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Old 10-15-2008, 03:37 PM   #1
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Nascar Hits Wall as Financial Crisis Dents Sponsorships Demand
________________________________________

By Gene Laverty
Enlarge Image/Details

Oct. 15 (Bloomberg) -- Sponsors of Nascar, the No. 2 sport on U.S. television after professional football, are slamming on the brakes because of the world's financial crisis.

General Motors Corp., Chrysler Corp., Sears Holdings Corp. and Chevron Corp. will cut or drop sponsorships next season. Dario Franchitti, the 2007 Indianapolis 500 winner was forced out of the stock-car series by a lack of sponsors.

Teams with family names revered in stock-car racing like Petty, Waltrip and Earnhardt may enter 2009 with unfunded cars. The circuit might even have trouble filling 43-car fields.

``There's maybe 26 teams that have sponsorship for next year, and five or six that have partial,'' said Michael Waltrip, an owner and driver who shored up his finances by selling a stake to Fortress Investment Group LLC founder Robert Kauffman a year ago. Waltrip, 45, faces 2009 with only one of three cars fully sponsored. He said he might have to shut down one team.

Waltrip, two-time winner of the Daytona 500, isn't alone. Dale Earnhardt Inc., founded by the seven-time Nascar champion and now run by his widow, has secured a backer next season for only one of four cars. Financial, automotive and consumer goods companies are balking at paying as much as $25 million to support a top team amid job cuts, seized credit markets and slow spending.

Junior Sponsorship

Earnhardt's 34-year-old son, Dale Earnhardt Jr., faces the prospect of a season without sponsorship for the team he owns in the second-tier Nationwide Series. Nascar's most recognizable driver hasn't yet found a company to replace the U.S. Navy as sponsor for his car, driven by Brad Keselowski.

He said he wouldn't run the car without a backer because of the estimated $7 million it takes to compete in Nationwide's 35 races.

``The economy is the way it is, there isn't much you can do about it,'' Earnhardt said after qualifying for Nascar's Talladega, Alabama, Oct. 5 race. ``A lot of these guys are going to walk around empty-handed next year.''

Nascar has some support from its $4.5 billion in television contracts that run though 2014, said Dennis McAlpine, president of researcher McAlpine Associates in Scarsdale, New York. Nascar and the tracks split the money from the contract, which is in its second year, McAlpine said. Teams get a share of the television money in race purses.

Completing Fields

TV contracts won't be enough to keep some racing teams on the track as the crisis deepens, he said.

``It may show up in the cars,'' McAlpine said. ``They may not be able to get full fields next season.''

Chevron said in August it would no longer use a Nascar sponsorship to sell its Texaco Havoline motor oil after 21 years in the racing league's top series, citing a decision to support more cars in racing's lower levels. The cut leaves Chip Ganassi Racing without a primary backer for the car driven by Juan Pablo Montoya next season.

Ganassi lost Molson Coors Brewing Co.'s Coors beer as a sponsor of its No. 40 Dodge last season. Unable to find a replacement, Ganassi shuttered the team in July and fired 70 crew members. Driver Franchitti will return to the IndyCar Series next year.

Economist Nouriel Roubini, the professor who predicted the financial crisis in 2006, said the U.S. will suffer its worst recession in 40 years. Over an 18-to-24-month span unemployment will rise to 9 percent and home prices will fall another 15 percent.

Selling Sponsorships

Cuts in consumer spending caused by the slowdown will make all sports advertising more difficult to sell next year, said Don Hinchey of the Bonham Group, a sports marketing consultant in Denver. That means the top teams are going to have the most success drawing money.

In Nascar, that's the richest. Four car owners -- Roush Fenway Racing, Hendrick Motorsports, Richard Childress Racing and Joe Gibbs Racing -- locked up all 12 spots in the top Sprint Cup Series championship playoff.

Roush Fenway, which is co-owned by Boston Red Sox owner John Henry's Fenway Sports Group, last month snapped up United Parcel Service Inc.'s sponsorship from Waltrip.

Childress grabbed General Mills Inc. from Petty Enterprises in April and Caterpillar Inc. from Bill Davis Racing in June. Neither Petty, a family-owned team that fielded a car in Nascar's first race in its top stock-car series at Charlotte, North Carolina, in 1949, nor Davis have secured replacements.

Helicopter Rides

Team owners may have to cut in other areas to maintain spending on improving performance, said Richard Childress, whose cars carried Earnhardt Sr. to six championships. Teams may have to hold back on new shops, corporate hospitality and perks like having helicopters transport drivers to tracks.

