Understanding NASCAR Sponsorship: A Comprehensive Guide

How a NASCAR Sponsorship Works Browse the article How a NASCAR Sponsorship Works

Introduction to How a NASCAR Sponsorship Works

At the track or on TV, it seems that nothing in NASCAR is without a sponsor. Cars are covered in logos and stickers, drivers have patches from shoulder to shoulder and every race is brought to you by one company or another. It stands to reason that sponsors shell out a lot of dough in NASCAR, but how much, exactly? And where does all that money go?

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There are three NASCAR series, and each of them has many, many sponsorship opportunities. As you'll discover when you read the list below, the name of each series is also subject to change -- that's because the series are named after a sponsor, too.

• Sprint Cup: These are NASCAR's big guns. Sprint Cup races are run on Sunday afternoons, 36 times a year by 40 or more teams and feature the names you're probably familiar with: Dale Earnhardt Jr., Tony Stewart and Jeff Gordon. This series was formerly known as the Winston Cup Series.
• Nationwide Series: This series races on Saturday and is a step below Sprint Cup in popularity; however, it runs at the same tracks and usually on the same weekends as the Sprint Cup. As a matter of fact, a lot of Sprint Cup drivers got their big break in the Nationwide Series. Until recently, this was called the Busch Grand National Series.
• Craftsman Truck Series: The often-forgotten, but still exciting, NASCAR truck races also run at the big tracks. This series also draws some big names, including Kyle Busch, among others. Craftsman tools has sponsored this race for years, but the series is slated to get a new sponsor in 2009.

Since Sprint Cup races are by far the most popular in the United States, this article will focus on that series. It is also the most expensive set of races in the country, and the sponsorship dollars reflect that. Having an entire series named after a company or product will cost millions of dollars, which makes sponsoring a single race seem like a deal at only $500,000.

That's right -- being a primary sponsor of a team costs $350,000 to $500,000 per race, although corporations can usually cut a deal to sponsor a team for a full season. That means the sponsor gets to choose the paint scheme of the car, put the logo all over it, and use the driver's likeness in advertising for the product or service they want to promote. It is possible to be the primary sponsor for just one race, and for your half a million-dollar investment, the car will change its appearance for just that one venue.

The cost of everything else -- driver endorsement deals, stickers, cameras and more -- is negotiable. On the next page, we'll tell you what all those logos pay for.

A Brief History of Sponsorship in NASCAR

NASCAR has a long-standing relationship with sponsors. In the earliest races of the 1950s and 60s, what few sponsors there were didn't even put logos on the cars, and they were mostly auto-related businesses. But in 1972, R.J. Reynolds bought the rights to name the series, which became the Winston Cup Series. Soon after that, Richard Petty's light-blue #43 car was famously sponsored by STP, an oil additive. Over three decades, sponsorship has evolved past the alcohol, tobacco, and auto companies of the early years to include the likes of M&Ms and GoDaddy.com.

Where does the money go?

One of the biggest expenses any NASCAR team has these days is fuel -- and not just for the race. Every team has to get at least one car and one full pit crew to the race -- plus the driver, the owners, the management, and all the team's racing gear and tools. This requires a couple of large transport trucks that drink diesel fuel for breakfast, lunch, and dinner. Just as an example, if diesel fuel is priced at $4 a gallon, the cost to fill a 300-gallon (1,135-liter) tank is $1,200. That's an expensive stop at the filling station.

Sunoco, another NASCAR sponsor, supplies free gasoline for the race cars on race day; however, those cars get run a lot more often than just one day a week. Teams test their equipment for speed and safety several times during a typical week, sometimes at non-sanctioned tracks, which means they pay for their own race fuel at around $6.25 per gallon (around $1.65 per liter). An all-day test session can burn through a 55-gallon (208-liter) drum, which costs nearly $350.

