In the last year, the IndyCar Series has signed 14 new sponsors as the league starts to improve its financial fortunes under CEO Randy Bernard, who took office last March.
The IndyCar Series is not alone in its successes. There have been a string of major racing sponsorship announcements that have some motorsports insiders wondering if the sport is making a comeback after four years of dwindling sponsorships and financial hardship.
Chip Ganassi, who owns IndyCar and NASCAR teams, thinks growth in the open-wheel series is driving growth in the sport.
“All of us in the industry feel the momentum of what’s going on in IndyCar racing,” Ganassi said. “We’ve got American drivers and new sponsors coming into the sport. That’s a breath of fresh air for us.”
This month, locally based Bryant Heating & Cooling signed a multiyear deal to be the title sponsor of the Indianapolis Speedrome on the city’s east side, and California-based Lucas Oil Co. signed a five-year deal to replace O’Reilly Auto Parts as title sponsor of the facility formerly known as Indianapolis Raceway Park in Clermont. It’s now called Lucas Oil Raceway.
Both agreements, motorsports business experts said, net mid-six figures annually.
The IndyCar Series has signed recent deals with Verizon, Sunoco, Avis and Starwood Hotels to name a few. In 2012, Chevrolet and Lotus also will become major series sponsors and engine suppliers. Collectively, the IndyCar Series deals should bring the open-wheel series $5 million to $10 million annually.
IndyCar teams are sharing in the success. Penske Racing recently signed deals with Meijer, Shell Oil and Izod; Target Chip Ganassi Racing has signed a deal with Novo Nordisk and TBC Retail Group’s Service Central; and Sarah Fisher Racing has signed Fuzzy’s Ultra Premium Vodka.
Motorsports experts estimate that the IndyCar Series will see a 10-percent sponsorship revenue increase on the team and league levels this year, and up to 20 percent next year when the series will unveil a new car and engine package.
Despite the recent string of motorsports successes, there are still challenges. Bernard acknowledged that the IndyCar Series has not been profitable since its 1996 founding and is not likely to be profitable this year.
“I believe we could be profitable this year if we really wanted to, if that was our sole priority,” Bernard said. “But this is no time to cut corners. We must lay a solid foundation for the future.”
The future is now for Lucas Oil founder and CEO Forrest Lucas, who said all of his company’s racing properties are growing. Lucas’ firm owns racetracks, series and teams in various series nationwide, in addition to a television production company dedicated to motorsports.
Lucas is one of the nation’s biggest sponsors in the NHRA, the nationwide sanctioning body for drag racing. He said sponsorship of the local Raceway Park is a natural fit.
“I think the recent growth shows motorsports is working for certain businesses,” Lucas said. “It’s definitely demonstrated a return for us.”
Lucas said motorsports sponsorships are a no-brainer for many automotive companies, but are also proving successful for many consumer brands looking to be closely identified with the athletes that drive the sport.
Zak Brown, president of Zionsville-based Just Marketing International, said none of his clients are exiting motorsports, and some are contemplating putting more money into the sport as the economy thaws.
JMI represents some of the biggest sponsors in Formula One, NASCAR, NHRA and the IndyCar Series.
“In 2011, I expect Formula One to be up in year-over-year sponsorship revenue, NASCAR is starting to stabilize and strengthen, and IndyCar is doing the best if you look at new transactions,” Brown said.
Larry DeGaris, director of academic sports marketing programs at the University of Indianapolis, thinks motorsports is making a comeback by emphasizing up-close opportunities with drivers and team owners that aren’t available with the stick-and-ball sports.
The IndyCar Series is this year, for the first time, allowing children as young as 9 years old to get garage and pit row passes. Previously, most IndyCar tracks required fans to be 18 to be in those areas.
“For sponsors and fans, motorsports offers opportunities like no other sport,” Brown said. “What other sport can you get that close to behind-the-scenes action? [Motorsports operators] have gotten better at telling their story to potential corporate partners.”
Tracks like Lucas Oil Raceway and the Speedrome have succeeded by keeping costs down, DeGaris said.
“It’s like the Indianapolis Indians,” he said. “They’ve carved a niche out for themselves with family-friendly, affordable entertainment. A fan can buy a ticket for the same cost as going to a movie and, in some cases, sponsors can get in for a few thousand dollars.”•