Category Archives: NASCAR

A Look At NASCAR’s Unique Approach To Increasing Official Partners’ Return On Investment

On the Thursday before the NASCAR Sprint Cup Series Championship at Homestead-Miami Speedway, decision makers from a who’s who list of Fortune 500 companies gathered in a meeting space at the trendy Fontainebleau Miami Beach.  Sipping Coca-Cola around tables as salsa music beat over the room’s speakers, the Fortune 500 movers and shakers brokering deals were in the room for one reason:  NASCAR brought them.

When it comes to sports properties, NASCAR boasts one of the most extensive lists of corporate sponsors.  This racing season, the number of official NASCAR partners neared 60.  The value a corporation reaps in partnering with NASCAR is vast in the sense that every Sunday, their logo travels around a race track in front of millions of eyes.  Yet, in an economic age where corporations have limited budgets to spend on sports marketing, NASCAR recognized that it must provide a greater return on investment for its official partners.  “So many partners are looking for return on investment,” said NASCAR’s vice president of partnership marketing, Norris Scott.

Wanting to provide its corporate sponsors with more return on their investment, NASCAR created its Fuel For Business Council.  The council provides NASCAR’s official partners the opportunity to engage in quarterly business-to-business meetings where they can buy and sell goods, forge marketing partnerships and network.  “Nine years ago, NASCAR had a group of partners get together to talk about more ways they could drive value out of their sponsorship.  Naturally, one of the options was to create a platform for our partners to get business back from their sponsorship investment,” Scott said.

Today, the NASCAR Fuel For Business Council allows NASCAR’s official partners to meet quarterly at NASCAR-hosted events to buy and sell products from one another.  In the business-to-business environment facilitated by NASCAR, official partners not only buy and sell products, but also learn from one another how to best benefit from their partnership with NASCAR.  “It makes good business sense to give our partners a platform to grow their businesses.  Nobody is immune to the economy.  That fact plays an even more important role, because marketers are scrutinizing their overall budgets.  Sports marketing isn’t immune to that scrutiny.  The opportunities the NASCAR Fuel For Business Council provides allows our official partners more of a measure of the return on their investment,” Scott explained.

Ford Motor Company is one official NASCAR partner that has benefited from the opportunities that the NASCAR Fuel For Business Council provides.  A participant in the council since its creation, Ford Motor Company has utilized the council to drive its “Partner Recognition Program.”  Through this program, Ford Motor Company offers other official NASCAR partners’ employees the opportunity to purchase its vehicles at discounted costs, and also works with official partners to supply their fleet vehicle needs.

The return on investment Ford Motor Company has seen in taking its business to NASCAR’s Fuel For Business Council meetings is vast.  In 2012, Ford Motor Company sold over 5,500 vehicles to NASCAR official partners.  One of its largest vehicle sales resulting from the partnership in 2012 was worth over $5 million.

For Ford Motor Company, the value garnered through the NASCAR Fuel For Business council’s business-to-business meetings brings an extra layer of worth to its NASCAR investment.  “It’s a real big win-win for us, because it allows us to measure some of our investment into the sport.  With what Ford and the auto industry have been through, it’s been a challenge from an investment standpoint to decide where to use marketing dollars.  You want to be able to measure a return on any of your expenditures when you are reaching out to customers in an advertising marketing way.  For the dollars we spend in the sport, we want to calculate a return on investment.  One of the best ways to do that in NASCAR, is to not only calculate it based upon what’s going on on the track and the impressions made through the media, but also behind the scenes from a business-to-business standpoint,” said Ford Racing’s motorsports marketing manager, Tim Duerr.

While the opportunity to engage with other official partners in a business-to-business environment is valuable, perhaps the best thing NASCAR provides to support its Fuel For Business council is a layer of accountability.  Each NASCAR official partner is assigned to a NASCAR account manager.  That account manager ensures that official partners meet with the corporations they want to engage with at council meetings.  Furthermore, after the meetings, the account manager follows up with all parties to help facilitate the conclusion of transactions.  “With the way NASCAR has structured the program and how they bring people together to build relationships and follow up to hold you accountable, it really gives you a second level of coverage to make sure that the thoroughness is there,” Duerr commented.

The commitment to the council’s success is one not only held by Duerr and NASCAR, but shared by all official partners who participate.  “A couple of things make the council special.  For one, it’s all about exclusivity in the room.  Even though the partners in the room may be competitors in the sport, they know that when they enter the room to do business, they have the advantage of their competitors not being in the room.  The other piece that makes this successful is the commitment the partners have.  They are all trying to find that return on investment,” NASCAR’s Scott noted.

