged online advertising to unlock revenue sources from digital channels that created a history making NASCAR racing team. The potential has never been greater and the most successful teams have the largest market opportunity to generate significant value that can be monetized in the digital economy.

When I reflect back to 2004, the NASCAR Craftsman Truck Series was on top of the world. This resulted in part from unprecedented levels of financial commitments from the Big 3 American automotive manufacturers and the grand entrance of Toyota into NASCAR. Because GM, Ford and Dodge made every effort to fend off Toyota Motorsports’ success during their inaugural year in NASCAR, balanced competition was created – and resulted in one of the most competitive racing series in the world. Furthermore, the Truck Series received a tremendous amount of public interest, record viewership, attendance and possibly the most important factor of all – awareness in the mainstream media.
As many of you know, I owned Bang Racing and led Toyota Motorsports’ racing team to a victorious year achieving record results for a newcomer to the series and sport. We won our first race in our 13th attempt – and consequently fueled our continuous mainstream media exposure. I was the first NASCAR Team Owner ever to appear live of the Fox News Channel and received international attention which created a cycle of vital media interest to fuel sponsorship demand and ROI for all of the Truck Series teams.
However, the Truck Series is a different animal today. Over the course of the last few years a lack of interest and dwindling financial support from the Big 3 – has morphed the series into nothing more than Toyota versus the independents. This one-sided competition is apparent in the absence from corporate sponsors and the lack of interest from the mainstream media.
Last year, Craftsman announced their leaving the series as the title sponsor. This is clear indication of the limitations the Truck Series has as a marketing platform. In contrast, back in 2003, as the owner of Bang Racing, I had both Craftsman and Snap-On Tools competing against each other to become the Official Tools of Bang Racing and a Major Associate sponsor of my team. And now -both have vastly reduced their involvement in the Truck Series altogether.
I speak from personal experience. Looking back to 2004, the marketing appeal of the Truck Series for corporate sponsors was rather limited. Today without the financial assistance of the Big 3 and practically little hope for its return; combined and with the rising costs of fuel and decreased consumers’ demand for light trucks and SUVs – NASCAR can’t hang the hopes of the Series on the unlikely event of another Japanese automotive manufacturer saving the Truck Series from its untimely demise. NASCAR must make significant changes to the scheduling, promotion and positioning of the Truck Series if they intend to secure the long-term viability of the Series.

