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Volume 20 No. 45
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NASCAR feeling the retail squeeze

Pressure on stores, consumer packaged goods cutting into the sport’s sponsorship base

The struggles of traditional retailers, and the vendors that sell products in their stores, is adding to the challenges NASCAR teams face in the search for sponsors.

Target’s decision to not renew its sponsorship with Chip Ganassi Racing marked the latest big departure from a sport whose teams rely on corporate revenue for around 75 percent of their annual income.

As many business-to-consumer brands face greater scrutiny and narrowing margins, NASCAR teams and tracks are turning to new categories, doubling down on providing assets, dropping prices and working harder to forge business-to-business connections, according to interviews with executives around the sport.

Target, a longtime sponsor of Chip Ganassi Racing, chose not to renew its deal.
“[Consumer packaged goods brands are] under total pressure,” said Anne Hansen, vice president of marketing and business development for Mooresville, N.C.-based Bulldawg Marketing, which specializes in the retail space. “You’re always trying to increase consumption and purchase, but at some point you also have to look at increasing profitability — so it forces the brands to make hard choices.”

The issue can be a circuitous one. Retailers get squeezed by e-commerce rivals such as Amazon, then in turn squeeze vendors, who then need to cut costs — oftentimes in marketing.

Dollar General left NASCAR last year after going from 30 primary paint schemes with Joe Gibbs Racing to none in one fell swoop. Kellogg’s Cheez-It brand has scaled back its spending, similar to Nature’s Bakery, which went from 27 races in 2016 to just four in 2017 for Stewart-Haas Racing.

On the flipside, Monster Energy and Kraft’s Velveeta brand are among the brands that have entered the sport or stepped up their involvement in recent years. One team in particular, JTG Daugherty Racing, still has myriad CPG brands on its car as part of a vendor-model sponsorship with Kroger, which has also increased its presence.

Hansen, whose firm works with brands including those from 3M and Unilever, disputed the notion that B2C sponsors are struggling across the board, saying her firm continues to see consumer-focused brands earning the returns they envisioned. The key for CPG brands, she said, is to integrate racing programs around a company’s wider marketing objectives and campaigns.

“It comes down to not necessarily packaging it as motorsports but connecting the motorsports assets back to the brand,” Hansen said.

She cited as an example a program that Unilever brand Hellman’s Mayonnaise did this year around its “Strangewich” campaign. Hellman’s sponsors Xfinity Series organization JR Motorsports, which produced a video showing kids of team employees concocting sandwiches with Hellman’s Mayonnaise and other wacky toppings like Oreo cookies that their parents had to then eat on camera.

Teams have secured long-term renewals with other brands including Mars and Miller Lite, while Hendrick Motorsports this year eked out a one-year extension from Lowe’s. With Hendrick securing just a one-year extension for Jimmie Johnson’s No. 48 team, which has won seven Monster Energy Series championships, it emphasizes the pressure on retailers such as Lowe’s.

“It happened over a certain time period, but more and more, it’s less about impressions, likes and views and all about, ‘What was the incremental sales [lift]?’” Hansen said.

Across multiple categories, some deals are increasingly being built around B2B wins. For example, Shell’s fuels are used in the thousands of vehicles that are part of Team Penske owner Roger Penske’s automotive empire, and Joe Gibbs Racing enticed convenience-store chain Circle K to come aboard this season in part by offering B2B opportunities with some of its other partners. While B2B success is a positive, well-known consumer-facing companies help give the sport cachet and allow it to reach millions of consumers through in-store displays, special packaging and other promotions.

Jeremy Lange, vice president of Leavine Family Racing, said his one-car Monster Energy Series team is still talking to B2C companies, but success comes down to their objectives. “We’ve got to be talking to the right people who understand that there is value in the TV and racetrack [exposure], and talking to brands who look at it as a TV buy or buy media,” Lange said. “It’s right for the right brand who wants awareness and wants to activate.”

Interviews with multiple team executives and sponsorship hunters in the sport showed that deals involving a B2B component are the main ones thriving, but some consumer-facing categories are emerging as spenders. Teams are also adjusting sponsor pricing and in many cases lowering their asking prices to get deals done with sponsors that have smaller budgets (SportsBusiness Journal, June 26-July 2 issue).

Tyson Webber, president of GMR Marketing, said municipalities, universities and colleges, health care companies, startups and even medical marijuana brands have become more active. Two recent examples are Liberty University and Florida Hospital. The regional hospital chain is one of the five “injector” entrance partners at Daytona International Speedway, which asked 10- to 15-year contracts at $2 million to $2.5 million annually for the rights.
Marc Bluestein, president and CEO of Aquarius Sports and Entertainment, which counts Florida Hospital as a client, said the hospital is using its Daytona asset as a way to market its Creation Health faith-based health and wellness program.

“If you compare the numbers to other stick-and-ball sports, the college space and other niche grassroots sports, the volume of the NASCAR audience and fan base are still there,” Bluestein said. “It’s about how you present that value proposition.”