Alex Meshkin

Questioning the future of Dodge’s continuing involvement in NASCAR is nothing new – back in September 2008, I wrote about the pending withdrawal of Dodge from NASCAR and unfortunately this appears to be the plan for 2010. (http://tinyurl.com/dlymm8)

Many, at first glance, didn’t feel that the Chrysler bankruptcy filing on Thursday would have any effect on the Sprint Cup teams backed by Dodge. And Chrysler was quick to issue a statement on Thursday reaffirming their commitment to NASCAR. It really should not come as a surprise that the new management from Fiat realizes the current iteration of the COT and the marketing platform offered by NASCAR is too expensive and doesn’t align with their new focus. Fiat/Chrysler’s new focus is on small fuel efficient cars and not on outdated large cars that inspired the NASCAR “Car of Tomorrow”.

Many sources strongly believed that Chrysler (Dodge) may pull its NASCAR funding in 2010. As many know, Dodge already slashed its motorsports budget by 30 percent this year. Then the question becomes this: What would happen to the teams that Dodge financially supports, if indeed they pull their support? That is the great unknown.

As I have professed for over two years, NASCAR is facing a crossroad; but yet, it continues down an ill-fated pathway of an outdated “Car of Tomorrow” instead of adopting a fresh approach that would leverage “green technologies” such as, biofuels and renewable energy, and a branding platform that is attractive to companies like Fiat. As I stated in July 2008,

You must wonder – why is NASCAR asleep at the wheel? Over the past decade, NASCAR has developed a phenomenal market platform for all types of companies – but without the financial and marketing support of the carmakers – NASCAR teams can’t afford to operate.
The time is now for NASCAR to embrace tomorrow’s future – alternative energy and fuel efficiency branding is required for the long-term viability of the sport as a marketing platform for the automotive manufacturers. (See: http://tinyurl.com/cwcjpj)

I am a strong believer that negative events create opportunities. NASCAR and the Big 3 (GM, Ford and Chrysler) at one time were going down a parallel road, but unfortunately as NASCAR started to become a rapidly growing mainstream sport in the early part of the decade and corporate sponsors rushed into the sport with their large marketing budgets looking to tap into this brand-loyal demographic, NASCAR lost sight of the value proposition and ROI required to keep the Big 3 involved in NASCAR. In the next couple of years, many will ask, why didn’t NASCAR do more to keep the Big 3 involved? The answer is quite simple, NASCAR and their Teams have a huge disconnect, and what’s good for NASCAR isn’t always what’s best for their Teams. Unlike all other major sports, like the NHL, NBA, MLB, and NFL; NASCAR team owners don’t have any say in the direction and decisions of the sport, nor do they participate in the financial upside during the good times. But what I do know is that they do bare the majority of the consequences during the difficult times. When Chrysler/Dodge leaves NASCAR, many teams will suffer and likely shutdown, but NASCAR Corporate will face very little short-term repercussions.

With the economic recession, dreadful environment for automakers and falling ratings of NASCAR racing, NASCAR has the opportunity to implement needed changes to put the sport in a position for growth and long term sustainability.

The solutions and answers for NASCAR are quite simple: race a car that is aligned with the automakers objectives, provide a fair distribution of revenues to competitors (teams), implement rigid cost controls; and, equally as important, please allow the drivers the freedom to race without the fear of penalties for relatively harmless actions. NASCAR, after all is said is done, should be entertainment.

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.

On Friday, Wired published an article titled – The Car of Tomorrow Has an Extension Cord – a discussion of the future plug-in hybrids coming soon to your local car dealer showroom. This discussion further demonstrates the continued divide between NASCAR and all automakers.
The founding principle and most basic concept behind NASCAR was and is “stock car” racing; and the ability for carmakers to demonstrate their performance of a car that closely models a car in the local showroom. This principle is no longer applied in NASCAR and is one of the basic problems existing for carmakers today in justifying their marketing expenditures in NASCAR.
“Stock car” doesn’t mean “old” or antiquated but means the use of current technologies which are closely tied to their street car equivalents. The age old adage of “Win on Sunday and Buy on Monday” is no longer applicable in NASCAR – and is contributing to the eroding sales of the Big 3. Furthermore, the COT is alienating carmakers by further dividing marketing objectives of the carmakers and the value proposition of NASCAR.
The future of carmakers exists in plug-in hybrids – the combination of battery power and biofuels. According to Wired; it all starts in 2010. General Motors (GM) promises to have the Chevrolet Volt rolling into showrooms by then. Toyota says it will roll out a small fleet of plug-in Prius hybrids to see how they do. Volkswagen has similar plans for its plug-in Golf. And Fisker Automotive hopes to have a few dozen pricey Karma sedans in driveways within 18 months. Ford and others are moving more slowly, aiming for 2012 and beyond.
It may surprise some to learn that widespread adoption of plug-in hybrids isn’t in the distant future and may be in consideration for your next car. According to Mike Omotoso of J.D. Power & Associates “…we could see critical mass by 2015.”
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.

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.

2007 Indy 500 Champion – Check, 2007 IndyCar Championship – Check, Superstar Actress Wife - Check, NASCAR Sponsor – Only in his Dreams.

In 2007 Dario Franchitti was one of the most accomplished drivers in American motorsports. When he moved from IndyCar (IRL) to NASCAR in 2008 he was full of hopes and dreams for an exciting future – and yet now he finds himself without a “ride” in 2008. What is happening in NASCAR? For Dario Franchitti, he isn’t sure what his future holds, but the former open-wheel star said Wednesday he’d like to remain in NASCAR.
It is not surprising, when viewing NASCAR and the economic climate today, that Dario Franchitti lost his ride when team owner Chip Ganassi closed down the unsponsored No. 40 Dodge – with 17 races into Dario’s first season in NASCAR.
But there is more in the making of this decision and the announcement really doesn’t surprise me – you have a team whose performance has been downright awful, a rookie driver struggling to adapt to a new form of racing, mass inflation in an already expensive business and serious downward pressure on the U.S. economy – specifically corporate advertising budgets. This is a wicked mixture for more future shakeups in the financially changed business model of team ownership in NASCAR.
The only question in my mind is when will there be a similar announcement from the Yates Racing organization. I can’t image that the Ford Motor Company will continue to fund the operations of a sponsor-less team; regardless of the fact that their performance has been promising.
More dark days are ahead for the NASCAR economy; rising gas prices and overall inflation are just the beginning – soon to come are significant effects of poor race attendance and souvenir sales. Since NASCAR Corp. is mostly focused on protecting the bottom line of their sister company – International Speedway Corp (ISC) – I would image there will be no relief in sight for the fledging racing teams – which are truly the heart and soul of NASCAR.