Over the past few years corporate marketing and advertising budgets have made a dramatic shift from Old Media towards New Media, which provides measurable customer acquisition with a recognizable ROI. Today, current NASCAR Sponsorship programs are structured much like Old Media, which fails to present corporate marketers with the value presented through “new media” channels. Now there are some who will say – sports marketing isn’t Old Media or New Media but Sports Media. While Sports Media does present a unique value proposition – at the end of the day, it does not provide corporate marketers a measurable customer acquisition medium -making it very similar to Old Media.
When specifically analyzing NASCAR as a marketing platform it’s undisputed that it provides unparallel consumer brand loyalty for sponsors; however “die-hard” fans, which are the most brand loyal – are unfortunately also a dying breed. As our country continues to face high inflation and a challenging economy for the middle-class, which is the loyal mainstay of the NASCAR demographic; it will become a less attractive marketing medium to corporate marketers.
Across the country, many businesses are attempting to adapt to this challenging economic market. Over the past number of months, the newspaper industry has announced wide scale layoffs as they attempt to transition their business to more online operations. The latest causality is The Atlanta Journal-Constitution that announced cuts to its work force by approximately 8 percent or 189 jobs. NASCAR is not alone; and needs to take heed and understand that it is no different than t the challenged models of the newspaper and Old Media industries – which also offer a branding and awareness platform with no real method to measure customer acquisition for its advertisers. Old Media is in a state of peril; and NASCAR and its teams must not make the fatal mistake of assuming they are immune to the fragile economy. Now is the time for them to reinvent themselves or they will face a similar dreadful business fate for their sponsorship prospects.
As a lifelong fan, former team owner and new media entrepreneur – I see numerous avenues to upgrade NASCAR from its current “1.0” platform to a “2.0” marketing approach; and leverage digital media technologies and social marketing techniques to provide unparallel fan interaction and advertiser ROI.
Back in 2003, in conjunction with the launch of my team Bang Racing with Toyota Motorsports, I developed a marketing platform and corresponding online venture to engage consumers and enable advertisers to target fans with online promotions and incentives. We successfully deployed a “points” based auction powered by eBay (a Bang Racing sponsor) and delivered unmatched ROI to our sponsors.
Today there exists technologies, which if employed could provide NASCAR and teams with a solution. Available web 2.0 architecture and social marketing techniques would enable NASCAR, teams and sponsors to leverage existing technology and increase their exposure, interaction and ultimately the sponsors’ ROI.
The most basic web 2.0 technologies, which have transformed online marketing, journalism and even politics, are “blogs”. They are free and easy to use but yet, not a single driver, team or even NASCAR has implemented one. This most basic concept is far beyond the understanding of most NASCAR insiders and demonstrates the antiquated approach to marketing.
NASCAR racing is entertainment and content; and while NASCAR Corporate controls the “content” at the racetrack; and teams are unable to successfully monetize their at-track presence – racing teams do have the ability to monetize their “content” away from the track – if they employ these new technologies. “RaceWorld”, which was a failed attempt by Michael Waltrip to engage fans in a physical structure, further demonstrates a lack of current business and technology savvy of NASCAR teams. Today, teams must embrace and engage fans through technology and the internet rather than expensive and traditional channels. A great case study is the success of online video – which is dominated by user-generated content – not by television networks or studios – this is the genius of the success of YouTube.
NASCAR teams, such as Hendrick Motorsports, Roush Fenway Racing and Joe Gibbs Racing could offset the devastating effects of projected manufacturer financial support losses and a difficult sponsorship market by simply distributing content through a variety of successful online businesses, which would increase advertisers’/sponsor’ impressions; while providing new revenue sources.
Through the use of live online streaming, micro-blogging, social networking and other web 2.0 concepts – NASCAR Corporate, racing teams and motorsports sponsors have the ability to receive an ROI capable of sustaining the growing costs of the sport. What are they waiting for – the race is on – and time is running out!

The U.S. Navy will not return next year as sponsor of the No. 88 JR Motorsports Chevrolet owned by Dale Earnhardt Jr. and driven by Brad Keselowski.

“We were informed last week that our sponsorship with the U.S. Navy will not renew at the end of the year,” said Mike Davis, director of communications for JR Motorsports. “It has been an exceptional partnership since 2005, and we look forward to a strong finish to the season.”

Brad Keselowski is currently second in the Nationwide Series champion standings and won at Nashville earlier this year. This announcement is another huge blow to the fledging Nationwide Series, which has also seen icons like Richard Childress Racing (RCR) – unable to retain their Nationwide Series sponsors. NASCAR continues to face tremendous obstacles – and yet, nothing is being done to help support the teams’ survival. Instead, NASCAR continues to implement “rules”, which are contrary to the best interests of the teams and the sport in general.
With growing financial uncertainty – NASCAR and teams should also fear – that the automotive manufacturers may begin pulling their financial support from the Nationwide series – this again, is another example of NASCAR putting their heads in the sand until reality comes knocking at the door.
One must believe – - if Dale Jr. is having a difficult time finding and retaining Nationwide sponsors -this series may face further set of debilitating setbacks.

Over the past several days there have been rumblings in the garage about the future of the U.S. Army sponsorship program. The U.S. Army, who has sponsored Mark Martin’s Dale Earnhardt Inc. (DEI) #8 Chevy for the last two seasons, is evaluating their alternatives to DEI – even though DEI insists they are still in the running to retain the deal.

“We are talking to them on a regular basis,” John Story, VP DEI said of the U.S. Army.

According to multiple sources, Army officials have not yet decided which team they want to go with next year. One published report has them moving to Bill Davis Racing (BDR) next season, which was roundly denied by several sources close to the situation. It’s strongly unlikely that the U.S. Army would select BDR over their alternatives.

But as the NASCAR elite reach the recently implemented 4 car limit; the U.S. Army’s options are far more limited than at any other time. Let’s analyze their options, the only well performing teams which have primary sponsorship vacancies are Joe Gibbs Racing and Gillette Evernham Motorsports (GEM).
Of course, if Tony Stewart acquires the majority of HAAS CNC Racing to form Tony Stewart Racing, it could clearly provide the U.S. Army with another viable option.