The driver typically flies from track to track, which is rather expensive, or the driver may take a tour bus, which is almost as expensive as flying. Now, we know what you're thinking, but don't worry about the driver -- he isn't paying for all of this travel out of his own pocket. Like everything else in NASCAR, the driver's income is negotiable. His salary is generally paid for by the sponsor, which gets a certain number of scheduled appearances out of the driver in return. The driver will also split race-day winnings with the team, and there are usually incentives for winning big races -- like the Daytona 500, for example. The driver can also bring in fees for additional appearances or even license his likeness to advertisers. The best drivers -- with the best agents -- can bring in millions each year, like 2008's top earner, Jeff Gordon. In 2008, Gordon garnered $17 million in endorsements and royalties, and $15 million in salary and race winnings, for a total of $32 million.­

Since everything is negotiable, let's talk about all those little logos that cover every surface of a NASCAR race car.

Driving without a Net

In the early days of stock-car racing, very few teams had sponsors. If they did, it would be an "in-kind" deal, where a company would provide tools or equipment in exchange for a sticker or mention of the company's name by the driver. But ever since sponsorship took hold in the 1970s, it's next to impossible to run races without corporate backing. Just ask Morgan-McClure Motorsports, which had to disband its Sprint Cup team for the 2008 season when it lost its sponsor, State Water Heaters.

Location, Location, Location

Just as different cuts of meat can vary widely in price, so too can the location of a company's logo on a NASCAR racer. The logo on the hood belongs to the primary sponsor, who also gets to choose the car's paint scheme and the team colors. The rest of it is -- you guessed it -- negotiable.

Associate sponsors are responsible for the fields of stickers that sprawl across the fenders and near the windows. Size and placement influence cost, with the quarter panels being the most expensive place to add a logo. Buying that spot, either right in front of or right behind the rear wheel, for a full season costs $1.5 million.

The area called the C-pillar, which is next to the rear window on both sides of the car, is the next most expensive spot. A logo in that area costs about $500,000 a season. The B-pillar, which is probably easiest to describe as the area right next to the driver's shoulder, is the smallest associate sponsorship possible. Those little stickers cost $200,000 for a full season's placement.

Other logos on the car carry on the "in-kind" tradition, like Craftsman, for example. They provide tools for the teams in return for a nice, big logo on the car.

Though it might not seem so, NASCAR is tightening the restrictions on where logos can be placed and how large they can be. In response, product placements are gaining ground at the track. Drivers are paid to swig non-alcoholic drinks (on camera) in the pits after a race, and crew chiefs are paid to mention sponsors' names in interviews.

There's a reason sponsors fork over so much cash. Up next, an exploration of return on investment.

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Brought to You by…Well, Just About Anyone

When Winston cigarettes pulled out of NASCAR sponsorship in 2004, many assumed that the NASCAR powers that be had decided to ban tobacco products. Not so -- that was part of the federal tobacco settlement deal of the early 2000s. There are no hard-and-fast rules for who can or cannot be a sponsor, though some have been turned down. Playboy, for instance, has tried to sponsor a team for the past few years, but the NASCAR powers that be have refused. Though beer sponsorships have been around for a long time, hard liquor wasn't allowed for years until 2006. If you're family-friendly and not infringing on anyone else's exclusive deals, you're good to logo.

Return on Investment

After approving a tremendous amount of money for a NASCAR Sprint Cup team, wouldn't it be nice if the sponsor got something back -- besides goodwill?

The most obvious result is in the fanbase of over 50 million viewers. That's a lot of potential advertising impressions to make. When calculating the return on their investment, some companies will count the number of seconds their logo is clearly visible on the screen, and then multiply that time by the going ad rate to get an idea of how far their NASCAR dollars are getting them. With a high-profile partnership like Tony Stewart and The Home Depot, for instance, that works out pretty well, especially among NASCAR fans, which have a habit of being loyal to the brands that sponsor their favorite drivers.

But companies also take into account print, billboard, Internet, and other ways their NASCAR team gets in front of consumers. They track consumers' awareness and image of a brand, thanks to their sponsorship of a race team. They'll also do promotions linked to sponsorship to determine if it's getting the brand exposure they want. If more people try a product during a promotion, that's a good return on investment.

Employee morale is another benefit, one that often flies under the radar. Think how happy you would be -- you, the NASCAR fan -- if your company sponsored a winning car. Maybe, if you sold the most widgets or were voted employee of the year, you could get a couple of tickets to a race. Sponsorship is the kind of intangible perk that can attract and retain employees.

