The big money of motorsports

By Jack Gage

updated 8:31 p.m. ET May 18, 2006

Spending $20 million a year to slap your name on a 200-mile-per-hour billboard can pay off handsomely — unless your billboard's not even in the race.

That happened this March at the Daytona 500, when Valvoline Evernham Racing's number 10 Dodge sputtered to a halt after a gear malfunctioned during the qualifying run. Then a pit crew member botched jacking up the car, eating up even more time. Number 10, sporting big Valvoline and Stanley Tools logos, didn't make the cut, and driver Scott Riggs watched the race from the stands. "We had faith that our car and driver could qualify on merit alone, but these things happen," says Ray D. Evernham, one of the team's owners.

So 37 million NBC viewers missed seeing Evernham's logos. NASCAR has lapped every sport for regular season ratings, except the National Football League. According to marketing analyst Joyce Julius & Associates, a top 25 finisher in the Daytona 500 got airtime equivalent to $7 million worth of 30-second commercials on average, given how often the car's logos had "in-focus exposure time" in front of viewers. Not a great time to have a breakdown.

The apparent return on investment can be considerable with the best drivers and cars. Last year Dale Earnhardt Jr.'s Chevrolet won only one race during the 36-race season, barely missing the checkered flag several times. But Joyce Julius estimates Earnhardt reaped $149 million in televised exposure time for lead sponsor Budweiser. By that calculation, Anheuser-Busch got a bargain. It is believed to have spent only $15 million on the sponsorship.

Fast-growing NASCAR racing has already eclipsed pro football in sponsorship dollars. High-profile team owners include Forbes 400 member Roger Penske, former Dallas Cowboys quarterbacks Troy Aikman and Roger Staubach, and current Washington Redskins coach Joe Gibbs.

VALUABLE NASCAR TEAMS Click the links below for a full breakdown of each racing team. 1. Roush Racing 2. Hendrick Motorsports 3. Joe Gibbs Racing 4. Richard Childress Racing 5. Chip Ganassi Racing 6. Everham Motorsports3 7. Penske Racing South 8. Dale Earnhardt Inc. 9. Robert Yates Racing 10. Petty Enterprises 11. Bill Davis Racing4 12. MB2 Motorsports 13. Haas CNC Racing 14. Waltrip-Jasper Racing 15. Valvoline Evernham Racing Source: Forbes

Sponsors like Anheuser, Home Depot and General Mills have shelled out a total of $650 million this year to have their logos splashed on NASCAR's top 35 cars in the Nextel Cup series. That's up from $500 million five years ago and comfortably exceeds the $485 million companies spend sponsoring NFL teams. (In both cases these numbers include only sponsorship money going to individual teams, and they exclude television advertising revenue.)

Attendance averages 127,000 per race, compared with 115,000 ten years ago and an average 67,000 per NFL game last season. The average ticket for a NASCAR Nextel Cup series race has gone from $70 to $90 during the past ten years, and ticket revenue at NASCAR's biggest track owner, International Speedway, is up 23 percent over the past five years.

The money's going to get even bigger. New qualifying rules implemented this season will create more certainty for sponsors that their ads will be seen, effectively driving up sponsorship revenue and the value of the top racing teams.

Under the old system any car that showed up had a chance at qualifying for one of the 43 positions. Now a point system that rewards consistent top performance will guarantee that each of the top 35 cars with the best cumulative record will race, even if there's a time-consuming mishap during the qualifying run. The top 35 still must do the qualifying race to determine starting position. (The Valvoline Evernham team is a new one this year, so there was no cumulative record allowing them an automatic slot.)

That's good news for NASCAR team owners. Says Ardy Arani, who heads Atlanta's Championship Group, a marketing firm that brokers deals between cars and corporate sponsors: "Sponsors can now mitigate the risk associated with not qualifying for a particular race."

Thus when Brown-Forman recently went shopping for a car on which to stick a Jack Daniels label, it picked Richard Childress Racing, which had 3 cars finish in the top 35 last season. "We knew the Jack Daniels car would start the season in contention — no matter what," says John Hayes, brands vice president at Brown-Forman. "No question we were willing to pay a premium for a Richard Childress team with those terms." (Hayes won't say how much of a premium he paid.)

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