Developing a professional nascar driver investor programs - for viewing

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Motorsports Marketing Mentor and Sponsor Attraction Coach, Annamarie Malfitana-Strawhand presents an outline on how a young up and coming talented race car driver can present an investment opportunity …

Motorsports Marketing Mentor and Sponsor Attraction Coach, Annamarie Malfitana-Strawhand presents an outline on how a young up and coming talented race car driver can present an investment opportunity to a company or individual to potentially fund their racing program and help them advance their driving career to the top levels of NASCAR. This also shows the potential return on investment for the investor once the driver becomes a professional NASCAR driver.
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  • 1. INVESTOR PROGRAMS AND HOW THEY WORK Prepared By: Annamarie Malftana-Strawhand Motorsports Marketing Mentor and Coach Marketing At Full Speed, LLC© Copyright, 2012 marketingatfullspeed@gmail.comAnnamarie Malfitana-Strawhand and 757-652-9936Marketing at Full Speed, LLC www.marketingatfullspeed.com
  • 2. The objective of this presentation is to outline the value of investing in an up and comingrace car driver that is poised to embark on a professional career in NASCAR.The sport of NASCAR racing has seen huge growth and success in the last ten years withthe star drivers becoming international celebrities and attracting large driving salaries,commercial endorsement contracts with fortune 500 companies, as well as high volumelicensed merchandise sales .Driving talent is only one factor that a NASCAR development team looks at as a perquisiteto hire an up and coming driver. The teams themselves look for the driver to initially bringtheir own funding to be „developed‟ in an effort to prove themselves on the track in theteam‟s race car and to the powers that be in the sport. Once they have provedthemselves as race driver that can successfully race in the development programs, thedriver is often hired to drive for the team, or will be hired to drive for another team, and willbegin earning a salary and race winnings.The reason the up and coming driver needs to find an investor is for the simple reasonthat he or she must bring their own funding to the team to get these initial drivingopportunities in an effort to ultimately drive professionally with a salary, percentage ofwinnings, performance bonuses, endorsements, sponsorships and merchandise sales.
  • 3.  Investor puts up the funding needed for the driver to compete in a „NASCAR driver development program‟ this could be a 2-5 year program depending on the age and skill level of the driver, and the team(s) chosen for development. This is in an effort to prepare the driver to ultimately compete in NASCAR‟s top division, the Sprint Cup Series. Development programs can start with NASCAR‟s touring late model division, then the K&N Series, Camping World Trucks or Nationwide Series then the final step into the premier division, the Sprint Cup Series. The investor will receive a return on the investment once the driver begins to earn a driving salary and winnings through a NASCAR team contract; as well as other earnings through sponsorships, paid endorsements, merchandise sales and licensing. The return on the investment can be a percentage of all driver income combined and can be applicable for a number of years as the driver competes professionally in NASCAR.
  • 4.  NASCAR is one of the most viewed professional sports in terms of television ratings in the United States. In fact, professional football is the only sport in the United States to hold more viewers than NASCAR. Internationally, NASCAR races are broadcast in over 150 countries. NASCAR holds 17 of the top 20 attended single-day sporting events in the world, and claims 75 million fans who purchase over $3 billion in annual licensed product sales. Fortune 500 companies sponsor NASCAR more than any other motor sport. NASCAR sponsorships (75% of team revenues are derived from them), including new companies such as Quicken Loans and 5-Hour -Energy. Farmers Insurance is currently the biggest, committing $800,000 per race for 22 races to Kasey Kahne‟s No. 5 car, part of the Hendrick stable. It is common for contracted drivers earn a percentage of the team sponsorships, or for the driver to sign a paid personal services agreement separately with the team sponsor. Source: http://www.forbes.com/nascar-valuations/
  • 5. Source: http://www.forbes.com/nascar-valuations/#rank
  • 6. Source: http://www.thesportjournal.org/article/show-me-money-cross-sport-comparative-study-compensation-independent-contractor-professional
  • 7. Nascars Highest-Paid DriversThese drivers earned the most in 2011 from their salaries and personal endorsements,as well as their share of race winnings and licensing income.These drivers all compete in NASCAR‟s premier division, the Sprint Cup Series.#1 Dale Earnhardt Jr. - $28 million #6 Kevin Harvick - $14 millionHendrick Motorsports Richard Childress Racing#2 Jeff Gordon - $24 million #7 Kyle Busch - $14 millionHendrick Motorsports Joe Gibbs Racing#3 Tony Stewart- $22 million #8 Danica Patrick - $12 millionStewart-Haas Racing Stewart-Haas Racing#4 Jimmie Johnson - $21 million #9 Matt Kenseth - $11.5 millionHendrick Motorsports Roush Fenway Racing#5 Carl Edwards -$15.5 million #10 Kasey Kahne- $11 millionRoush Fenway Racing Hendrick MotorsportsSource: http://www.forbes.com/sites/kurtbadenhausen/2012/02/22/nascars-highest-paid-drivers/
  • 8.  The return for the amount invested can be based on a percentage paid on the driver‟s overall income through professionally racing in NASCAR. This comes from paid endorsements, sponsorships, paid appearances, souvenir sales, licensing fees, driving salaries, performance bonuses and winnings. Professional race drivers in NASCAR realistically make their peak salary and winnings when racing competitively for a top 10 team in the NASCAR Sprint Cup Series. However, they can begin to earn up to three figures in the NASCAR Nationwide Series and Camping World Truck Series based on their own self- promotion and popularity with pulling in their own sponsorships, commercial endorsements, personal services agreements, souvenir sales and licensing fees. Investors that finance an up and coming driver who goes through the “development” phase must understand that typically NASCAR teams do not pay salaries or offer race winnings to development drivers. Drivers must bring their own funding to do this. But once the driver makes it to the top three nationally recognized NASCAR divisions, (NNS, NCWTS, and NSCS) the winnings and salaries vary depending on the level and competitiveness of the team. A driver must have marketing savvy and a good personal PR campaign to utilize the position he or she is in and pull in their own personal endorsement deals, sponsorships and personally grow their fan base to insure lucrative souvenir sales.
