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NASCAR: How much bang does Caterpillar get for its sponsorship buck?

Caterpillar is among the prominent NASCAR sponsors that have to be asking themselves how much they really need to spend keeping racing teams afloat, especially in light of this Forbes magazine article highlighting just how far NASCAR has fallen from fan favor in the past five years. The woes: Cars look the same. Drivers look the same. Races look the same. And NASCAR is tightly controlled by the family that owns it.

Says the three-time reigning Sprint Cup champion Jimmie Johnson: “The best thing to be is NASCAR, the second best a driver and the last thing a team owner.”

Team owners assume the lion’s share of the risk by investing heavily in people and equipment but get a pittance from broadcast revenue and none of the ticket sales, which go mainly to the track owners. It can cost $10 million to recruit a winning driver and $25 million a year to race one car. Most teams raced two or three last year, and 90% of their operating budget came from corporate sponsors. The rich sponsorship deals signed during the fat years earlier this decade are expiring, and new sponsor money is drying up. Domino’s Pizza, a primary sponsor of Michael Waltrip Racing, and Eastman Kodak, a sponsor of Penske Racing, threw in the towel after last season. Also gone are Coors Light and Tide.

Sponsors still committed to the sport, such as Caterpillar, Diageo and UPS, are flocking to winning teams or spending their money at the track. Winning brings in money, and the money funds the ability to win. The haves are pulling away from the have-nots. The four richest racing teams filled all 12 positions in the sport’s Chase for the Cup playoff format last year. Most of the 43 drivers at this weekend’s Daytona 500 will start their engines knowing they have a slim chance of cracking the top 10. Some won’t even bother to complete the race.

Teams are folding, merging or taking bailouts from plutocrats. Seven-time NASCAR champion Richard Petty sold his Petty Enterprises team last year to the private equity firm Boston Ventures because he could not raise enough sponsor money. (Boston Ventures recently sold Petty’s name to the team owned by multimillionaire businessman George Gillett.) In 2007 Jack Roush sold half of his team to Fenway Sports Group, a firm controlled by the company that owns the Boston Red Sox. Morgan-McLure Motorsports shut its doors last year after 24 years on the circuit because of a lack of sponsors. Ditto Bill Davis Racing.

Team owners want a franchise system like pro baseball and football teams have. NASCAR says no dice. Sponsors have lots of sway in pro racing … can’t help speculating that Cat and its brethren might have something to say about whether the team owners get what they want.

Cat sponsors Richard Childress Racing with Jeff Burton in the No. 31 Chevrolet. Cat’s racing page is here.

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Tom Mangan posted at 6:15 am February 10th, 2009 |

One Response to 'NASCAR: How much bang does Caterpillar get for its sponsorship buck?'

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  1. Deron_05 says:

    I know that our plant that the Cat sponsored Nascar team has been a great source for jokes and amusement. We just shake our heads wondering how much positive feedback does Cat get from a team – at least in recent seasons – finished at the back of the pack. When the team that Cat sponsors switched to a Toyota branded car, the jokes really flew around.

    I know that Cat dropped sponsorship of the NHRA team manned by “Hot” Rod Fuller. Though Rod had a hard time
    balancing the old checkbook, he did win some races.

    Permalink | Posted February 10th, 2009, at 9:47 am

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