In the wake of Furniture Row Racing’s announcement it will shut down after this season, there was a telling quote team president Joe Garone gave to the Denver Post.
“There needs to be a runway when a partner leaves,” Garone said, referring to the loss of a sponsor. “… Had 5-Hour (Energy) not quit, we’d still be racing. That’s the truth. They did (quit) and we weren’t able to replace them.”
Though Tuesday’s news was a shock in many ways — after all, when was the last time the defending championship team announced it was ceasing operations? — it also exposed a situation many NASCAR teams are facing.
What happens when a major, big-money sponsor leaves in 2018? In an era where the cost of running a championship-caliber car has wildly outpaced new sponsorship revenue, teams have built themselves a house of cards to try and keep up with their rivals.
A decade ago, it was fantastic for NASCAR and its teams when major corporations or brands wanted to throw $25 million a year at race cars. Many of them did, and NASCAR was flourishing at the same time.
But companies aren’t spending that way these days, and they haven’t been for awhile now. So when a high-paying sponsor exits the sport — even if it’s “only” $10 million compared to the budgets in the spending heyday — that can be a fatal blow to a race team.
The reality is exactly what Garone said: There’s no runway if something goes wrong. If a major sponsor leaves a team, the chances of finding a replacement are about the same as landing a passenger plane on a cliff without going over the edge.
In that case, there are two options: Spend way less money — which means no more wins or competitive finishes — or call it a day and go home. That is, of course, unless the team owner is a super rich dude with disposable income.
That used to be Visser, but after burning through tens of millions and finally getting sponsorship to fund the team, he couldn’t go back. Not after winning a championship.
There are more teams than not in Furniture Row’s position — the teams who rely on sponsorship to survive and don’t have a billionaire to fall back on. As such, those teams could find themselves in the same situation: One sponsor decides to leave, and that could be it.
I’m not trying to be an alarmist here, but here’s an example: What if FedEx pulls out of racing at some point? Do you think the No. 11 car can find sponsorship at the same level? Maybe, but…
Look, I understand being jolted by the Furniture Row news. It’s a serious situation. But if this is really a wake-up call for you, then you either haven’t been paying attention to what’s happening in NASCAR or you’ve been in a bit of denial about it.
Either way, nothing is going to change at this point. I highly doubt teams are going to agree to some sort of spending cap, and NASCAR can’t take costs out of the sport fast enough. So this is the reality.
Where does that leave things now?
For one, questions about where Martin Truex Jr. and Cole Pearn will land next season — while interesting and relevant — don’t speak to the big picture.
After all, if there are no race teams, there’s nowhere to race. The current team model in NASCAR is broken — and has been for some time now — and everyone can only hope the Furniture Row news is an isolated case due to unique circumstances rather than the start of a frightening trend.
Nascar killed itself with the most recent new tv deal.
Not that there wouldn’t still be huge problems without it, ratings would still be down even on broadcast/over the air, and attendance would still be way down.
but I really think this was the last straw for many companies, or the one that justifies re-thinking their sponsorship in nascar
putting so many races on obscure cable channels, in a sport that relies on viewers to to attract sponsorship, was the ultimate in short-term thinking. Compounding the problem was chasing big dollar signs when signing the contract, but ignoring the fact that, to recoup their investment, the networks would have to incessantly bombard fans with interruptions and commercials, which just cannot be done in this age with all the alternatives people have for commercial-free entertainment. People will just turn the race off. This, of course, further killed whatever smaller ratings there would’ve already been from both the obscure tv networks and just the decade-long decline in nascar’s popularity. And poor ratings means it’s cheaper to advertise on the nascar tv broadcasts itself rather than a race team; why bother spending $25 million for a rolling billboard that’s not on screen most of the time, when you can get dozens of time more exposure through ad buys. How many nascar advertisers during the broadcast, either in commercials or broadcast sponsorship (O’reilly pit reporters, etc) actually sponsor a race car? Now go back 1-15 years and see how many that was. Sure there’s always been some, (wal mart) but watching the ads now I amazed how many are not sponsors of a cup car
yeah, with the new tv deal, everyone got a nice payday, but none of that goes back into the sport, it’s just profit-taking. even if team owners got more tv money, how many are willing to use that to run their cars. Few, I bet. they see that as gravy, meanwhile, the new tv deal severely devalued the sponsorship experience, and it’s killed ROI.
For decades NASCAR has given 65% of purse money to the tracks, at least half of which the France family owned, with only 25% to the teams ( NASCAR keeps 10% for themselves). The teams didn’t, couldn’t or wouldn’t demand more of the revenue so here we are.
Toyota could easily afford to cough up 10 or 15 million to sponsor car. Let loose Toyota
Not sure the other Toyota teams that were able to survive by working hard to get sponsorship money would be OK with that.
“Not sure the other Toyota teams that were able to survive by working hard to get sponsorship money would be OK with that.”
Other Toyota teams:
-4 Joe Gibbs cars, the by fact Toyota factory team
-the BK #23 car, which just finished bankruptcy proceedings
-the part-time Gaunt Brothers #96 car
So, what other Toyota teams?
