Home Depot Leaving NASCAR: Commentary

Joe Gibbs Racing team owner Joe Gibbs has been at the center of NASCAR’s sponsorship changes in 2014. Mandatory Credit: Sam Sharpe-USA TODAY Sports

Motorsports sponsorship is obviously paramount to NASCAR so when one of the longer standing high profile marketing partnerships ends, it makes news. Sports Business Journal reports that Home Depot is leaving NASCAR and Joe Gibbs Racing (JGR) at the end of this Sprint Cup season. That is big news.

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Atlanta-based Home Depot has been a primary partner with JGR since the late ‘90s, but had cut back their sponsorship involvement recently. In fact, they had taken a back seat as a major sponsor on the #20 Toyota, currently driven by Matt Kenseth, and had sold off some of their exposure to Dollar General, permitting the latter as a majority of the visual advertising in 2014. Home Depot’s tool brand Husky has had most of the spotlight the past couple of years – so it makes this move less surprising.

Home Depot had a great amount of publicity during the early years with Tony Stewart as the driver for JGR including a couple of championships. Young gun Joey Logano also raced under the Home Depot banner before Kenseth took over last season. Home Depot has changed their focus including major reorganizations in its corporate structure, plus the departure of their Chief Marketing Officer Frank Bifulco in 2011.

NASCAR problems

In recent years, among young adults, NASCAR has slipped in popularity as a sport. A decade ago, they were second only to the NFL as the most popular sport in the United States, but Major League Baseball and NCAA football have passed them in the last few years.

There are a few other reasons as to why corporate America has cooled somewhat to NASCAR marketing. Though NASCAR has tried to make inroads among minorities and viewers, the sport is still traditionally a white male dominated fan base. The fact that NASCAR fans tend to be working class, has made the situation tenuous at best due to the elongated Recession. NASCAR hasn’t helped much with ticket prices that are quite exorbitant for recessional times like these.

Also, moving race dates and making the cars look the same has alienated many staunch fans. Those same longtime fans also don’t understand what the sam hill is a Facebook Twitter and why it pertains to stock car racing. On the flipside, younger folks have not been captured by NASCAR’s ongoing repackaging – a Cup race takes too much of their fun time to watch. Even Danicamania couldn’t drive ticket sales up.

Dollars moving

After a decade of full season sponsorships, Home Depot has been reducing their spend in NASCAR in recent times; but, their complete departure will certainly cause a stir in the Sprint Cup garage as well as in the business world.

Jun 13, 2014; Brooklyn, MI, USA; NASCAR Sprint Cup Series driver Matt Kenseth drives the Dollar General #20 Toyota. Dollar General has replaced Home Depot as the primary sponsor this season and is rumored to be stepping up to a full sponsorship in 2015. Mandatory Credit: Andrew Weber-USA TODAY Sports

It’s rumored than Dollar General could step up for a full sponsorship next year along with unsubstantiated reports that Carl Edwards may move over from Roush Fenway Racing to JGR; but Edwards would probably have to bring some sponsorship support with him. JGR has clearly stated they will not make any decisions until September.

By the way, sponsoring a major team in Sprint Cup as a major sponsor for a full season is estimated to cost between $20 and $30 million a year. Considering activation (advertising, appearances and ancillary marketing) can cost two to three times as much as the actual sponsorship, Dollar General could be looking at a $100 million a year commitment.

Neither JGR or Home Depot would comment on this report.

Source: Sports Business Journal, Eagle II Motorsports Marketing

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