Open-wheel racing still trying to kick tobacco habit

February 23, 2010
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It’s easy to say the split killed open-wheel racing.

And it certainly didn’t help.

But I think if you dig down a bit deeper, and you’re really objective about it, you can’t help but conclude that there were a confluence of factors that brought the IndyCar Series to its current state—which is to say, facing a slew of challenges.

One of the big factors is the evaporation of tobacco money that fueled auto racing for so long. The announcement today that Penske Racing will at last abandon Marlboro team colors is a sign that the last of the big tobacco money is going up in smoke.

There was a time that tobacco, beer and motor oil money accounted for more than two-thirds of motorsports sponsorships.

Money from tobacco sponsors kept auto racing rolling at almost every level through its halcyon days. The demographics of both made motorsports and tobacco marketing a near perfect match.

The packed speedways of the 1970s and 1980s were the perfect place to hand out free smokes, snuff, chewing tobacco and bandits alike. And those freebies transferred into sales. The partnership kept sales increasing for tobacco companies and sponsorship dollars rolling in for many race teams, tracks and series.

As odd as it seems, NASCAR—with its roots in the heart of tobacco country—was the first to limit its reliance with a new breed of mass retail type sponsors. Still, it was awfully hard for fendered car operators to say so long to Winston as NASCAR’s biggest series sponsor in 2003.

As late as 2000, North America’s three major racing series were still relatively flush with cash. They were, however, at different stages of realizing the iceberg that lay before them.

In 2000, NASCAR raised $558 million in sponsorship revenue and CART $492 million, compared with Indy Racing League’s $143 million, according to Chicago-based IEG Inc., a leading sports marketing analyst.

The Indy Racing League cast its bet with dot.com companies. In a bold gamble, the series partnered with start-up search engine Northern Light as its title sponsor in an endeavor, that in the end, only yielded a pan full of fool’s gold. Other dot.com sponsors on the series and team level came and went.

The consumer brands that flocked to NASCAR were—and remain—a tough get for the fledgling open-wheel series.

It’s not clear what path CART/Champ Car decided on. And in the end that helped drive a big wooden stake through the series’ heart. Series leaders’ inability to replace the tobacco cash had as much to do with the series’ death as Tony George and his hammer ever did.

Given the series’ relative health a decade ago, CART’s death was the most stark and stunning to watch. CART simply couldn’t or wouldn’t change as the current of commerce shifted.

Not only did government regulation help hasten the end of tobacco’s involvement in racing, but increasing education and a smoke-cessation movement began to eat away at tobacco companies’ sales—and marketing budgets.

In the end, CART/Champ Car fell like a 200-ton dinosaur dealing with a massive climate change.

It’s difficult to believe, 10 short years ago, there was $635 million in sponsorship cash coming into open-wheel racing, almost $60 million more annually than was coming into the good old boys’ fendered series.

Year-by-year, up in smoke it went, burning faster than a forest fire during a 100-years drought.

A plan never emerged to adequately replace lost sponsors. No vision ever materialized to connect the existing auto racing faithful and any emerging audience that might be out there with a new breed of sponsors.

With no bridge built between a new era of sponsors and what is left of open-wheel racing’s consumer audience, a smoldering past is about all some racing observers think we’re left with.

But for now at least, the IndyCar wheels keep turning—with testing underway in Alabama this week and the series ready to kick-off March 14 in Sao Paulo, Brazil.

Open-wheel’s new boss, Jeff Belskus, is still forming his plan for the future. And his big hire—new IRL President Randy Bernard—is ready to take office March 1.

And where there’s life, hope burns eternal.
 

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  • Be careful Anthony, it is heresy among the haters to say that something other than the split caused the downfall of cart.

    It is sad that OW had that much money and lost it. I cannot prove it, but I think that cart and to a lesser extent, the IRL were gunning for "wealthier" sponsors. Sponsors that aimed for the higher class while NASCAR went for the common man and the common man sponsors. Tide, KFC, Purex and Wrangler jeans are products that do well even during bad financial times.

    Your numbers do bring back my question that if 10 years ago cart was pulling down $500 million in sponsors, how did they fail? A question most either ignore or blame on TG. But if they had it all, the only way they could have failed was a bad business model.
  • Agree Indyman
    Indeed - Indy Car, CART and even Sports Cars (IMSA, Rolex Series and so on) featured high end sponsors and even sponsors that you as a consumer couldn't even buy from (business 2 business). I remember Googling (actually it was Alta Vista-ing) some of the sponsosrs back in the day, to find out what they did, besides sponsoring race cars.
  • Tobacco
    Blame it on the closing of the snake pit. And on cops enforcing drunk driving rules. The end of the party.
  • Oh cry me a river
    IRL, now two full years after merger, has squandered any and all momentum it had to emerge from the "tobacco" hangover. SUcks to be them I suppose.

    Before we shed the crocodile tears let us remember the IRL did willfully sign a 10 year TV contract with VERSUS where ratings had dropped 60% from the previous year. Foreign races (and drivers) were added to the schedule and DIRECT TV dropping Versus had tremendous impact in Marlboros decision to dump the IRL.