It seems to me that many of Nascar’s ‘cost cutting’ measures have backfired. Testing, for instance. Yes, it was expensive to haul to a track to test. How much has it cost teams to buy pull down rigs, buy wind tunnel time, and Hire the nerds to run their computer simulations? When was the last time team could go to their local parts store for parts for their ‘stock’ car? All the technology doesn’t seem to have saved any money…or made the racing more exciting. Nascar has snatched up several sponsors that could be on cars, but fine it cheaper to become the ‘whatever’ of Nascar.
The next “elephant in the room” for NASCAR is the advanced age of the major owners. Penske and Roush are in their 80’s. Joe Gibbs and Richard Childress in their 70’s. Hendrick, Ganassi and Haas are deep in their 60’s. What are NASCAR’s plans if one, or more of these owners pass on soon and their heirs and business partners decide not to continue their teams? True, some of these teams, notably Gibbs and Childress have families involved who will likely carry on those teams. And it is true that Tony Stewart has significant equity in Stewart Haas and Jeff Gordon has some equity in Hendrick, but as rich as these ex-drivers are, they don’t have the deep pockets and outside business support of their bosses.
I think one of the key reasons that Barney Visser decided to shut down the FRR team was the concern after of his 2017 heart attack and his heirs not being too keen to re-invest in FRR to make up the recent loss of sponsorship.
I think Cindric will take over Penske, but his son Jay has owned an Indycar team in the past (Dragon) and is now running a Formula E operation. Penske is a bit like a McLaren in that the team will outlive him I think. They have their fingers in too many pies.
Roush…you’d think it’d be the “Fenway” part of the operation. Although when’s the last time you heard about anything with the Fenway half.
Gibbs is already in transition. His sons J.D. and Coy does a lot there. Coy is the real presence behind their presence in motocross and supercross where “JGR Toyota Suzuki” is the Suzuki factory team.
Hendrick, don’t know. Maybe Gordon and Johnson.
Childress. To the grandsons?
Ganassi became Ganassi by buying out Pat Patrick. No reason anyone can’t do it for him.
NASCAR is different from any other sport entertainment.
In the stick and ball sports the team owners own the league. They conduct their business, make the rules, etc.
Not so in NASCAR. You own a team. You really have very little say in what goes on.
Further, in what other entertainment venue do the “players” have to pay to play? Teams send in money with their application forms in order to race.
NASCAR has its hand in the till at every turn. Can you imagine Tom Cruise paying to star in a movie? Or maybe Lebron James paying to play basketball.? What about Tom Brady paying to play quarterback for the Pats?
Speaking as a fan who has watched every race since 1990 and a season ticket holder, I’m honestly surprised the wheels didn’t come off sooner. Or maybe the wheels came off a few years ago and no one wanted to speak up? Maybe Brian France being gone has enabled some of the press who follow the sport to speak up without fearing for there jobs.
Here is my list of what has decimated the sport, in no particular order.
Nepotism. The Dillion’s and Menards occupy way to much of the field. Listen when they are introduced at driver intros. Silence: no one cares about these people.
Dale Jr. He’s super likeable, and the son of our greatest warrior. But people hung around for 17 years waiting for him to do something, and not much ever happened.
Jimmie: maybe the greatest achievement in NASCAR, 5 championships in a row. Unfortunately he was not the superstar of the sport.
Kyle Busch. Probably the guy who could have really energized the sport. Has such a terrible personality that his almost unparalleled skill is overshadowed by hate.
Danica. Like a sugar high, NASCAR and the press decided to bask in short term attention that was unsustainable. Even people who know nothing about racing eventually figure out she’s never going to win, and leave.
Constant clean air problems.
Constant change for the worse. Like the Chase. It has become such a crap show that Edwards thought “it’s not worth racing all year to get down to one race and have a 25 percent shot at a championship. I quit”.
Tv broadcasts that absolutely SUCK. Constant big pharma commercials about lung cancer and rectal bleeding and on and on and on. Also, most of the shows like Racehub suck as well. They function like the North Korean press division.
Drivers complaining about working so much. Denny Hamlin needs to go WORK at FedEx and see how he likes it. Sure he may feel like it’s too long of a season, but don’t SAY it.
“…….NASCAR can’t take costs out of the sport fast enough. So this is the reality……”
Don’t I remember a certain “last American Hero” say that things were wrong when it takes more than 10 million dollars a season to be able to compete in NASCAR??…
Junior Johnson tried raising this alarm over a decade ago, but NASCAR and its teams would not listen…
There IS a way NASCAR can DRAMATICALLY cut costs, but they just won’t do it:
SHORTEN THE SEASON!!!
The season was too long when it was at 26 races, which is where it was when I started watching way back in ’87. Now, with 36 races on the schedule PLUS the “All-Star race” and others, by the time the “Chase” is over, almost nobody cares because a short 7 weeks later here comes the “new” season…..
This LONG season is at least PART of why many of the sports drivers have left NASCAR. The current season just does not allow for any kind of life and it has shortened careers……
….but it DOES allow things like BORING races at Loudon, California, Kansas, etc. Even with the contrived “stage racing”.
First Lowes, Now Furniture Row…….others soon to follow….
Whats NASCAR going to do with its new TV contract when there isn’t anybody around who can even AFFORD to race?
NASCAR R.I.P 1948-2017