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The Use of Sponsorships in NASCAR

The National Association for Stock Car Auto Racing, or NASCAR, always seems to be the butt of the joke when it comes to sports sponsorships. A recent big-budget Hollywood movie, Talladega nights: The Ballad of Ricky Bobby, even went as far as to poke fun at the sport’s use of sponsors when the main character, a NASCAR driver, sold advertising space on his windshield to a sponsor. However, NASCAR sponsors, both on the corporate and team level, are the ones getting the last laugh. And, they are laughing all the way to the bank.



A recent study conducted by the James Madison University Center for Sports Sponsorship concluded, “NASCAR sponsorship is the best buy in marketing.” Sponsorship in NASCAR is so appealing because sponsors see an immediate return on their investment after making the commitment to sponsor a NASCAR team or be a corporate sponsor. This is one reason why NASCAR has more sponsorship participation by Fortune 500 companies than any other sport (Irwindale 38). Even the stock market has acknowledged the power of NASCAR sponsorship and, as a recent USA Today article stated, within only two days of announcing sponsorship of NASCAR, most companies experience gains in stock market value of more than $300 million (Krantz 2).



There is a myriad of reasons why NASCAR is as good as it gets when it comes to sports sponsorships; one of the main reasons is NASCAR sponsors are getting much more exposure to fans than in many other professional sports. NASCAR has an extremely broad reach with a total of 1,800 racing events held each year. These events take place in 36 states and are hosted by more than 110 tracks across the country (Office Depot Media Relations 2). The number of tracks has even been increasing in recent years. NASCAR has been expanding its reach in recent years, and new tracks have been built in major metropolitan areas. The new tracks reflect the growth NASCAR is experiencing, while at the same time helping to aid the growth of the sport by providing more venues where races can be held. New NASCAR tracks have been constructed recently in Miami, Chicago, Kansas City, Dallas and Los Angeles.



NASCAR’s season is a full ten months long, lasting from February to November, and NASCAR is the number two rated sport on television, second only to NFL football. NASCAR races are watched by both men and women, since the gender-neutral sport consists of a 60% male and 40% female fan base.



NASCAR as an organization boasts more than 75 million fans (more than one-third of the adult population in the United States) and their NASCAR races often draw larger crowds than a Super Bowl, NBA Finals game and World Series game combined. NASCAR races are televised in more than 100 countries around the world and, according to a 2001 study, the average NASCAR fan takes in more than six hours of NASCAR related television a week (Irwindale 27).



However, the people who really keep the engine running and the money coming in for NASCAR’s corporate and team sponsors are the self-proclaimed “hardcore” and “diehard” NASCAR fans. The number of “hardcore” NASCAR fans has grown by 60% since 2002 and there are currently more than 40 million “hardcore” NASCAR fans in the United States alone (Irwindale 27). These hardcore fans take in even more NASCAR-related media each week than the average NASCAR fan, consuming nearly nine hours of NASCAR-related media per week (this includes TV, print, radio and Internet). These NASCAR enthusiasts usually come from households that make, approximately, $40,000 per year in combined household income and they are spending, on average, over $900 annually on NASCAR-related products (Irwindale 31). These “hardcore” NASCAR fans are also, for the most part, long-term fans who, on average, have been NASCAR fans for 18.6 years (Gamble 5).



There have been many studies done on how NASCAR fans’ enthusiasm for the sport translates into enthusiasm for sponsors. The results of these studies show that NASCAR fans are not only able to identify almost all of NASCAR’s sponsors, on both the corporate and team level, but that they also have a clear understanding of the importance of sponsorship in supporting the sport and are more than willing to go out of their way to spend money on the products of the sport’s sponsors. One study of 1,000 NASCAR enthusiasts revealed that 92% of NASCAR fans feel that their favorite NASCAR drivers could not run their cars without the support of their sponsors. The same study also concluded that 85% of NASCAR fans are able to identify which companies sponsor NASCAR on the corporate level (James Madison University 6).



