NASCAR: What’s wrong with NASCAR? Part 3 – Money and sponsorship

Sponsorship cycle

So you’re probably wondering, what in the world is a “sponsorship cycle” and why is it important? Here’s your answer. It’s one of the biggest issues that plagues modern-day NASCAR. In fact, this is the singular reason corporate businesses such as Lowe’s are leaving the sport.

Let me start from the beginning.

Remember last slide when I discussed the basis of sponsorship and how it affects the sport? The sponsorship cycle is building off of that concept.

Back in the 1980s and 1990s, the sport was booming. Names such as Winston, Goodwrench, Dupont and Budweiser were raking in millions of dollars in sales due to Sunday exposure. Sold out grandstands and millions of fans at home equaled big results come Monday.

That idea, while still viable, no longer works. Why? Because sponsoring a car is too expensive compared to the results it yields. In this article by racingnews.co, it is reported that sponsors can spend over $10,000,000 annually to be on a top-tier race car for one season.

The article linked above revealed that Farmer’s Insurance paid roughly $660,000 per race to have their name on Kasey Kahne’s #5 Hendrick Motorsports Chevrolet in 102 races from the 2012 season to the 2017 season. Now they aren’t represented in the sport.

Unfortunately, a sponsorship cycle begins when teams need sponsorship, ask for major prices and then find themselves without major sponsorship very long. With better ways to market products such as social media, Fortune 500 companies see no reason to have a flying billboard that may or may not be shown on TV.

The consequences of this cycle have changed the way that sponsorship works for years. For instance, a team that may have had one or two primary sponsors throughout a season may have up to four or five by the end of that season.

Overall, companies just don’t want to spend excessive money on a sport with lower TV ratings and fewer fans in the stands. Just imagine if you had a business. Would it make more sense to use FREE social media or spend millions of dollars on a car that could receive little exposure every week?

Sponsoring a car is no longer a luxury. It’s a bad investment.