When you think about the lifeblood of a sports team or league, certainly fans, sponsors, and broadcast partners come to mind. With that in mind, it’s hard to find a more perfect example of how all three of those sources mesh together than NASCAR where everyone benefits from each other’s success. A big component of that success is the increase in business that NASCAR drives to its many sponsors.
Despite the reported slip in television ratings and attendance along with Dale Earnhardt Jr.’s recent announcement that he is retiring at the end of this season, there is evidence to show that current sponsors are getting a return on their investment and more and more big companies are joining the NASCAR family.
“NASCAR works for business,” said Sean Downes, Chief Revenue Officer for Richard Petty Motorsports. “Despite any headwinds, the fan base remains huge and their commitment and loyalty to sponsors that support their sport exceeds all other sports properties.”
Speaking of Richard Petty, “The King” is living proof of how a race team and a sponsor can enjoy a prosperous long-lasting relationship. Petty began a relationship with STP back in 1972 and they are still together today with the longest sponsorship in NASCAR history. Over the course of more than four decades, the STP brand has become synonymous with Petty because he has impacted their business in both a positive and influential manner.
And now, 45 years after starting a landmark relationship with STP, Petty is having a significant impact on another sponsor. Since 2012, Smithfield Foods has been a sponsor of RPM aligning themselves with a global icon like Petty to grow their bottom line.
“The NASCAR fan consumes 15 to 40 percent more of the type of products we make than the average American depending on the product,” said Smithfield Foods Vice-President of Corporate Marketing Bob Weber during an April 2014 interview with Sports Business Daily. “We know the fan buys sausage. We know they buy bacon. We know they buy pork. How do we get them to buy us? We believe in the NASCAR pitch that consumers believe buying sponsors’ products keeps them in the sport and keeps the sport effervescent.”
When Smithfield renewed its agreement with RPM back in 2014, they did so after seeing a double-digit and sometimes triple-digit rise in sales because of its involvement with NASCAR.
“We have validated the ability of the team and the sport to connect our brand and products both to fans and customers,” said former Smithfield President and CEO Larry Pope during a 2014 interview with NASCAR.com. “It translates to sales at the finish line, which for us is the cash register. We’ve seen the data supports the fact that this is the right way to reach our customers.”
The numbers don’t lie.
NASCAR is quick to point out that they surpass all other major United States sports when it comes to fan loyalty. They are number one in avid fans who consider trying, consciously supporting, and recommend sponsors. With a massive audience of 80 million fans, NASCAR followers spend an average of almost 10 hours a week following the sport.
With that said, the partnership of RPM and Smithfield is akin to a marriage made in heaven.
“Having Smithfield Foods as a sponsor has been a great partnership for RPM,” said Petty, a 7-time NASCAR champion. “We have enjoyed having them be a big part of our program and growth and we take great pride that the partnership has had a tremendous impact on their sales. Our fans are very loyal to our team and they, in turn, have been very supportive of Smithfield.”
Several sources in the NASCAR industry have told me that they have bought Smithfield products because “The King” is involved in the relationship. It makes all the sense in the world because any sponsor on the famous “43” car would have a big leg up on the competition.
“There are people that like Kyle and Kurt Busch and there are people who hate them,” said a NASCAR industry source. “But who doesn’t love The King?”
The reality is that companies are getting their monies worth when they partner with NASCAR. According to NASCAR, more than one in four fortune 500 companies are sponsors of a team, track, media partner or NASCAR itself and there has been a 20 percent increase in new companies coming on board since 2008. Also, nearly half of fortune 100 companies are now sponsors with that number growing by 5 percent each year.
NASCAR is doing its part to retain and attract sponsors by evolving to meet the needs of the fan base. There is a focus on digital engagement or building programs that attract that all-important younger demographic.
“It also helps that there is a stable of young drivers with extraordinary talent to continue giving fans the on-track excitement they seek while serving as national ambassadors for the companies so heavily invested in the sport,” said Downes.
One driver, in particular, that could play a big role in the continued success and popularity of NASCAR is Aric Almirola who drives the No. 43 car for Richard Petty Motorsports. This season, he has three top 10 results including a fourth place finish at the Daytona 500 and another fourth place showing this past Sunday at Talladega.
His goal is to continue to produce big results, not only for the race team, ownership, and “The King” himself but also for the sponsors like Smithfield.
“I want to win,” said Almirola. “We’re in a performance-based business. It’s imperative that we are successful and competitive so that way we can keep our sponsors happy. Without sponsors, race teams don’t survive in this sport. We have great sponsors. (Smithfield has) been great to us, supporting us and helping us achieve the things that we want to achieve. But, we’ve got to continue to strive to do better.”
NASCAR and its teams are under immense pressure to keep their sponsors happy. What sets NASCAR apart from other sports is that there isn’t another sport that relies so much on corporate support. The competition in NASCAR isn’t just on the track in terms of winning races and championships. There is also the competition for the next big company that is ready to come on board as a sponsor.
“The sanctioning body, teams, tracks, and media partners are all competing for sponsorship dollars to generate revenue for their respective entities,” said Downes. “Therefore, the competition amongst the primary stakeholders is fierce. Sponsorship on the team level is most critical. Without sponsorship, the teams cannot fund their operation and quite frankly, the sport would not exist.”
So at the end of the day, the weight of the NASCAR world is on the sales staffs to generate the revenue that is needed to survive. It’s a monumental responsibility because the bottom line is for the team to perform well and win. That only happens on a consistent basis if a team can land those highly coveted sponsorship dollars.
That leads to the age old question…what came first…the chicken or the egg?
NASCAR, its teams, and the media partners are all clamoring for sponsors, but are those sponsors going to see a return on their investment? The statistics are saying “yes”, but all of the entities in NASCAR need to continue to produce to ensure that the sponsors continue to see the “checkered flag” of results.
The bottom line is that the sponsors need to continue making money as a result of their support of NASCAR.
“More than ever, marketers demand to know their path to ROI (return on investment) before any commitment is made to a race team,” said Downes. “This includes performance on and off the track. Therefore, securing sponsorship is only half the battle. It is incumbent on the team to truly understand a company’s objectives and to customize marketing platforms that will deliver results.”
In the sports world, there is no shortage of competition. There are the battles on the tracks, fields, rinks, and courts. The various sports are competing for the entertainment dollars of the loyal fan bases. And there is also the battle of these sports entities for the sponsorship dollars, a quest that couldn’t be any more prevalent than it is in NASCAR.
Winning races, selling tickets, and increasing television ratings is a team effort from all parties involved including NASCAR as an organization, the teams, and the media partners. Then, within a team, it’s the job from everyone in the organization from ownership to sales to the drive and to the crew to not only make the current sponsors happy but to help land new ones.