  • 9.  The investor and the driver can put together an agreement that bases a return on an investment early on in his or her NASCAR driving career based on percentage of sponsorships, endorsements and souvenir sales and not just on salaries and earnings. The investor and the driver can also put together an agreement based on a return after a certain amount is being earned by the driver from all sources of income, such as starting at a $250,000 mark, with a percentage based once that amount has been reached yearly by the driver. The investor and the driver must also understand that the driver could be considered “under development” for up to 3-5 years depending on his or her starting point, age, learning curve and quickness to adapt to the cars, tracks and level of competition. So it is highly suggested that the return on investment must be based also on the driver‟s ability to sell souvenirs and attract sponsorship, not just on driving potential. A driver owns the rights to his or her own likeness and also can sell souvenirs and get their own paid endorsements and sponsors while under development. So, the investor can start getting returns earlier on, as the driver gets more sponsors and sells more souvenirs. Investors can also be granted full licensing rights to the driver they are financing – to create and sell their own merchandise.
  • 10.  Typically, the amount of up front funding from an investor for a development driver varies, depending on the level and quality of teams that are developing the driver- and the level that the driver starts out at for his or her development. Current Funding Amount Examples Step By Step: 1) Championship caliber regional touring NASCAR late model program – Approx. $300,000 - $500,000 per year. (1 full season) 2) Championship caliber NASCAR K&N East Series or ARCA program– Approx. $1,000,000 - $2,500,000 per year (1 full season) 3) Championship caliber NASCAR Camping World Truck Series or NASCAR Nationwide Series program– Approx. $3,000,000 - $5,000,000 per year (1 full season)
  • 11.  Below are current examples of professional race drivers who are working with investors to develop their careers in NASCAR, as well as Drivers and Teams that have had successful development programs: 1) Paul Harraka (Source: ESPN.com/ESPN The Magazine April, 2012 Issue) Read article: “The new investment vehicle --Young drivers can no longer break into the NASCAR scene on talent alone” Link: http://espn.go.com/racing/story/_/id/7712993/nascar-young-driver- paulie-harraka-end-nascar-money-woes-espn-magazine 2) Paul Harraka ( The Duke Chronicle Online) Link: http://www.dukechronicle.com/article/harraka-starts-company- fund-his-racing 3) Joey Logano, Denny Hamlin, NASCAR.com – “Development Success Stories” Link: http://www.nascar.com/2009/news/features/11/11/enterprise.develo pment.in.nascar/
  • 12.  The driver must have his or her own corporation or LLC set up before meeting with potential investor The driver must have teams lined up with letters of intent to develop the driver based on the amount funding needed The driver must provide a professionally prepared prospectus with legalities by his or her attorney for the investor The prospectus must map out in detail how the funding is to be paid to the driver, and the responsibilities of the driver to provide the return on the investment to the financiers Once the prospectus is agreeable by both the driver and the investor, an agreement is to be drawn up by the driver‟s attorney and the financier can have their own attorneys review Once the agreement is signed and a payment schedule set up with the investors, the driver must set up his own written agreements with the team(s) and begin his or her development program
  • 13.  This outline was prepared and researched based on my many years experience in the business of motorsports marketing, management and driver development. My information comes from the documented resources listed as well as information personally acquired from meetings with NASCAR team owners. This is strictly for informational use as a potential guideline to how these investment programs can work. This is NOT to be used as prospectus or any type of agreement. Please seek legal counsel for all investment programs. The content of this presentation is copyrighted and is intended for use only by my clients and their counterparts. This presentation can only be reprinted or shared digitally with my expressed written permission.Thank you,Annamarie Malfitana – StrawhandProfessional Motorsports Marketing Mentor and Coach © Copyright, 2012 Annamarie Malfitana-Strawhand and Marketing at Full Speed, LLC