But dissecting the most logical options, the question remains: Would the U.S. Army sponsor a foreign manufacturer (Toyota)?

Doubtfully – so that leaves us with GEM.

Earlier this week, Dale Earnhardt Jr. provided a candid team owner’s perspective of the forthcoming change to the Car of Tomorrow (COT) in the NASCAR Nationwide Series. When asked about his future Sprint Cup plans with JR Motorsports, he said:

“I used to say no way, no way. But it’s almost as expensive to run in the Nationwide Series. And they’re going to bring a COT in and we won’t be able to race in the Nationwide Series with the COT probably. That’ll just be too expensive to switch all that over.”

“…And the COT program is going to be too expensive for me to justify creating a whole new program with COT stuff, so I’d just as soon go into the Cup Series or get out of the Nationwide Series altogether.”

Dale Jr.’s statements raise an alarming concern on the viability of the Nationwide Series. Let’s be honest – if the Nationwide Series business model doesn’t work for JR/Hendrick Motorsports – why then, would anyone think it would work for someone else? I have a hard time envisioning any other team being able to justify the capital expenditure required to compete in the NASCAR Nationwide Series with the COT. The pending arrival of the COT to the Nationwide Series couldn’t be at a worst economic time. Even teams such as Richard Childress Racing (RCR) are struggling to find new sponsors; and in retrospect, recently announced that the former Championship #21 team would be reducing its schedule in 2008 for the Nationwide Series due to a lack of sponsorship.

It’s undisputed that the COT provides enhanced safety for the drivers – which are undeniably priceless. However, compensation for improved safety should be at the forefront of NASCAR’s economic model and NASCAR should provide assistance for the teams’ through financial allowances to ensure that drivers and crew members are safe; while at the same time, enabling team owners’ to survive. It’s unfortunate that team owners must bear 100% of the financial burden of safety while NASCAR corporate continues to retain the vast majority of revenues and profits – continuing to drain many of the teams’ livelihoods – and perhaps even to the sport’s future longevity.

If I was still an owner of my NASCAR team (Bang! Racing), I would organize the Nationwide Series Team Owners to take a stand and demand financial assistance from NASCAR to adopt the COT in 2009. If Dale Jr. can’t afford to- who in the world can?

Last year, undoubtedly was the most dramatic year for racing fans in NASCAR Silly Season history with Dale Jr. moving from Dale Earnhardt Inc. (DEI) to Hendrick Motorsports. But this year may prove to be the most crucial for team owners, as sponsors and drivers play musical chairs as they navigate through the myriad of sponsor changes. With the enhanced expectations of corporate sponsors, drivers must be careful to choose the right team for 2009 and the future. Just look at DEI, Michael Waltrip Racing, Chip Ganassi Racing, Hass CNC Racing, Richard Petty Enterprises and Yates Racing – all are in dire need of sponsorship. And yet, you must give credit where credit is due – Travis Kvapil (my former driver at Bang! Racing) is doing an exceptional job for Yates Racing – but honestly, I don’t believe that sponsors are lined up at Yates door.

Every year, there is always one driver who defines all of Silly Season and in 2008 – that man is Tony Stewart. But to be realistic – you must believe that most, if not all sponsors considering a change (or any potential new sponsors – are there any?) will wait until Stewart makes up his mind before finalizing their 2009 plans.

It is well known that Stewart wants back into the Chevy camp where he has won two NASCAR Sprint Cup Championships and over 30 races. So that leaves Stewart with only two legitimate options – Hendrick Motorsports or Richard Childress Racing (RCR). Yes, RCR has won more races than Hendrick in 2008 but I would be shocked to see Stewart join RCR and race the Cheerios car. But on the other hand, Hendrick already has four drivers – didn’t they say they had “no room at the inn” last year before signing Dale Jr.? Could Casey Mears be moved to a satellite team like Hass CNC? Let’s just imagine – Dale Jr., Jeff Gordon, Jimmie Johnson and Tony Stewart all as teammates?

Only time will tell where Tony Stewart lands in 2009 – but the drivers better be ready to grab a seat because once Stewart decides on his plans – it will be pretty easy to be left without a seat once the music stops in the high stakes game of NASCAR Silly Season 2008.