SBJ/Oct. 7-13, 2013/Marketing and Sponsorship

Penske seeking revenue growth

Roger Penske arrived at last year’s NASCAR awards banquet in Las Vegas eager to talk to MillerCoors CEO Tom Long. A few weeks earlier, Brad Keselowski gave Penske Racing and Miller Lite their first NASCAR championship, and Penske wanted to extend both the driver’s and sponsor’s contracts.

“We need to take this success with Brad and package it for the long term,” Penske told Long. “I’ll get to Andy and work it out.”

Last year’s NASCAR championship spurred Penske’s new long-term deal with Miller Lite.
Photo by: GETTY IMAGES
Over the next eight months, Penske and MillerCoors Chief Marketing Officer Andy England hashed out a new agreement that takes Miller Lite’s sponsorship of Penske Racing through 2017 and includes an option for 2018. It ensures Miller Lite, which began sponsoring Penske Racing in 1991, will remain one of the sport’s longest-running team sponsors.

“The key thing here is we want to be partnered with Roger Penske long term,” England said. “Secondly, we want him to be successful. We want to enable that success.”

To help make Penske successful, Miller Lite is joining the ranks of other sponsors and ending its full-season primary sponsorship of the No. 2 car. It will be the primary sponsor of 24 races next year and allow Penske to sell the remaining 12 races to one to two other sponsors. Penske asked Miller Lite to either increase its investment, which is valued at more than $13 million a year, or free up races for Penske Racing to sell so that it could bring in more money to invest in improving the No. 2 team.

Coming off last year’s Sprint Cup title, Keselowski has struggled in the No. 2 Miller Lite car this year. At press time, he had failed to win a race, and he became only the second defending Cup champion to fail to make the Chase for the Sprint Cup championship.

Penske believes the combination of a long-term deal with Miller Lite plus two other sponsorships will boost the No. 2 team’s revenue and allow it to invest in improving the car in coming years. That’s why he gave Miller Lite the option of reducing the number of races it sponsors.

“When you have a relationship for 23 years [like Penske Racing had with Miller Lite], this isn’t a case of poker,” Penske said. “It’s a case of sitting down and saying, ‘What’s reasonable? What can we do?’ As the costs have gone up for us, we can’t expect we can dial up the sponsor and expect them to cover it.”

Miller Lite is the latest in a string of sponsors in recent years to cut back the number of races it sponsors. Budweiser, UPS, The Home Depot, Napa and others have made similar decisions. The moves reflect both the rising cost of sponsoring NASCAR teams, which mushroomed in recent years, declines in attendance and TV viewership over the last decade, and a glut of available primary sponsors with top teams.

There will be just four full-season sponsors in 2014: Lowe’s, Menards, Furniture Row and Aaron’s. (Lowe’s brand Kobalt sponsors nine races on the No. 48 car.) And industry observers anticipate there will be a day when no more full-season sponsors remain.

“It will happen in the next three years,” said Darren Marshall, executive vice president of consulting and research at rEvolution, which has studied the correlation between fan awareness of a sponsor and the number of primary races a brand sponsors. “We wouldn’t advise anyone to do a full season anymore. You can [sponsor] two-thirds of a season now and get the full benefits of a season.”

Keselowski, who Penske also signed to an extension, said that concentrating on whether Miller Lite sponsors 36 races or 24 races misses the point.

“This is going to increase revenue in the sport because we’re going to bring in a new sponsor and Miller is going to stay,” Keselowski said. “This is a win across the board.”

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