Jack Daniel's, Jim Beam lose their NASCAR spirits, race out of their deals

NASCAR may have a blue-collar image, but it's an expensive sport. Not only is there the cost of the racing cars, but there's the payroll needed for the experienced staff required to maintain them. With all the overhead, sponsorship doesn't come cheap. Yet attendance and TV ratings are down, making it tough for NASCAR to prove its value.

Two whiskey brands, Jack Daniel's and Jim Beam, announced this week that they're discontinuing their NASCAR sponsorships. Jack Daniel's, owned by Brown Forman (BF.B), cited a "re-evaluation" prompted by the recession, while Jim Beam, owend by Beam Global Spirits & Wine, a subsidiary of Fortune Brands (FO), made its decision after an "extensive review" of its marketing strategy.
With their departure, NASCAR retains just one spirits sponsor: Canadian whiskey distiller Crown Royal.

Many companies increasingly scrutinize what they get in return for their marketing spending, says Basia Wojcik, who specializes in sports marketing at the Marketing Arm in Dallas. "People are being conservative, and watching where every penny goes," she says.

NASCAR confirms this: "In recessionary times, every marketer is weighing every single dollar that they're spending," spokesman Andrew Giangola says. Despite the departures of Jack Daniel's, which sponsored Richard Childress Racing's No. 07 team, and Jim Beam, which sponsored Robby Gordon Motorsports, NASCAR has signed on new sponsors including Guitar Hero and Ask.com.

A sport with a working-class fan-base is not immune to economic woes. As the average NASCAR fan travels at least 250 miles to attend a race, rising gas and hotel costs have put a big dent in attendance. The average audience this year has been about 110,000, down from about 120,000 last year, Giangola says. Ratings have slipped, too. For the season's first 10 races, ratings on Fox declined about 12 percent, according to Nielsen Media Research. The Daytona 500 drew 16 million viewers this year, compared with 17.8 million last year.

As a result, NASCAR has sought to trim costs, cutting somewhere between 600 to 800 team members during the winter, and banning tests between races, which saves about $1 million per car. This lower overhead has helped some teams offer sponsorships for, say, $8 million instead of $10 million, Giangola says.
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