SBD/July 11, 2012/Marketing and Sponsorship

U.S. Army Cutting Ties To Stewart-Haas Racing Due To Low ROI; Still Committed To Sports

Army's deal with Newman last year cost them $7.4M for 15 races
The U.S. Army remains committed to sports sponsorships, but it has opted to sever ties with Stewart-Haas Racing after this season because it is not seeing enough of a return on its investment. U.S. Army Marketing Support Chief John Myers, whose organization does recruitment advertising for the Army, said the Army will continue to sponsor the NHRA and entitle the annual high school football game known as the U.S. Army All-American Bowl because both of those sponsorships provide a good ROI, which for the Army is based in part on recruiting leads. Myers said that the Stewart-Haas Racing sponsorship, which cost the Army $7.4M for 15 races last year, was "quite simply a return-on-investment decision." Myers added, "It has nothing to do with Stewart-Haas Racing, per se, which has been a very, very strong partner the past four years. We'll repurpose those dollars against other programs that our metrics show yield better results." In addition to the NHRA and All-American Bowl, the Army will continue to spend its marketing budget on social media initiatives, mobile marketing, TV and digital advertising. Myers said that a recent move by U.S. Reps. Jack Kingston (R-Ga.) and Betty McCollum (D-Minn.) to amend the defense budget to prohibit sports sponsorships was not a factor in the Army's decision. The Army's marketing budget will remain flat next year (Tripp Mickle, SportsBusiness Journal).

BELT-TIGHTENING: McCollum in a statement said, “By ending its sponsorship of NASCAR, the Army made the right move to eliminate a wasteful program and protect taxpayer dollars -- which has been my goal all along.” Myers: “I want to stress that Stewart-Haas Racing has been our partner for four years and it was a completely mutually beneficial partnership. But in today’s budgetary environment, we’ve got to look at every single thing we’re doing and derive the best possible ROI out of every component and element.” Myers said that he “could not say how many recruits were generated by the NASCAR sponsorship.” Myers: “That is a very difficult thing to do. Recruiting someone to invest four, five, six years of their life in an enterprise of the Army, it doesn’t happen with one experience at a NASCAR track.” SPORTING NEWS’ Bob Pockrass noted the U.S. Air Force sponsors Richard Petty Motorsports "for a couple of races," while the U.S. Marines, Navy and the Air National Guard "have sponsored NASCAR teams in the past and eventually dropped the sponsorships” (SPORTINGNEWS.com, 7/10).

NOT LEAVING ALL MOTORSPORTS: ESPN.com’s Terry Blount reported Army officials are "in the process of signing a contract extension with Don Schumacher Racing through 2013 to continue the long-running sponsorship of the Top Fuel dragster" for Tony Schumacher. Myers said, “The NHRA is a valuable part of our motorsports outreach portfolio. ... The NHRA gives us a great return on our investment.” Blount added the Army has been Schumacher's primary sponsor "since the 2000 season, one of the longest-running major sponsorship agreements in the NHRA” (ESPN.com, 7/10).

PUTTING YOUR GUARD UP: USA TODAY’s Dustin Long reports McCollum will “meet today with National Guard officials to discuss their backing" of Dale Earnhardt Jr.'s No. 88 Sprint Cup entry. McCollum said that the National Guard “requested today’s meeting.” Long notes even if the proposed amendment to the defense budget "is killed, the National Guard will likely have less money to work with next year, which means Earnhardt's No. 88 team with Hendrick Motorsports could be impacted.” The National Guard's “total sports sponsorship was $54.5 million in fiscal year 2012," and the organization "made a request of $24.5 million in fiscal year 2013 as all branches of the military plan to cut their marketing programs.” The Guard “budgeted $26.5 million on NASCAR alone in fiscal year 2012, down from $32.7 million in fiscal year 2011” (USA TODAY, 7/11).

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