With sponsors harder to convince, teams having to get creative

CHARLOTTE, N.C. -- NASCAR visits the lands of bright lights and billboards this weekend in Las Vegas.

Tons of billboards. You can't walk two feet without seeing an ad for something, from a large picture of Kurt Busch saying he wants his PT's (a tavern) to a rolling sign pushing a local brothel.

There was a time not too long ago when it was that way on the track, where most of the cars were 200 mph billboards in the Sprint Cup and Nationwide Series.

That isn't the case at the moment. Dale Earnhardt Inc., Chip Ganassi Racing with Felix Sabates and Michael Waltrip Racing are struggling to find sponsorships to fully fund one Cup car each. Yates Racing doesn't have full support for either of its cars with the No. 38 of David Gilliland sponsored for seven races and the No. 28 car of Travis Kvapil for none.

Jacques Villeneuve lost his ride at Bill Davis Racing after one event because he couldn't find sponsorship.

The situation is worse in the Nationwide Series where almost half of the 43-car field is without full sponsorship for the season. There were only 42 cars in last weekend's race at Auto Club Speedway in Fontana, Calif., and more than half a dozen had no primary sponsors.

Top-tier team Joe Gibbs Racing doesn't have its No. 18 Nationwide Series car fully funded with Kyle Busch, Denny Hamlin and Joey Logano splitting duties behind the wheel.

"It's tough out there," said Roger Penske, who is running a limited Nationwide schedule with Daytona 500 champion Ryan Newman and Sam Hornish Jr.

Many agree the economic climate of NASCAR sponsorship, much like the climate of the U.S. economy -- if not in a recession -- is in a downward cycle. Teams are scrambling to piece together deals that will keep them on the track.

"I don't think it's a panic situation," said Richard Childress, who will start a fourth Cup team next season if he can find sponsor help. "It's a warning that says, 'Look where you're going to be five years down the road. Do we need to do things differently?'"

Michael Waltrip, who is looking for full sponsorship on the No. 00 currently driven by David Reutimann, agreed.

Michael Waltrip

I wouldn't say panic, but there's certainly a lot of concern. You understand how fragile it is. You look at the business model and look at the summary of what it takes to compete. If you don't have a sponsor, you don't race. It's not like the sponsor is a bonus. It's a necessity.

-- Michael Waltrip

"I wouldn't say panic, but there's certainly a lot of concern," Waltrip said. "You understand how fragile it is. You look at the business model and look at the summary of what it takes to compete. If you don't have a sponsor, you don't race.

"It's not like the sponsor is a bonus. It's a necessity."

It costs $15 million to $30 million to fully fund a Cup team. At least 70 percent of that comes from sponsors that pay to have their logo on the hood of a car.

The cost to compete has risen so fast that companies that once served as the primary sponsor for an entire 36-race schedule, as well as the Budweiser Shootout and All-Star race, are splitting the season with one or two other sponsors.

"That's not a sponsor issue," said J.D. Gibbs, the president of Joe Gibbs Racing. "That's a cost issue. We spend a lot that's unrelated to sponsors. If you look in the garage, we've got a lot of large corporations involved. Does that mean they can afford to be primaries on the car? That can be hard at times."

Interstate Batteries has gone from a primary sponsor for Joe Gibbs Racing's No. 18 Cup team, paying about $2.5 million when it initially got into the sport more than 15 years ago, to a partial primary appearing in only six Cup races.

McDonald's, once the primary sponsor for Bill Elliott, shares sponsorship on the No. 19 of Elliott Sadler with Best Buy and Stanley -- each considered strong in their own right.

Dave Jessey, the vice president of sales at Gillett Evernham Motorsports, calls that his "trimary" sponsor.

"We would love to have each of those companies take a car by themselves," he said. "Each has the wherewithal to do it. But even those guys are saying, 'Hey, we only have a certain amount we can invest in motorsports.'"

Jim O'Connell, NASCAR's vice president of corporate marketing, says the sport is as healthy as it has been from the sponsorship side. He reminds that more Fortune 500 companies are involved than ever, and argues that splitting sponsorships between two or three companies only brings more companies into the sport.