Going into its tenth year of existence, NASCAR’s Fuel For Business council is only getting fired up.  When it comes to future plans of how the council can benefit NASCAR’s official partners, Scott notes, “We want to continue to be innovative.”  For a sports entity that provides its sponsors with a business-to-business opportunity unlike that of any other sports entity, innovation should not be hard to find moving forward.

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How NASCAR’s Efforts After Daytona Nationwide Crash Will Impact Litigation

On February 23, at least 28 spectators were injured after a crash during a Nationwide Series race at Daytona International Speedway sent debris flying into the crowd.  Since the crash, NASCAR has reportedly begun investigating what mechanisms led to the crash and subsequent spectator injuries.  To do this, NASCAR is not only working to reconstruct driver Kyle Larson’s car, but is also working with fencing experts to determine how the track’s fencing may have played a role in the number of fans injured.

Hearing that NASCAR is taking these measures may have caused the injured spectators’ ears to perk up.  Reports indicate that numerous injured spectators have consulted with lawyers over the possibility of suing NASCAR for the injuries they sustained.  These individuals may believe that subsequent measures taken by NASCAR to improve the fencing around Daytona International Speedway may bolster any case they have against racing’s governing body.  However, such is not the case.

Given the amount in damages that potential litigants will likely demand against NASCAR, it is likely that a lawsuit would be filed in federal court.  Thus, the federal rules of evidence would apply.  The rule at issue here is Rule 407:  Subsequent Remedial Measures.  Notably, Florida’s state rules of evidence has a similar rule, Florida Statute § 90.407.

Rule 407 provides:

“When measures are taken that would have made an earlier injury or harm less likely to occur, evidence of the subsequent measures is not admissible to prove: negligence; culpable conduct; a defect in a product or its design; or a need for a warning or instruction.  But the court may admit this evidence for another purpose, such as impeachment or — if disputed — proving ownership, control, or the feasibility of precautionary measures.”

In the case of potential lawsuits injured spectators may file against NASCAR, Rule 407 is notable.  Any lawsuit filed against injured spectators will more than likely include a claim of negligence.  This negligence claim will expectantly be based in part on an argument that not having higher fences at the racetrack was negligent on NASCAR’s part.  Should NASCAR in the coming days or months take the subsequent remedial measure of heightening the fences, potential plaintiffs could not use evidence of those measures to show that NASCAR was negligent in this instance.

From NASCAR’s perspective, the existence of Rule 407 is beneficial.  It is beneficial because NASCAR can make the necessary improvements to Daytona International Speedway in the wake of the crash without fearing that doing so will improve plaintiffs’ likelihood of success in litigation.  It is for this reason that Rule 407 exists.  However, as noted by the exception to Rule 407, plaintiffs will still likely raise any adjustments to Daytona International Speedway made by NASCAR in the wake of the accident during the course of litigation.  Most likely, plaintiffs will raise evidence of any subsequent remedial measures to negate any argument that such measures were impossible to complete.

Analysis of this small issue goes to show the battle that NASCAR stands to fight after the February 23 crash.  Not only must it evaluate the cause of the crash and research measures that could better protect fans, it must consider how those measures may impact its looming court case.  Thus, it’s safe to say that NASCAR’s lawyers will be putting in heavy hours in the coming months.

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Should The Military Sponsor Sports Franchises?

By:  Richard Braun, Ruling Sports Intern (Twitter:  @RicBraun)

Last week, Congress voted to continue military sponsorship of professional sports such as NASCAR, UFC, and bass fishing. By a 216-202 vote, Congress rejected a proposal that would have cut $72.3 million from the military budget for sports sponsorships.

The main target of this advertising money is NASCAR driver Dale Earnhardt. Jr., whose primary sponsor is the National Guard. In addition, the Marines sponsor the UFC and bass fishing, while the Army sponsors NHRA dragsters driven by Tony Schumacher and Antron Brown. The idea behind the sports sponsorships is to help with military recruiting, since sports tend to appeal to men aged 18-34.

The theory has not worked as well in practice, however. In fact, the Army has independently already decided that it will end its sponsorship of Ryan Newman’s #39 car after this year. The Army has been a NASCAR sponsor for the past 10 years, but has determined that the benefit they get from this is no longer worth the cost. NASCAR claims that the Army collected 46,000 leads for potential recruits as a result of their car sponsorship. But nonetheless, the Army will no longer be sponsoring Newman’s car, so the amount of enlistments that resulted from those leads must not have been worth it. Additionally, the Marine Corps ended their NASCAR sponsorships in 2006, with the Navy following suit in 2008.

