Will NASCAR Be Affected by the High Cost of Sponsorship After 2010 Season?

Sal Sigala Jr.Senior Analyst IJanuary 13, 2010

FONTANA, CA - FEBRUARY 25:  Juan Pablo Montoya, driver of the #42 Texaco/Havoline Dodge, and Jeff Gordon, driver of the #24 DuPont Chevrolet, lead a pack of cars during the NASCAR Nextel Cup Series Auto Club 500 at California Speedway on February 25, 2007 in Fontana, California.  (Photo by Donald Miralle/Getty Images)
Donald Miralle/Getty Images

As our ever-changing world continues to turn, we can easily look around to many, many changes that have taken place in our everyday lives.

Little by little most of us are beginning to turn away from being creatures of habit, and into more of a planned out, and not so much doing things on a whim type of society. We are taking a little longer when it comes time to make those big decisions that could have a long-lasting affect, whether for the good or the bad.

Our money nowadays means more, and is worth less then it was last year at this time. It’s no big secret anymore, that our dwindling economy is where we can put the majority of the blame on.

More and more, we Americans are looking for that so-called sweet deal, the deal that is supposed to make spending money a lot easier.

We probably find ourselves bartering more and more, and along with the bartering, we may even look away from the name brands and settle for generic.

Hey after all, if it means saving a substantial amount of green that can be used somewhere else…why not?

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This is where the world of advertising steps into our everyday lives in their relentless pursuit of devising new and innovative ways, to persuade us the public to purchase whatever product they are advertising.

Sponsorship is one of the biggest ventures that a company or manufacturer will invest their money in, because of the cost to put their respective logo in places where it will get the most exposure, which is usually done during commercials on your TV set.

Sporting events on TV get the most exposure, and are always the most expensive when it comes to advertising.

What other sport besides NASCAR utilizes a rolling billboard, as well as bigger then life advertisements staring at you for three to four hours at a time 36 weeks a year?

Even with all this exposure, sponsorship in the series has not been easy to come by in the last couple of years.

The cost of advertising has gone up, along with sponsors not willing to put out the money that they once did. Sponsorship for one the top tier best teams in the sport (HMS, JGR, Roush Fenway, RCR), can cost up to $25 million for a full year sponsorship.

When you break down the cost per race, it can easily run in the neighborhood of $500,000-$700,000 for the privilege of putting your company logo on the best spot on the car.

During the off-season, sponsorship was one of the biggest challenges that was put out there with the biggest question being…who and how many would be back?

Sponsors started pulling out of the sport one by one since last season, and NASCAR began to realize that they no longer had the upper hand anymore.

We seen sponsors such as DeWalt, Jack Daniels, U.S. Army, Allstate, and Jim Beam have all pulled out of the series that are not coming back.

Kellogg’s who has been with Hendrick Motorsports for 16 years as the primary sponsor for the No. 5 car, moved over to Roush Fenway while downsizing to an associate sponsor role.

GoDaddy.com who came over with Danica Patrick from the IRL, will take over the primary role on Martin’s No. 5 Sprint cup car, along with JR Motorsports No. 7 Nationwide team which didn’t come cheap to owner Dale Earnhardt Jr.

How long will GoDaddy.com be able to pay the price of sponsorship, especially if Martin doesn’t perform the way he did last season?

Without those fancy and colorful paint jobs that have those big corporate names embedded in them, where else will the money come from to keep the series moving forward?

NASCAR is not going to reach down into their deep money lined pockets, and help these teams out. So now all of a sudden the tables are turned, and they are not in NASCAR’s favor anymore.

NASCAR no longer has the trump card, and they have lost the power that went with it. In one big swoosh, the economy took the bargaining chips out of NASCAR’s pockets, and put them into the sponsors playground.

Now all of a sudden it’s the sponsors who can play hard ball, and level out the playing field.

NASCAR at one time was the heavy favorite, making this game of cat and mouse a one-sided affair.

NASCAR is already feeling the heat, as more and more teams are going public saying that they only have limited sponsorship deals, which will only carry them through half the season.

Some teams are still looking for sponsors just to make it into the Daytona 500, but the big question is how much of this dilemma will be sorted out by the time the 500 rolls around?

When will NASCAR finally break tradition, and give into letting the sponsors in for a cheaper price?

We are already witnessing a break down, as far as sponsorship negotiations are going. There is no way that NASCAR can survive, without painting some kind of a sponsor on each and every car that makes the field for the season opening Daytona 500.

As the game of cat and mouse continues, we can already see the results as the days grow closer to the start of the racing season.

The economy itself may still be on a downward spiral, but is that actually the way that NASCAR is looking at it? With all of the insecurity for future sponsorship dollars,

NASCAR needs to step in and implement some type of change to reduce the cost to run a team full-time.

With all the free agents that will be available next season, the question will once again be raised if the drivers will be able to bring their current sponsors to their new teams, if in fact they do change organizations.

Or will the drivers have to secure new sponsorship deals, which could be another major problem, and a bargaining nightmare?