Navigating Sports in a Down Economy:  a look at the business of motorsports and  its dependence on corporate america
“ Auto racing, bull fighting and mountain climbing are the only real sports… all others are games.” - Ernest Hemingway
9 CHAMPIONSHIPS – 103 VICTORIES
“ I am in this for one reason. To win. I want to run up front and  to win races. But as important to  me is to help our sp...
Champions, Diverse Backgrounds and Experience
Daytona Rolex 24 Hour Virginia International Miami/Homestead Watkins Glen Kansas City Miami/Homestead Iowa Daytona Texas I...
<ul><li>Sponsorship allows you to cut through the clutter and motorsports sponsorship allows you to do it in a unique way ...
<ul><li>Sports are NOT Recession Proof </li></ul><ul><li>Top 3 spenders in sports are Financial Institutions, Automotive C...
 
 
<ul><li>Increased corporate scrutiny Shrinking Pool of  </li></ul><ul><li>Difficult economy/bankruptcies Sponsorship Dolla...
<ul><li>Shrinking Pool of Sponsorship Dollars to Race With </li></ul><ul><li>Must deliver for existing sponsors to justify...
<ul><li>Value for sponsors is a function of what they spend vs. what they get…. </li></ul><ul><ul><li>If what they spend r...
<ul><li>Companies still want to increase awareness, shape consumer attitudes, incent the trade, differentiate product from...
 