``We'll have to look at other ways to save the money, put the money where it's going to be the most effective,'' Childress, 63, said after his No. 31 car won the Bank of America 500 last weekend.

General Motors, whose stock last week dropped to a 58-year low, won't renew naming rights for the three Nascar Sprint Cup Series races it sponsors next season and will cut supplies of vehicles provided to racetracks. The Detroit-based company didn't say how much it would save by the measures.

Nascar is looking for a backer for its third-tier truck races after Sears departs next month, and Dodge said in September it will no longer support teams in the series. The racing league still expects to have full 43-car fields in its top Sprint Cup Series races next season.

``We know it's more challenging than ever,'' said spokesman Kerry Tharp in Charlotte. ``At this point we still anticipate having full fields for next year.''

For Earnhardt Jr., a third-generation racer whose JR Motorsports shop is in his hometown of Mooresville, North Carolina, survival is the first responsibility of a team owner.

``We'll race the races we can afford to race,'' Earnhardt said. ``A lot of the people that work there are family and so that place has to be open.''


http://www.bloomberg.com/apps/news?p..._mk&refer=home
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Old 10-15-2008, 03:37 PM   #2
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Join Date: May 2005
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Nascar Hits Wall as Financial Crisis Dents Sponsorships Demand
________________________________________

By Gene Laverty
Enlarge Image/Details

Oct. 15 (Bloomberg) -- Sponsors of Nascar, the No. 2 sport on U.S. television after professional football, are slamming on the brakes because of the world's financial crisis.

General Motors Corp., Chrysler Corp., Sears Holdings Corp. and Chevron Corp. will cut or drop sponsorships next season. Dario Franchitti, the 2007 Indianapolis 500 winner was forced out of the stock-car series by a lack of sponsors.

Teams with family names revered in stock-car racing like Petty, Waltrip and Earnhardt may enter 2009 with unfunded cars. The circuit might even have trouble filling 43-car fields.

``There's maybe 26 teams that have sponsorship for next year, and five or six that have partial,'' said Michael Waltrip, an owner and driver who shored up his finances by selling a stake to Fortress Investment Group LLC founder Robert Kauffman a year ago. Waltrip, 45, faces 2009 with only one of three cars fully sponsored. He said he might have to shut down one team.

Waltrip, two-time winner of the Daytona 500, isn't alone. Dale Earnhardt Inc., founded by the seven-time Nascar champion and now run by his widow, has secured a backer next season for only one of four cars. Financial, automotive and consumer goods companies are balking at paying as much as $25 million to support a top team amid job cuts, seized credit markets and slow spending.

Junior Sponsorship

Earnhardt's 34-year-old son, Dale Earnhardt Jr., faces the prospect of a season without sponsorship for the team he owns in the second-tier Nationwide Series. Nascar's most recognizable driver hasn't yet found a company to replace the U.S. Navy as sponsor for his car, driven by Brad Keselowski.

He said he wouldn't run the car without a backer because of the estimated $7 million it takes to compete in Nationwide's 35 races.

``The economy is the way it is, there isn't much you can do about it,'' Earnhardt said after qualifying for Nascar's Talladega, Alabama, Oct. 5 race. ``A lot of these guys are going to walk around empty-handed next year.''

Nascar has some support from its $4.5 billion in television contracts that run though 2014, said Dennis McAlpine, president of researcher McAlpine Associates in Scarsdale, New York. Nascar and the tracks split the money from the contract, which is in its second year, McAlpine said. Teams get a share of the television money in race purses.

Completing Fields

TV contracts won't be enough to keep some racing teams on the track as the crisis deepens, he said.

``It may show up in the cars,'' McAlpine said. ``They may not be able to get full fields next season.''

Chevron said in August it would no longer use a Nascar sponsorship to sell its Texaco Havoline motor oil after 21 years in the racing league's top series, citing a decision to support more cars in racing's lower levels. The cut leaves Chip Ganassi Racing without a primary backer for the car driven by Juan Pablo Montoya next season.

Ganassi lost Molson Coors Brewing Co.'s Coors beer as a sponsor of its No. 40 Dodge last season. Unable to find a replacement, Ganassi shuttered the team in July and fired 70 crew members. Driver Franchitti will return to the IndyCar Series next year.

Economist Nouriel Roubini, the professor who predicted the financial crisis in 2006, said the U.S. will suffer its worst recession in 40 years. Over an 18-to-24-month span unemployment will rise to 9 percent and home prices will fall another 15 percent.