He insists that the balance of competition suggests teams are better funded than ever and calls the lack of full sponsorships nothing more than a blip on the radar.

"There have been times when we've had a few more sponsors than others," he said. "But if you look at the entire field across all three series, sponsors are doing very well."

The year after 9/11 was one when marketers were more careful with their money until they determined the mood of the country.

"That was a slow period for a brief time, and then it picked back up," said Geoff Smith, the president of Roush Fenway Racing. "If this marketing thing gets cleared up over the next few months there'll be marketing money again.

"Classically, what happens is there's a forecast for something that makes people nervous, and marketing money is withheld. I've seen that two or three times in my career. This is one of them."

Only four years ago Smith lost Jeff Burton to RCR because he couldn't keep a full sponsor on the No. 99 car. Two years later he had more sponsors than he had teams because he offered companies the chance to buy smaller race packages at a smaller price.

"We got into the business of selling off one-race, two-race, three-race deals," Smith said. "We think we have a really creative approach to finding a program that will work and matching a sponsors' budget that will keep things going."

Even NASCAR's most popular driver, Dale Earnhardt Jr., has two primary sponsors.

Most agree creativity is the key to growing sponsorships. That's why organizations are going outside of traditional NASCAR sources for hires. DEI hired Max Siegel from the entertainment business to serve as president for global operations.

Jessey had no NASCAR background when he was hired by GEM from Bank of America. Tom Reddin, GEM's new CEO, was the chairman of Lending Tree until early last year.

Many top-tier organizations have brought in business partners to subsidize rising costs -- partners who couldn't initially tell the difference between a front-end splitter and rear wing.

"You have to bring in folks with more of a business background," Jessey said. "This isn't the sport it was 10 years ago."

Companies also are going outside the borders of the U.S. in search of sponsors. GEM is scouring the Canadian market to take advantage of connections with majority owner George Gillett Jr. -- also the owner of the NHL's Montreal Canadiens -- and Canadian-born driver Patrick Carpentier.

Steve Lauletta, the president of Ganassi Racing, is negotiating with companies all over the world with Juan Pablo Montoya and Dario Franchitti in his stable.

"Deals are still getting done," said Lauletta, who spent 12 years on the other side of marketing when he worked for Miller Brewing. "We're getting ready to announce a deal at Bristol for the rest of the season. It's not like the market is totally dried up.

"It's just a different environment, and you have to have your story more straight as a seller and a buyer than you did two or three years ago."

Penske agreed, saying the retail sector that used to rule the sport is "absolutely soft."

"What you have to do is continue to have people knocking on doors," he said. "You really have to go places people haven't been."

Warning sign?
Ed Clark, the president of Atlanta Motor Speedway, said he knew the Nationwide Series was in sponsor trouble after walking through the garage before the Daytona 500.

"I had more teams than I ever have come up to me and say if I've got anything to send their way, to please put them in touch," he said. "It's definitely a tougher environment than I've seen in years past."

One dilemma for the second-tier series continues to be the influx of Cup drivers. Tracks need the Cup drivers to sell tickets, and teams need the Cup drivers to sell sponsorships.

The small team without Cup support ends up struggling to find a company that will take a chance on an up-and-coming driver.

Lauletta has seen that firsthand, finding it much easier to sell Nationwide sponsorship for Montoya and Franchitti than for Bryan Clauson.

"Something has to be done so we can tell their story and continue to bring sponsors in," he said.

Sta-Green got into the sport a few years ago to take advantage of NASCAR's popularity for fast national exposure. The company was the primary sponsor for Kyle Busch's Nationwide car last season at Hendrick Motorsports.

But rising costs -- and with Hendrick planning to split the car between several drivers in 2008 -- the company opted to form an aggressive marketing program with Speedway Motorsports Inc. instead.

"Like him or hate him, we had one driver," said Amy Yoder, the CEO of United Industries, which owns the Sta-Green brand. "That allowed us to get a bit of a fan base. With a series of drivers, even with Dale Earnhardt Jr., we felt it was going to be hard to build that fan base.

