There was concern at PPG Industries’ Pittsburgh headquarters last year, when news broke of archrival Sherwin-Williams signing an official sponsorship deal with IndyCar.
The two-year agreement made Sherwin-Williams the official paint of not only the series but of any IndyCar team that didn’t have a previous supplier. A few PPG executives were concerned their business-to-business Team Penske relationship, which a source said generates more than $2 million annually for PPG in automotive paint sales alone, could be in peril.
“I had emails saying, ‘What does it mean to us?’ and I said, ‘It doesn’t mean anything. We’re fine,’” said John Outcalt, vice president of automotive refinish for PPG, which has been aligned with Team Penske since 1984. “I knew [Sherwin-Williams’ IndyCar deal] was for sponsorship in general, but our guys who weren’t as close to it got concerned because we’ve had this very long, storied relationship with the Penske team.”
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| Photo by: Getty Images |
Just as Outcalt had suspected, PPG’s deal with Team Penske — and by connection Penske Corp. — was not in limbo. Instead, when IndyCar was negotiating the sponsorship, it made it clear to Sherwin-Williams that Team Penske would not be part of the deal, knowing the team would stick with its longtime partner.
Team Penske reaches its 50th anniversary at a time when the average length of its sponsorships is 13 years — a feat reached in no small part because of the sort of loyalty displayed to PPG.
In more than a dozen interviews with SportsBusiness Journal, motorsports and business executives painted a picture of how Roger Penske’s team has maintained best-in-class standards in motorsports marketing by getting to understand sponsors’ businesses and driving high returns on investment.
“In no particular order, [Roger] knows how to drive business for sponsors, is completely engaged with his partners and treats them like true partners, and has surrounded himself with a great organization that supports him and have been around him a long time,” said Zak Brown, executive chairman of Just Marketing International, which counts Team Penske sponsor Verizon among its clients.
Said Brown: “He is unbelievably professional, delivers on the track and has won championship after championship, race after race; has probably set the model on demonstrating to his own companies how you can use motorsports to build your business; and probably does the best job of using his race team not only to build his business, but to drive business for the Verizons of the world.”
Team Penske competes in four series — NASCAR’s Sprint Cup and Xfinity series, Verizon IndyCar and Australia’s V8 Supercars — and has a rich history in sports car racing. Across those series, it has more than 30 current sponsors, at least five of which (Snap-on Tools, PPG, MillerCoors, Mazak and Bosch) have been associated for more than two decades. Blue-chip brands including Verizon, Shell-Pennzoil, Avaya and Hertz are some of the other companies on the roster.
Walt Czarnecki, executive vice president of Penske Corp., said he thinks Team Penske sponsors deserve anywhere from a 4:1 to 5:1 return on investment. Hard details of Team Penske sponsors’ returns weren’t available, but numerous industry executives remarked that given how many business-to-business deals many of the team’s sponsors have struck — either with Penske Corp., fellow sponsors or both — such gaudy returns are possible.
“In motor racing, I think [B2B pitches are] more of a throwaway line than realistic business opportunities …
whereas that’s not the case with Penske,” said Stephen Dutton, CEO of fluid transfer solution company Pirtek, which sponsors Penske’s V8 team in Australia. “It seems to be that it’s just part of the ethos of the business.”
Two other factors not to be overlooked, according to industry experts, are the team’s competitive pricing — sources pegged its asking price for primary NASCAR sponsorships at $15 million to $16 million annually, for example, below the $20 million to $25 million that some of the other top teams ask — and the ability to offer quantifiable, rather than estimated, returns. Some NASCAR teams start with lower pricing on sponsorships but include performance clauses that allow prices to increase based on how well the teams do on the track or how much additional business the deals generate for the sponsors.
For instance, when Shell replaced Mobil 1 at Team Penske in 2011, it got the chance to put its oils and lubricants in vehicles across Penske Corp., including 220,000 rental trucks, 400,000 new cars sold annually at Penske dealerships across the world, and 3 million cars serviced annually by Penske Corp. — making the sponsorship pay for itself before the No. 22 Shell Pennzoil Ford even fired its engine.
“If you think about what Penske Corp. does and what everyone at Shell does, from Penske’s perspective, they’re into trucking and automobiles and clearly racing, and from a Shell perspective, we make the products that go into all of those cars,” said Heidi Massey-Bong, senior business adviser of NASCAR sponsorship for Shell. “So it was almost a no-brainer that you could tell that there would be great synergies for us.”