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Chip Ganassi

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Chip Ganassi

  1. 1. Navigating Sports in a Down Economy: a look at the business of motorsports and its dependence on corporate america
  2. 2. “ Auto racing, bull fighting and mountain climbing are the only real sports… all others are games.” - Ernest Hemingway
  3. 3. 9 CHAMPIONSHIPS – 103 VICTORIES
  4. 4. “ I am in this for one reason. To win. I want to run up front and to win races. But as important to me is to help our sponsors win, to get a return on the investment they have made with us.” Chip WIN RACES – ADD VALUE TO SPONSORS
  5. 5. Champions, Diverse Backgrounds and Experience
  6. 6. Daytona Rolex 24 Hour Virginia International Miami/Homestead Watkins Glen Kansas City Miami/Homestead Iowa Daytona Texas Indianapolis 500 Edmonton Birmingham Nashville Kentucky 2008 2008 – Most Successful Year in Team History 14 Wins and 2 Championships
  7. 7. <ul><li>Sponsorship allows you to cut through the clutter and motorsports sponsorship allows you to do it in a unique way </li></ul><ul><ul><li>Motorsports fans are loyal to sponsors & are a significant segment of the population </li></ul></ul><ul><ul><li>People view sponsorship as not intrusive, but rather necessary to the sport </li></ul></ul><ul><ul><li>Your message is not an interruption from the action, it IS the action </li></ul></ul><ul><ul><li>The association can be used in other value-added ways outside of consumer marketing </li></ul></ul>Public Relations -Diversity Initiatives -Philanthropic Initiatives -Race & Non Race PR Business Opportunities -External -Customers -B2B Partnerships -Internal -Recruiting -Incentives -Employee Morale Branding Properties -Cars/Uniforms -Marketing Comm. -Signage -Clothing Advertising - Performance Messaging -TV, Print, Radio - Internet - Photography Market Extensions -Merchandising -Sales Promotions -Event Programs -Driver Appearances -Showcars
  8. 8. <ul><li>Sports are NOT Recession Proof </li></ul><ul><li>Top 3 spenders in sports are Financial Institutions, Automotive Companies and Alcohol Companies. </li></ul><ul><li> - Bank Failures, Bankruptcies, Mergers </li></ul><ul><li> - Impact on tickets, suites, naming rights and valuation of teams </li></ul><ul><li>Leagues and Teams are Faltering </li></ul><ul><ul><ul><li>- Golf Events, WBNA Team, Arena Football </li></ul></ul></ul><ul><ul><ul><li>- 3 NASCAR teams are gone </li></ul></ul></ul><ul><ul><ul><li>- NHL, NFL, MLB, NBA franchises next? </li></ul></ul></ul><ul><li>Fan Attendance is in Flux </li></ul><ul><li>- Middle class is priced out of the market </li></ul><ul><li>- Licensing is suffering </li></ul><ul><li>Teams and Leagues are cutting jobs </li></ul><ul><li>Binding contracts are being ignored/terminated </li></ul>
  9. 11. <ul><li>Increased corporate scrutiny Shrinking Pool of </li></ul><ul><li>Difficult economy/bankruptcies Sponsorship Dollars </li></ul><ul><li>Less factory/supplier support to Race With </li></ul><ul><li>Open-wheel: value has declined over last few years Team Performance and Value </li></ul><ul><li>NASCAR: continues to deliver value to Sponsors is More </li></ul><ul><li>but costs rising and highly saturated Important than Ever </li></ul><ul><li>small pool of new money entering sport </li></ul><ul><li>High cost and lengthy process associated </li></ul><ul><li>with acquiring new sponsors; particularly for Sponsors Expect More for </li></ul><ul><li>sponsors who are new to motorsports High Cost of Investment </li></ul><ul><li>Sponsors are less patient and need more </li></ul><ul><li>measurement and ROI </li></ul><ul><li>Highly competitive on-track and costs are rising Shift to haves and have-nots </li></ul><ul><li>Teams being bought by investors with deep pockets Teams begin to dominate and </li></ul><ul><li>and multiple paths to create value for sponsors teams who do not win are very vulnerable to sponsor switches </li></ul>
  10. 12. <ul><li>Shrinking Pool of Sponsorship Dollars to Race With </li></ul><ul><li>Must deliver for existing sponsors to justify increases and steal share from other teams to raise incremental $ to race with </li></ul><ul><li>Series might have to re-think exclusivity (e.g. Sprint, Sunoco, Goodyear) </li></ul><ul><li>Series needs to control cost increases/rule changes </li></ul><ul><li>Team Performance and Value to Sponsors More Important than Ever </li></ul><ul><li>Teams who provide more value and marketing benefits for the $ will attract and retain more $ to race with </li></ul><ul><li>Communication of value relative to other marketing opportunities is important </li></ul><ul><li>Sponsors Expect More for High Cost of Investment </li></ul><ul><li>Teams must maintain Championship/leadership position on-track </li></ul><ul><li>It costs less to invest in retaining and renewing existing sponsors than to acquire new ones </li></ul><ul><li>Shift to Haves and Have-Nots- Teams Vulnerable to Switches in Off-Years </li></ul><ul><li>Multi-car teams have economies of scale to better compete </li></ul><ul><li>Multi-sport owners can offer more value and have stronger connections to corporate america </li></ul><ul><li>Costly and difficult to win on-track – must allocate resources effectively </li></ul><ul><li>Poor performing teams are vulnerable in off-years and sponsors easily can switch teams (see M&M’s, CAT, Cheerios) </li></ul>
  11. 13. <ul><li>Value for sponsors is a function of what they spend vs. what they get…. </li></ul><ul><ul><li>If what they spend rises at a rate greater than what they get, eventually you have a loss and they will use the money for something else. </li></ul></ul><ul><li>Given the importance of driving value to sponsors, therefore, every decision that is made by the different series should answer one or both of these questions: </li></ul><ul><li>How does this help us keep all aspects of the sport healthy by adding value to sponsors (especially team primaries and engine manufacturers)? </li></ul><ul><li>2. How does this help us grow our fan base at a rate faster than cost to sponsors? </li></ul>
  12. 14. <ul><li>Companies still want to increase awareness, shape consumer attitudes, incent the trade, differentiate product from competitors, entertain clients, communicate commitment to a particular lifestyle and drive sales…etc. </li></ul><ul><li>19 of the 20 most attended events in 2009 will still be Motorsports events </li></ul><ul><li>Find partners vs. sponsors </li></ul><ul><li>Work to seek new ways to drive value for sponsors beyond traditional exposure and fan affinity </li></ul><ul><li>Invest in research </li></ul><ul><li>Control expenses – athletes make too much damn money </li></ul><ul><li>Collaboration will be paramount </li></ul><ul><li>Performance based contracts will be the norm </li></ul><ul><li>This is a great time to get involved - tremendous value </li></ul><ul><li>Teams cannot bottom out the market – Must maintain disipline to pricing </li></ul><ul><li>Focus on the entertainment value – diversion from their lives </li></ul><ul><li>Teams need to share the wealth and focus on collaboration – MLB Teams poach ideas </li></ul>

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