It has been a tough decade for NASCAR. As a business agent in the industry for over 20 years, I have watched as NASCAR, like most all professional sports, learned to adjust, evolve, and—some may say— reinvent itself in light of major changes such as financial recessions, enhanced technologies, and a new generation of fans. From my perspective, I think the recession going back to 2007 is foremost responsible for the changes underway.
You’ve heard of the domino effect? Well, I’ve seen it in action—from struggling race team operations and sponsors re-evaluating and reducing investments to corporate entertaining shrinking in group size at the races.
How the Recession and Other Factors are Affecting NASCAR
This most recent recession forced the corporate world to cut back on nonessential expenses. Unfortunately, marketing budgets and sponsorships are generally the first things to get cut…but we will leave the wisdom of those budgetary cuts for another discussion. Nevertheless, these cuts reduced the number of team sponsors and ultimately led to the demise of some good teams.
For example, Michael Waltrip Racing did not survive this decade period despite some limited success on the track and what some thought would be a promising future. Meanwhile, Robert Yates Racing went from an iconic championship race team to surviving because it became a prominent engine builder to the NASCAR industry as Robert Yates Racing Engines. However, some teams were forced to merge with other teams while others just ran out of money when their main sponsor left the industry.
Corporate entertaining at the races almost disappeared for a time after 2007, and the NASCAR race fan learned to enjoy NASCAR via large HD screen TVs since they could not afford the travel expenses and cost of tickets to attend the race. However, look around: Do you see any 100,000 capacity football stadiums being built anymore? No. The new stadiums, ballparks, and race tracks are being redesigned and built to offer a better experience, with fewer seats, and fewer people.
While not necessarily related to the recession, another important factor is that the face of the NASCAR fan has changed. While the “demographics” of the fan base may be similar in measurable brackets such as age, gender, income levels, own or rent housing, # of kids, etc., a lot has changed in this new mobile, global, HD, digital, social media world that now must be built into the equation.
For example, this is the WiFi generation, and we at HardHead Marketing believe that the new NASCAR fan does not just watch a race; they want to experience the race and share that experience live with others. It’s crazy to just think about how these and other changes have impact and altered our personal lives, and that includes how we view NASCAR and all other spectator sports. So now we all have to evolve.
How Corporate Hospitality and Sponsorships in NASCAR are Evolving
Given changing market forces and even the changing whims of new fans, NASCAR is evolving. It seems corporations want smaller group hospitality options that offer more intimate settings for spending time with guests. So whether we are creating options for 20-50 people in private suites; working with tracks to share a weekend suite or hospitality package with multiple groups; or helping race teams with smaller sponsor packages…it’s all part of the adapting to changes underway. As of now, it would appear that the days of the large 100 to 500 person pre-race trackside hospitality party chalets, which were once so common, are now a thing of the past. Similarly, the cost to sponsor top race teams has gotten out of control. Race teams no longer have one Primary Sponsor for the race season. Remember the days of DuPont, Bud, Miller Lite, CAT, and other iconic sponsors of NASCAR race teams? These brands that, 10-20 years ago, spent $5 to $10 million annually to sponsor a top caliber race team for a 10-month, 36-race season, now must increase sponsorship budgets 2 to 3 times that, or their other choice is to reduce the number of races they choose to sponsor the team.
While some smaller teams would be happy to have those $5 to $10 million sponsor dollars for an entire season, they are unable to compete at the championship level that these type of iconic sponsors are accustomed to. (All teams will tell you that you have to have money to get speed, but sponsors want the speed before they give the money. Classic chicken and the egg scenario.) These are the teams we at Hardhead Marketing like to help, and we hope they have a future in the industry. As a smaller, more efficient firm, companies such as HardHead Marketing are evolving with the times; we are helping create new styles of team sponsorships, customizing group entertaining to meet the need for smaller group sizes while enhancing the fan experience at reasonable prices because that is what is required.
So the evolution of change is underway in the corporate world, and change is coming for individual fans, too. While studies still show NASCAR is the #1 form of motorsports on television, and is still #1 in fan base loyalty to its sponsors, the new NASCAR is having to reach the next generation of NASCAR fans. I personally think the signing of Monster Energy last year as the title sponsor of the “Monster Energy NASCAR Cup Series,” the most elite of the NASCAR race series, was a significant effort toward reaching out to the younger generation.
With some popular NASCAR drivers retiring, such as Jeff Gordon, Dale Earnhardt Jr., Tony Stewart, Carl Edwards, Danica Patrick, and others, the next generation of driver talent pool is large and promising with the likes of Kyle Larson, Chase Elliott, Ryan Blaney, rookie William Byron, and many more. Perhaps it is time for new sponsors to come in and be part of the new NASCAR and create new iconic team sponsor relationships that relate to the evolving NASCAR. What this all may look like is to yet to be determined.
So, back to the opening question: Is now a good time to become a NASCAR team sponsor? Like in a race, I would rather be in the front making changes with others following my lead than the other way around.