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SBJ/August 31 - September 6, 1998/No Topic Name
NASCAR-Coke deal may be a real (big) thing
Published August 31, 1998
NASCAR's goal of global expansion got a boost last week when the Coca-Cola Co. maker of the world's pre-eminent soft-drink brand agreed to sponsor what may turn out to be the largest single-event merchandising deal in NASCAR history.
Coke will sponsor cars driven by Dale Earnhardt and his son, Dale Jr., at the Coca-Cola 500, a NASCAR exhibition race scheduled for Nov. 22 in Motegi, Japan. The elder Earnhardt will step away from his traditional black GM Goodwrench-sponsored ride to drive a red car that features Coca-Cola's script trademark. Earnhardt Jr. will be in a black car that shows off Coke's polar bears.
It will be the first time the two Earnhardts share a track in competition.
While Coke has a significant presence in NASCAR as a title sponsor of races and associate sponsor of individual drivers, it does not sponsor a car on the Winston Cup circuit. Coke officials said that isn't likely to change at least not "in the short term."
The world soft-drink champion's presence on two cars at this particular race is meant to boost NASCAR's credibility in a place where its racing product is not nearly as well known as Coke's fizzy product.
"This is a chance for us to enhance our sponsorship association with these guys [NASCAR]," said Howard Jacobs, senior group manager of motorsports for Coca-Cola. "It's part of our commitment [with NASCAR] to take this sport global. And, within that, there is a merchandise opportunity."
The merchandise program, anchored by Action Performance Cos. and aided by Coca-Cola's international distribution network, is expected to generate between $30 million and $40 million in sales, according to motorsports sources. The high end of that estimate would give the deal four times the merchandising value of Action's best-seller to date the Bass Pro car that Earnhardt drove at The Winston earlier this year.
"This will be the biggest collectible die-cast project ever done and it will be awfully tough to match it in the future," said Fred Wagenhals, CEO of Action Performance. "The promotional opportunities all the way through 1999 are going to be tremendous. You're matching Dale Earnhardt with Coke, which has one of the greatest trademarks in the world. It's going to be huge."
The Bass Pro program has generated about $10 million in sales, Wagenhals said. Previous one-race programs featuring Earnhardt generated $4 million to $8 million, he said.
This one likely will tug hard at the collectibles segment of the market, which Earnhardt already dominates.
For starters, Earnhardt is shifting from a black car to a red car, creating a unique product line. The Winston Cup debut of Dale Jr., who is leading the Busch series in points and dominating it in merchandise sales he ranked third in sales behind only his father and Jeff Gordon on a recent race weekend in Bristol, Tenn. is expected to shift the race from "exhibition" to "event," at least in consumers' minds. It guarantees increased exposure for the race, which will be televised by TBS.
Toss in the Coca-Cola trademark and Coke's cuddly polar bears and you've got merchandise that crosses demographic lines.
The idea was spawned by Action Performance, which bought marketing rights to both cars for the Tokyo exhibition, then went to work putting together the deal. Coke offered the best leveraging potential of any sponsor, since its brand not only benefits from merchandise sales but stimulates them.
"Coke has to win. They've got to get people to go buy more Coke," Wagenhals said. "The drivers have to win. They have to get their royalties. And Action has to win. We've got to sell merchandise. All three are going to happen."