Selling Sponsorships

Cuts in consumer spending caused by the slowdown will make all sports advertising more difficult to sell next year, said Don Hinchey of the Bonham Group, a sports marketing consultant in Denver. That means the top teams are going to have the most success drawing money.

In Nascar, that's the richest. Four car owners -- Roush Fenway Racing, Hendrick Motorsports, Richard Childress Racing and Joe Gibbs Racing -- locked up all 12 spots in the top Sprint Cup Series championship playoff.

Roush Fenway, which is co-owned by Boston Red Sox owner John Henry's Fenway Sports Group, last month snapped up United Parcel Service Inc.'s sponsorship from Waltrip.

Childress grabbed General Mills Inc. from Petty Enterprises in April and Caterpillar Inc. from Bill Davis Racing in June. Neither Petty, a family-owned team that fielded a car in Nascar's first race in its top stock-car series at Charlotte, North Carolina, in 1949, nor Davis have secured replacements.

Helicopter Rides

Team owners may have to cut in other areas to maintain spending on improving performance, said Richard Childress, whose cars carried Earnhardt Sr. to six championships. Teams may have to hold back on new shops, corporate hospitality and perks like having helicopters transport drivers to tracks.

``We'll have to look at other ways to save the money, put the money where it's going to be the most effective,'' Childress, 63, said after his No. 31 car won the Bank of America 500 last weekend.

General Motors, whose stock last week dropped to a 58-year low, won't renew naming rights for the three Nascar Sprint Cup Series races it sponsors next season and will cut supplies of vehicles provided to racetracks. The Detroit-based company didn't say how much it would save by the measures.

Nascar is looking for a backer for its third-tier truck races after Sears departs next month, and Dodge said in September it will no longer support teams in the series. The racing league still expects to have full 43-car fields in its top Sprint Cup Series races next season.

``We know it's more challenging than ever,'' said spokesman Kerry Tharp in Charlotte. ``At this point we still anticipate having full fields for next year.''

For Earnhardt Jr., a third-generation racer whose JR Motorsports shop is in his hometown of Mooresville, North Carolina, survival is the first responsibility of a team owner.

``We'll race the races we can afford to race,'' Earnhardt said. ``A lot of the people that work there are family and so that place has to be open.''


http://www.bloomberg.com/apps/news?p..._mk&refer=home
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Old 10-15-2008, 05:10 PM   #3
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Nascar and track owners have been like Wall Street for the last ten years bleeding fans and sponsors,now its coming back to bite them.
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Old 10-15-2008, 06:09 PM   #4
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<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Nascar and track owners have been like Wall Street for the last ten years bleeding fans and sponsors,now its coming back to bite them. </div></BLOCKQUOTE>
Same is true for pro football/basketball/baseball/hockey and college sports also. Their ridiculous salaries and costs have been bleeding fans dry for decades. Maybe the economic crunch will result in costs so that a family of four can take in a game, have a coke and hot dog for less that $500.
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Old 10-16-2008, 12:49 AM   #5
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For the last 10 years NASCAR is not what it used to be. It has been so Corporaate as of late; and now that looks like it is about to change again! It was fun while it lasted.
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Old 10-16-2008, 02:32 PM   #6
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I used to go to 4 races a year. The prices kept going up until I reduced my attendance to 1 Cup race and 2 Nationwide races per year. Now I don't go to any. Just too darn expensive.

They have become so consumed with making money they are destroying the racing for the fans. Soon, just like NFL and MLB, only the rich will be able to afford the tickets. I guess they wanted to be like the NFL and MLB, and they are almost there.
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Old 10-16-2008, 03:57 PM   #7
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The last ten years bleeding fans and sponsors,now its coming back to bite them.

So true.
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Old 10-16-2008, 05:59 PM   #8
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I used to be a season ticket holder to Homestead for the final weekend of the year and always attended speed weeks and the 500 at Daytona. Living in Tennessee, it's too expensive to drive to south Florida and the cost to go to Daytona is outrageous. Tickets on the front stretch are thru the roof and the campground's fee outside turn four (Racetrack RV) now goes for nearly $1300.00 for the week. Who can afford it, plus food, etc.

We also are season ticket holders to Bristol and it will be difficult, but will keep those because Bristol is fairly close to home and I can always sell those tickets if I cannot go.

But,like others have said, NASCAR is too corporate, too expensive and is becoming rather boring at times.

Bob
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