    I remind you that Penske abandoned the CART series with his big tobacco money back in 2003 for the IRL and, by coincidence, CART folded 2 years later. Which, is another coincidence...IRL has for the past year enjoyed the fruits of Marlboros partnership in the form of team sponsorship and FREE TICKETS to IRL events. APPARENTLY Marlboro saw the horrendous direction the IRL was headed and decided to leave. And that, some 7 years AFTER they left CART and within the USA Master Tobacco Settlement.

    So, save your Tobacco Tears friends...the IRL asked for it and Marlboro delivered.

  • U.S.ofA.
    Perhaps they would attract a few more sponsors with some appealing American drivers. Having 4 of 25 drivers in the series be American won't cut it, and taking drivers into the series just because they have a sugar daddy and can cut a check is short-sighted. You see where ride buying got CART/Champ Car. Nowhere.
  • Mutoh Mania Should Solve It
    Hideki has signed to save the day. Viso is back. All is well.
  • Hey wheres the Rahal kid?
    He's won way more than Danica and is a legacy driver...IS AMerican too! No Ride.

    Maybe the IRL is not a good ROI platform for sponsors? I wonder why?
  • Chief, i thought TG killed cart, now it is marlboro? Make up your mind.

    Good to see you still have Danica envy. Are you related to Kyle Busch?
  • Some Needed Clarity vs Inanity
    Unlike some-who clearly have NO idea what they are talking about-I can say that, yes, the reliance-and failure to respond appropriately when it was gone-of tobacco money did play a major role in the end of CART.

    A parable: Formula 1 was similarly beholden to tobacco money-brands like Rothmans, Mild Seven, 555, Lucky Strike, West, John Player Special, etc. However, when F1 lost it's tobacco money, they were proactive and signed companies like Shell, Vodafone, AT & T, Compaq, Hewlett-Packard, ING, Royal Bank of Scotland, etc. What did CART/IndyCar do? Turn to ride buyers and fall flat on their faces. For the first time-maybe ever-I'm agreeing with something you wrote, Anthony. Hell may indeed be freezing over.
  • High end sposors for the IRL??
    That's funny Indyman. The IRL going after "wealthier" sponsors. For a bunch of IRL Gomers out in the middle of that big corn field called Indiana?

    HAHAHAHA
  • GA,

    As Anthony reported, the IRL turned to dot.coms which were high dollar, high class sponsors living on borrowed time in those days as many investors learned. they were the modern day land speculators.

    Here is a link so you can learn your history http://en.wikipedia.org/wiki/Dot-com_bubble
  • GA
    George, Nice, just put down not only any open wheel fans but also all Hoosiers. Why don't you take your not so savvy, know-it-all attitude and throw it off a cliff. Perhaps someone down there will care about what you say.

    Worthless.......

  • Forgotten, but not gone.
    Don't kid yourself. Big Tobacco still spends big money in motorsports, but they had to drop the "advertising" component years ago. It has'nt been "Marlboro" Team Penske for a long time, but the money was still there behind the team. My guess is that Verizon wanted the look of all cars changed, since they will be using the "advertising" aspect of sponsorship. But, I bet PM is still there. Look for those red Marlboro hats at the first US event. I bet you a pack of smokes you'll see them there.

    And, next time, do a little more research before you start spouting out the financials of racing. IEG's reports are always about sponsorship "value" and not about cash. They don't have access to the sponsor contracts, so they have no clue what the cash spent on a sponsorship might be. TV ratings play a huge role in calculation of that value.
  • Read my lips
    CART killed itself.

    The IRL killed AOW racing. Look it up....

    Little iman, you're like ducks in a barrel..
  • Chief,
    is that beeping i hear your opinion changing course? How many times have we heard you say that cart was dominant and successful and that the irl killed it? At least you now admit that cart was on a suicide course. TG's original vision was right, look at all of the former cart'ers who are preaching it now. i think that the long slow death of cart propped up by a series of deep pocketed owners and foolish investors who let it last 8 years longer than it should have and the abandonment of the original irl ideas.

    Belaskus has his work cut out for him.
  • Yet....
    How pathetic do the IRL supporters look now? Are they somehow SUPERIOR now that the sport is dead on their watch?

    Iman, those are foolish observations. The AOW sport is in RUINS. Only you and several TF denizens roam the innerwebs preaching your victory in CART defeat.

    Tony George started the IRL in 1996. In 2010, the IRL whimpers to the starting line with 4 americans, 10 years contract on Versus (not available on Direct TV) and down 60% in TV ratings, 28% at Indy alone. Marlboro OUT, more foreign and domestic street races, more foreign drivers, more ride buyers, more Brazillian ethanol, more Italian chassis and Japanese engines, NO more Danica.

    Stop blaming the problems of the sport on all that came before it. The Speedway is SOLELY responsible for the fate of the sport....and it looks fatal to just about everyone everywhere.
  • Get a clue!
    Anthony must be some kind of lackey for the tobacco companies, just as Randy Bernard has been. Randy catered to US Smokeless with the PBR for years, until US Smokeless dumped them. Now Randy is planning on bringing tobacco back to racing and Anthony, prophesying of things to come is just paving the way for them.
    NASCAR picked up Nextel to replace Winston, and their events only got better. They are having no problems and are one of the fastest growing sports. They are using sponsors that appeal to their viewers. That is why you see sponsors for products used by women. There are lots of female viewers.
    This is not what you consider the "good ole' days", as it is not a male dominated viewership, drinking, smoking and making sure our kids do.
    Get a clue Anthony!

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