Another recent study revealed that “96% of self-described “big” fans of NASCAR correctly identified Budweiser as a sponsor of Dale Earnhardt, Jr.” This study included a section reminding the reader that a fan’s ability to identify sponsors of their favorite teams in other sports does not come close to the fan’s ability to identify NASCAR team sponsors (Jenkins 2).



Not only are NASCAR fans able to identify sponsors, but they are also three times more likely to purchase sponsors’ products and 94% more likely to develop and maintain positive feelings about NASCAR’s sponsors (Irwindale 5). NASCAR fans show “enhanced commitment to a brand and willingness to pay more to get the brand” if they sponsor NASCAR or one of their favorite NASCAR drivers (Gamble 14). NASCAR fans seem to associate sponsors with the success of the sport, more so than in any other sport. This is exactly what companies are looking for when they are deciding whether or not to become involved in sports sponsorship. Therefore, it only makes sense that NASCAR has a huge number of sponsors and a large number of Fortune 500 companies willing to shell out large amounts of money to support the sport. (Sponsoring NASCAR delivers the results sponsors are seeking).



There are two different types of sponsorship in NASCAR, corporate sponsorship and team sponsorship. Corporate sponsors sponsor NASCAR as an organization. They also sponsor NASCAR-related events and help to maintain tracks throughout the season. NASCAR’s team sponsors sponsor a specific “driving team” that is represented by one driver. In addition, when a company makes the decision to be a team sponsor they must first be certain that the driver will be a good spokesperson for their brand. They must then decide what level of team sponsorship they want to finance. This can make a huge difference in the amount of money invested by a team sponsor. This also affects how much space they will receive on the body of the car to advertise their brand. (This determines how recognizable they will be as a sponsor of the team as well as the likelihood the sponsorship is going to produce results financially for the company).



The cost of running a top NASCAR team currently costs more than $20 million a year and there are several different levels of sponsorship. The smallest amount of money a firm can spend on sponsoring a team is one million dollars, this would buy them limited amount of space to advertise their brand on the body of the car (Krantz 2). The primary sponsor of a team receives the entire hood of the car as well as most of the space on the sides of the cars to advertise their brand to fans (The primary sponsor must invest large sums of money to receive this amount of space on the car). The first major associate, second in the sponsorship chain, receives a space on the backend of the car where they can advertise their brand, the two ‘C’ pillar associates (third on the chain) both receive space on the ‘C’ pillar, associates four and five receive space in front of the rear tire, and the smaller, contingency sponsors, receive limited space between the doors and the front tires (Mlekush 7).



In most cases, the point of sponsoring a sporting event or team is to have the excitement and fun that is associated with the sport become associated with the brand. However, in NASCAR this is not necessarily the case. Many of NASCAR’s sponsors are not brands that are seeking an exciting image that parallels the image of NASCAR. However, team sponsors know that NASCAR fans associate the sponsor of their favorite driver with the success of their favorite driver. According to a NASCAR.com poll, 33% of respondents stated they would travel any distance to meet their favorite driver. “This strong connection between fan and driver creates an unbreakable bond that manifests itself through product loyalty and unwavering dedication to the sport” (Mlekush 1). This product loyalty is not product loyalty to NASCAR as a product, but to the products manufactured by NASCAR’s team sponsors.



According to a 2002 USA Today article, written by Chris Jenkins, “NASCAR fans regularly shell out $25 for a T-shirt, $30 for a hat and even $300 for a jacket plastered with the corporate logo of their favorite driver's sponsor.” Apparently NASCAR fans truly believe they are helping their favorite driver by purchasing the sponsor’s product. This is a unique relationship that only NASCAR fans and NASCAR sponsors have. There is no other sport that has fans who really believe they are helping out their favorite team by purchasing sponsors products. This could be because NASCAR fans realize that the cost of running a team is so high. Maybe NASCAR fans believe the extra money the sponsor makes from their purchases will somehow make it back to the driver and he will receive more money for his car and racing equipment. Whatever the reason, team sponsors are cashing in on the loyalty of NASCAR fans to their favorite drivers.



