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The Score - Anthony Schoettle

Welcome to The Score, your place for hard-hitting sports business news, fast-breaking updates and fuel-injected debate.  Buckle up.  I'm your host, Anthony Schoettle, IBJ sports reporter.

Sports Business

Open-wheel racing still trying to kick tobacco habit

February 23, 2010
KEYWORDS Sports Business

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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