"Aligning ourselves with the SMI tracks, we can do more things such as ticket giveaways that allow us to be more fan friendly. You can't do that with cars unless you're ready to spend millions upon millions."

Jessey said he believes the drop in fully-sponsored Cup teams also hurt Nationwide sponsorship. He said when Cup teams began to discount deals, it became tougher for Nationwide teams, particularly those without Cup benefits, to find partners.

"And if you're in the Truck Series, it's really challenging," he said. "There is definitely a cascading affect."

Smith said he began seeing that after the 2006 season.

"The selling season of 2006, we were turning away people trying to be Nationwide sponsors," he said. "There was more interest in that series than we had teams or programs. When we got into last summer that market was nowhere near as active as it has been.

"Then we saw the number of unsponsored trucks and unsponsored Nationwide cars this year, and we have a pretty good indicator of what's going on in the Cup garage in terms of interest, and it's off right now."

Norm Miller, the CEO of Interstate Batteries, said rising costs have driven mid-level companies such as his out of the primary sponsorship business.

"We only have X amount of money that we have for marketing and promotion," he said. "With NASCAR, it uses a great percentage of our cash that we create for promotions. When you get people like Home Depot and FedEx, companies that have multi-million dollar budgets, money for this is one arm of what they're doing, or one finger of what they're doing.

"For us it had to be our major thrust."

So Miller opted to run a partial sponsorship in Cup and Nationwide, and put more effort into becoming the official battery of JGR. That way, he said, he gets the benefit of all three Gibbs drivers -- Busch, Hamlin and Tony Stewart.

"What's happening will be good for the sponsors overall because it's going to force the teams to be creative and offer more for the money," Miller said. "It makes them think about it more overall, and it makes us all think about it."

Changing times
Childress has spent more time worrying about sponsors than he cares to count because of his ongoing feud with NASCAR and series sponsor Sprint over having AT&T as Burton's primary sponsor.

When Cingular rebranded as AT&T last season, the governing body refused to allow the AT&T logo on Burton's car because of an agreement with Sprint that forbids any other wireless companies to enter the sport. AT&T is the re-branded Cingular, which was grandfathered in -- along with Alltel -- as long as it stayed in the sport under the Cingular name.

The sides finally reached an agreement that allows AT&T on the hood through the end of this season, meaning Childress actually is seeking primary sponsorship for two cars in 2009.

"We have our challenges," he said.

Imagine the challenge for an organization outside the top 20, or even the top 35, in points. Sponsors more than ever are looking for more value, which means finding a driver and a team capable of winning races and competing for a spot in the 12-driver Chase.

"I typically hear sponsors say I want to be in the top 15," Jessey said.

Lauletta said companies aren't willing to risk as much on an up-and-coming drivers as they used to.

"I liken it to the fact that in good economic times, when people are sure of where we're going, you can be 80 to 85 percent sure of something and sell senior management on doing a sponsorship," he said. "Now, when the climate gets to where it is, they want to be 98 percent sure.

"It's harder to get it done. It takes longer to get deals done."

He added that companies aren't as anxious to commit to deals that will have their name on the side of the car by the opener in Daytona, as once was the norm. Some are willing to wait until Week 3 or Week 7, choosing to pick certain races that might hit a more specific demographic relative to their product.

"Now the timing leverage is with the company," Lauletta said. "They can be on the car whenever they want."

The addition of Toyota last season, which added seven new cars to the series, added to sponsorship woes. How long this lull will last is anybody's guess.

"We'll be fine," Gibbs said. "I don't see any red panic flag. Now, are there more companies not stepping up to be primaries? Yeah, but they'll come back."

Lauletta agreed, saying NASCAR is no more in dire straights than any other sport.

"I've got a lot of friends in every other sport and they're all looking for sponsor dollars," he said. "It's across the board. It's amplified in motorsports because of the type of dollars we're looking for and the visibility of the sponsors.

"But anybody looking into corporate America, it's tougher than normal."

David Newton covers NASCAR for ESPN.com. He can be reached at dnewtonespn@aol.com.