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For the Fans Watching at Home

As gas prices climbed this spring, so did NASCAR's television ratings. Analysts speculate that there are two fuel-related reasons for the La-Z-Boy's triumph over the bleachers at the track. First, the cost of driving to the track, when added on top of tickets and trinkets at the event, became prohibitive for many race fans. Second, it seems that nobody is driving anywhere else, either, meaning the guy who was only an occasional Sprint Cup viewer is now home nearly every Sunday to see the action live.

Corporate Sponsorship

The corporate accounting office is going to want those return on investment numbers -- stat! Everyone else in the company wants a skybox and all-you-can-eat corn dogs. No problem -- just remember, in the world of NASCAR sponsorships, everything is negotiable.

If a company has signed a sponsorship deal with a team, they may be able to negotiate to have Dale Jr. at the corporate picnic. It doesn't get them grandstand tickets or even the right to have a booth at the track. That requires a track-level sponsorship.

Sponsoring a race at the track level means the event is named after your company -- the Coca-Cola 600 at Lowe's Motor Speedway, for example. This will set the company back $500,000 to $2 million, depending on the venue. But the perks are numerous, and, with good negotiating skills, can include:

• Venue signage
• Sponsor logos on the tickets and race programs
• Skybox, VIP tickets, hospitality tent
• Pace car rides
• Pit tours and passes
• Access to drivers' meetings and the Winner's Circle
• Being the Grand Marshal, waving the green flag, or giving the trophy to the winner
• Saying "Gentlemen, start your engines!"
• Unlimited corn dogs could be worked out -- for a price

All right, let's put it all together and see what this would look like if we held the HowStuffWorks 500.

The Candidate's Car

In the summer of 2008, an Internet rumor flew around the globe: U.S. Democratic presidential candidate Barack Obama was trying to court the red-state vote by sponsoring a NASCAR team for the August 3 Pocono race. Turns out it wasn't true. BAM Racing, with Ken Schrader at the wheel of the team's Toyota, offered the sponsorship slot to both Obama and Republican nominee John McCain, but neither party took the sponsorship bait.

Welcome to the HowStuffWorks 500

If we were going to hold a HowStuffWorks 500, we're definitely going to do it at the company's home track, Atlanta Motor Speedway. This is a popular venue that has been on the NASCAR circuit since its gates opened in 1960. It sits on the upper end of the track sponsorship price, and will cost at least $1.5 million for a single race. For that price, we don't get to+ use the NASCAR logo on our Web site, but we do get to use the name of the race in any promotions we choose.

Two NASCAR races run in Atlanta in October, the Craftsman Truck Series Georgia 200 and the Sprint Cup Series Pep Boys Auto 500. Let's say we displace those sponsors and make these two events our own. We may even get a discount for sponsoring both.

The races we're sponsoring are late in the season and part of the Chase for the Cup -- that's when the top 12 drivers vie for the championship during the last 10 races of the season. It will bump the price of track sponsorship up closer to $2 million, but casual fans as well as die-hards tune in for the Chase action, which means more potential customers adding to our return on investment.

Over the years, the speedway has undergone several expansions. It now seats 124,000, plus 138 luxury suites. The spring Sprint Cup races held in Atlanta in 2008 earned a 5.6 Nielsen Rating, which translates to more than 4 million households potentially hearing "We'll be right back with more of the HowStuffWorks 500" before every commercial.

As part of the deal, we negotiated for a skybox with food and beverages, plus the HowStuffWorks logo on the tickets and programs. Since we aren't team sponsors, we can root for anyone we want -- we don't even have to agree on which driver we like.

For more information about NASCAR and other NASCAR-related topics, follow the links on the next page.

The Official List of NASCAR

NASCAR has a roster of official sponsors. Some are expected, like Sonoco, the Official Fuel of NASCAR. Others are little quirkier:

• AMD, the Official Technology Partner, Microprocessor, and Semiconductor Technology of NASCAR
• Combos, the Official Cheese-filled Food of NASCAR
• Daytona USA, Official Attraction of NASCAR
• Oral B, Official Oral Care Product of NASCAR