Corporate sponsors are not missing out on the action when it comes to support of sponsors by the fans. Corporate sponsors know that NASCAR fans associate them with the success of the sport as a whole and their favorite driver would not be there if the corporate sponsors did not put up the cash to make the whole thing possible. Corporate sponsors have also been reaping the benefits of NASCAR fan loyalty; A 2007 NASCAR sponsorship study revealed when fans buy the products of corporate sponsors they feel they are contributing to the success of NASCAR. In fact, 51% of fans agreed they feel they are contributing to the sport when they buy the products of NASCAR sponsors (Sponsorship Research & Strategy 15).



Office Depot, which has been a corporate sponsor of NASCAR since 2005, is a good example of a corporate sponsor that is not trying to associate the excitement of NASCAR with its brand. By sponsoring NASCAR, Office Depot is trying to translate the loyalty NASCAR fans have to the sport into brand loyalty for Office Depot. As a result, the company has been successful at doing this, as most corporate sponsors have. According to reports the office-supply chain has released, they have been very successful in harnessing this NASCAR fan power. A report Office Depot released this year stated that the main reason they decided to engage in sponsorship with NASCAR is because, “with NASCAR, you have loyalty not only to the driver but also to the companies that make the sport work and that is a competitive edge for Office Depot.” Other reasons cited for their involvement in NASCAR included NASCAR’s number one ranking in corporate involvement (among other major professional sports) and their number-one ranking in per-event attendance and number-two ranking in television viewership.



Although NASCAR sponsorship has proven to be a great investment for most corporate and team sponsors there is an added risk when deciding to sponsor a team. The enthusiasm of NASCAR fans could potentially manifest itself in the boycotting of a specific product that sponsors a racing team if fans feel the success of their favorite racing team is threatened. This would result in huge monetary losses for that sponsor after absorbing the costs of sponsoring the team as well as the costs of losing such a huge market (again, the NASCAR fan base consists of one-third the U.S. population). Although this is something that is yet to happen in NASCAR the potential is there to seriously hurt the success of a brand if they do not do their research on what is going on in the sport and what the driver they are sponsoring represents to the fan base. In a recent interview with USA Today reporter, Chris Jenkins, the vice president of marketing for Sirius, Philip Pilla talked about the possibility of this happening. In the interview, Pilla said NASCAR fans “understand that if Sirius Satellite Radio goes away, that’s one less car out there.”



Another potential negative that sponsors must consider, specifically beer and alcohol sponsors, is the recent attention that has been on NASCAR for attempting to broaden its young-teen fan base while simultaneously introducing more alcoholic beverages as both “premiere” corporate sponsors as well as team sponsors. NASCAR has also been receiving plenty of negative attention for manufacturing toy cars that feature the logo of alcoholic-beverage sponsors (Jim Beam, Jack Daniels, Diageo/Crown Royal, etc.). A recent “Campaign for Alcohol-free sports TV” has been focusing on NASCAR; this negative press could cause some serious damage for alcohol-related sponsors if NASCAR fans, and the rest of the population, believes NASCAR’s alcoholic-beverage sponsors are trying to market their products to young children.



Although there is the slight potential that becoming a sponsor of NASCAR could cause damage to the reputation of a company, it is not probable that this would happen. It is certainly necessary to do some research before committing your company financially to sponsoring any event; however, according to recent studies, with NASCAR there appears to be less of a risk. NASCAR fans always have and always will love NASCAR sponsors for making the sport they love possible. Sponsorship in NASCAR definitely is “the best buy in sports marketing.”



http://www.sbu.edu/studentresearch.aspx?id=25420