Drivers feeling sponsorship pinch
Readers and fans often ask me where I think this driver or that driver will end up next season.
Everyone is asking the wrong question. It's not where a driver will go, it's where can he go? The options are limited to almost nothing.
Spend a little time talking to NASCAR team owners, potential sponsors, team officials, drivers, etc., and one message comes through loud and clear:
The current business model in NASCAR needs an adjustment.
I hear this refrain over and over again. The cost of doing business, especially at the Cup level, is too high.
I don't mean for this column to be all doom and gloom and imply NASCAR is in trouble. It isn't.
NASCAR remains one of the most successful professional sports in the world. But it does need a bit of a course correction on spending.
In preparation for an appearance on "NASCAR Now" Thursday to talk about Silly Season driver changes, I spent most of Wednesday on the phone talking to people involved in NASCAR at various levels.
It quickly became obvious I was asking the wrong question. There are few quality rides available in Cup because fewer teams have full sponsorship to run a competitive program. Over the past decade, costs have soared. For example, in the year 2000, Bill Elliott had full-season sponsorship with McDonald's for $6.5 million.
"We spent three times that much now and can't run in the top 20," said Brad Daugherty, co-owner of the No. 47 Toyota at JTG/Daugherty Racing. "I don't think the average person realizes how much even a one-car team like ours spends a year."
One team owner told me it takes between $6 million and $7 million just to run a competitive Nationwide Series car these days. The competitive Cup cars want more than $20 million a year.
And fewer companies are willing to pay it. Only a handful of cars today have a single primary sponsor. The era of one sponsor being the brand for a driver and a car is ending.
Tony Stewart recently lost Office Depot as one of his sponsors. Stewart-Haas Racing also lost the Army as a sponsor on Ryan Newman's car. That's lost income somewhere in the neighborhood of $25 million a year, and that's at an organization with the defending Cup champion in Stewart and a driver who made the Chase last year in Newman.
Office Depot is on the verge of bankruptcy, so it's unfair to say the company left because of the cost of racing in Cup. But it's increasingly difficult to find companies willing to spend the type of money Office Depot was spending, regardless of the driver's success.
The Army was spending about $8 million to be on Newman's car for half the season. Most people assumed the Army left over the congressional debate of military sponsorship, but the Army continued its sponsorship on Tony Schumacher's NHRA dragster.
"The NHRA is a valuable part of our motorsports outreach portfolio," said John Myers, director of marketing support for the Army, when the Army announced its decision. "The NHRA gives us a great return on our investment."
And that comes at a much lower cost than sponsoring a Cup car.
Newman reportedly agreed to accept a new deal with SHR that pays him only purse money, which isn't so bad considering he has earned over $4 million in purse money already this season. But it's what he needed to do since the No. 39 car needs sponsorship.
When Toyota entered Cup in 2007, over 40 cars were fully funded for the season. That number today is fewer than 25.
Roush Fenway Racing and Richard Childress Racing went from four cars to three this season. Penske Racing went from three cars to two in 2011.
Obviously, the economic meltdown is a big part of it, but not the entire story. Top teams still want at least $20 million a year in sponsorships, but companies aren't willing to pay that price now.
Some good teams are willing to take less, but they all feel they do so at a competitive disadvantage. And the cost of competing will go up significantly in 2013 with the introduction of the new car model. It will bring more brand identity back for the manufacturer, which is a good thing, but it also will be a major expense initially for all the teams.
"Many teams are just trying to survive," one team owner told me.
But some elite team owners still are making huge sums of money. Texas Motor Speedway president Eddie Gossage isn't buying the idea of economic turmoil.
All of us in this country are dealing with this economic situation, but we need to keep it in perspective. How unhealthy can it be when 20 years ago teams were driving to a race in a 12-person van and now they're in a 727 jet with the team owner's picture on the tail?” -- Eddie Gossage, Texas Motor Speedway president
"I don't totally agree," Gossage said. "I'm not going to tell you all is well. All of us in this country are dealing with this economic situation, but we need to keep it in perspective. How unhealthy can it be when 20 years ago teams were driving to a race in a 12-person van and now they're in a 727 jet with the team owner's picture on the tail?"
Therein lies part of the problem. Private jets and $300,000 motor coaches are the norm for drivers and team owners. That's a big-money monster that has to be fed, and it takes major sponsorship to feed it.
Drivers wanting a quality ride may need to bring money or a sponsor to the table. This is nothing new in auto racing, but it's a bigger factor than ever in NASCAR.
Danica Patrick will race a third Cup car for Stewart-Haas Racing next year because Go-Daddy is footing the bill. Meanwhile, both Stewart and Newman need additional sponsors.
Brian Scott and Michael Annett might get a ride in Cup soon because their families have money to bring to a team. But some talented young drivers continue to wait for opportunities because they have no money to offer.
Times have changed. Jeff Gordon came to NASCAR 20 years ago because his family didn't have any money to put him in an open-wheel car in CART. Now some NASCAR team owners want to know if a driver can bring funding to the operation.
So when readers and fans ask me where a certain driver will go next season, they're asking the wrong question. The question is, where can he go? The options are few.