Massey declined to say if Shell sees the 4:1 ROI that Czarnecki envisions. However, a source said the company does indeed see a return in that range.
Among other reasons sponsors have been attracted to Team Penske is the level to which Roger Penske gets to know the ins and outs of the businesses he works with, regardless of category, and the level of commitment he shows them. Adam Dettman, director of sports and entertainment marketing for MillerCoors, recalled when Penske flew back through the night one day last year from Europe to Charlotte so he wouldn’t miss a summit with 3,000 MillerCoors employees and distributors.
“Here’s a man who basically works 24/7, which is quite extraordinary, and consequently, he’s right on the ball,” said John Hogan, who ran Philip Morris’ Marlboro sponsorship program during its Team Penske association in the 1990s and 2000s and worked closely with Roger for years. “He’s always ahead of you.”
“The Captain,” as Penske is affectionately known by his employees, also has a reputation for being tireless — “He returns phone calls and emails within minutes,” JMI’s Brown remarked — and for handling tough, important matters personally, like when he fired NASCAR drivers Kurt Busch and A.J. Allmendinger due to varying transgressions.
“One of the things Roger often says to me and other people is, ‘You can’t manage your business at 30,000 feet,’” said Jonathan Gibson, vice president of marketing and communications at Team Penske. “What he means by that is you need to be in the weeds of your business to really understand how it’s working. That’s something he does himself and it’s something he really wants all of our leadership to do.”
While many point out the extent to which Penske finds synergies for B2B-focused companies —- for example, when sponsor SKF aligned with Cintas, Hawk with AutoZone, or Daimler with Wurth — the team also is known for getting business-to-consumer-focused companies like MillerCoors and Verizon maximum exposure by running near the front (the team has won 177 open-wheel races, and 150 in NASCAR.)
Moreover, Gibson said, Team Penske works to find brands varying business opportunities even if they are traditionally consumer facing.
“Honestly, they’re just as integrated as any of our other partners,” Gibson said. “Just because there might not be a business-to-business opportunity with our corporation, there still are other opportunities to do co-marketing, cross-merchandising and other business-to-business relationship opportunities.”
Many executives remarked that another hallmark of Roger Penske is his old-fashioned business style: To the point and instinctive rather than doing everything by the letter of a contract.
“A lot of teams — and this comes from the drivers themselves — if you get 10 days [to use the driver for the brand’s marketing activation], then you get 10 days,” Brown said by way of example. “With Roger, as long as you’re not abusing the privilege and it’s for good use, he’ll give you 12.”
Attention to detail and a near obsession with cleanliness are two other hallmarks of the Penske organization, industry executives said, from simple things like Team Penske staff members having golf carts on the ready to transport guests when at the track, to having spotless, on-point hospitality areas, garages and haulers.
“It’s perhaps an overstatement, but I don’t think it is: Penske invented sponsorship,” Hogan said. “Sponsorship has evolved, and back then [when Team Penske started], it was about getting branding on the car, getting name and fame with drivers, etc. It was about building relationship with consumers — Roger was well ahead of the game in that respect. …
“Without standing on anybody’s toes — NASCAR and IndyCar — they did have sponsorship [before Penske], but it was the name of the local gas station on the car,” Hogan added. “It wasn’t serious corporate sponsorship.”
How Team Penske does B2B
Jonathan Gibson, vice president of marketing and communications at Team Penske, offered a glimpse into the process the organization uses to develop business-to-business opportunities for its sponsors.
“For us, the most important thing with finding a partner is the cultural fit,” Gibson said. “What that means is finding like-minded companies that we can partner with both on the racetrack but also potentially within our business and within our partners’ businesses.”
■ Goal setting: What does the sponsor want out of the relationship and how will those goals be documented? “If your goal is to do ‘X’ amount of business with our corporation or our partners, whatever the goal is, let’s set it down and document it.”
■ Management: “With every one of our partners, we have regular forms of communication, usually a weekly call or biweekly call, and manage the relationship as to: ‘Where are we at with our goals? What are their objectives?’ This allows you to course-correct and find: ‘Where are we short? Where are we exceeding? Where are the opportunities?’” Gibson said Team Penske will set up introductory meetings between partners, participate in those meetings and help foster relationships.
■ Measurement: “We do living dashboards, which are: ‘What are the goals, and what are the results?’ So we manage that with them and include that in our weekly calls and our quarterly recaps and annual recaps. That way, at the end of every year, Penske partners and Penske, we can look at each other and say: ‘Here’s where we are versus the goals. How do we correct course? How do we make it better?’”