Considering the significant cost of sponsoring a car such as Earnhardt Jr’s or Newman’s, the Government is certainly justified in taking a closer look at the effectiveness. A primary sponsorship of a car ranges from $10-20 million. Congress is taking a look at every aspect of the budget, and it is reasonable for them to examine whether or not that money provides any material benefit.

Looking into the demographics of NASCAR fans gives us a glimpse as to why the Army determined that the sponsorship did not result in higher enlistments. NASCAR has a huge fan base, 77 million strong, but only 5% of that falls within the military’s key demo: men 18-34. Spending in excess of $10 million to reach such a small percentage of potential enlistees would strike many as a misappropriation of funds. If the military aims to reach younger viewers, NASCAR might not be the way to go.

Dale Earnhardt Jr. is one of NASCAR’s most visible drivers, and the National Guard argues that they get great value on their branding opportunities. However, the National Guard should concern itself more with recruitment efforts than branding. Other sports would better allow the military to reach its target audience, and at a more affordable price. For example, at an NHRA event last year, the Army had the opportunity to speak with nearly 13,000 students regarding careers in the military. On top of this, advertising NHRA cars is three times cheaper than NASCAR.

Government sponsorship of sports leagues is not inherently a bad thing. Military enlistment has been declining steadily across the board for some time. Spending a relatively small part of the military budget on advertising could possibly yield positive results. Like any business, however, the advertising dollars have to be spent wisely. As popular as Dale Earnhardt Jr. is, his celebrity does not appear to be aiding National Guard recruitment. Spending the $72.3 million more wisely would not include Dale Earnhardt Jr. in the future.

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AJ Allmendinger and NASCAR’s Drug Testing Policy

By:  John Fabiano, Ruling Sports Intern (Twitter:  @Fabs 5180)

July 24th is a big day for AJ Allmendinger.  The driver of Penske Racing’s #22 car recently tested positive for one of NASCAR’s banned substances and has been suspended indefinitely.   Two samples, A and B, are taken when NASCAR members are drug tested.  Allmendinger’s A sample tested positive for a banned substance but he will get a second chance when his B sample is tested this Tuesday.

NASCAR changed the structure of its drug testing policy in 2009 when it started randomly testing drivers and just about every team member than plays a role on race days, including team officials, crew chiefs, tire changers, and jack men.  The members tested are randomly selected by a computer system, where in the past the tests were only administered due to reasonable suspicion.  There are over 100 substances that violate NASCAR’s substance abuse policy, and Allmendinger tested positive for at least one of them. 

The most mysterious aspect of the whole testing policy is that if NASCAR may, as it did in Allmendinger’s case, choose not to release which substance a violating member tests positive for.  There was a great debate concerning this standard of confidentiality when Jeremy Mayfield, the only other driver to be suspended since the inception of the random drug testing policy, tested positive for a banned substance.  It was not resolved until court documents revealed that he tested positive for methamphetamines.  Only the banned substance list, which includes illegal substances, prescription drugs, alcohol, and dietary supplements, is made available to the public.

After testing positive for an illegal substance, the next 72 hours are crucial.  In this time frame, one option the violator has is to present evidence to NASCAR officials that they were taking prescription drugs in accordance with their doctor’s orders.  Another option is to request that the B sample be tested, which is what Allmendinger did.  During the testing of the B sample, Allmendinger will exercise his option to have an independent toxicologist chosen by him watch the test.  If the B sample comes back negative, Allmendinger will be immediately reinstated.  A positive test will lead to an indefinite suspension and could require a treatment plan that includes substance abuse counseling, treatment, or rehabilitation.

A lot of NASCAR drivers have been outspoken about the drug test policy since Allmendinger’s positive test went public.  His Penske Racing teammate Brad Keselowski doesn’t agree with NASCAR’s decision to keep the substance Allmendinger tested positive for a secret.  He states that there is a big difference between a driver taking a stimulant, which may have come from a legal supplement, and an illegal, recreational or performance-enhancing drug.  He went on to say, “It’s my belief that nothing should be allowed, I don’t think you should take Flintstone pills.”  While Keselowski’s ideal restrictions may be over the top, most drivers do agree with a strict drug testing policy.  Matt Kenseth agreed that a stern drug test policy will keep drivers in check while participating in a sport where the potential for fatal accidents is always present.  Kenseth said, “When you’re racing at 200 mph, you want everybody to be right.”

Drivers do not want to put themselves in a situation where they are competing against drivers that are unnecessarily putting their careers in jeopardy.  Tuesday’s test could make or break AJ Allmendinger’s career and reputation.

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