One of the reasons Bill France Sr. founded NASCAR was to bring a sense of order to a sport that had none in the early years. One of his goals was to draw bigger crowds to the races and to increase the amount of money available to pay drivers and promote future races. Sponsorships quickly became a lucrative way for NASCAR to pay the bills.
NASCAR racing is more sponsor-oriented than any other sport in the world -- and for good reason. NASCAR fans are extremely brand-loyal. According to RaceStat, a syndicated NASCAR research project, 71 percent of the NASCAR audience reported that they "almost always" or "frequently" choose a product involved in NASCAR over one that is not, simply because of the sponsorship. As you can imagine, this has companies clamoring for a piece of the action.
Let's look at the major types of sponsors available in NASCAR:
- Title sponsors: A title sponsor pays millions of dollars a year to have its name placed in the title of one of the major NASCAR series. It's not just the NASCAR Cup; it's the NASCAR Nextel Cup Series (soon to be the NASCAR Sprint Cup Series, to reflect Nextel's name change). Title sponsors usually don't relinquish their positions, but it does happen. In 2003, R.J. Reynolds Tobacco dropped its sponsorship, marking the end of the Winston Cup era. And in 2006, Anheuser-Busch officials announced that they would no longer sponsor the Busch Series after 25 years. NASCAR joined forces with ESPN to find the replacement: Nationwide Insurance.
- Primary sponsors: If a company wants to see its name on a NASCAR race car, it can become a primary sponsor. The cost for such high exposure averages $8 million a season. What a company does with its primary sponsorship can be quite complex. For example, Mars U.S. brands will serve as the primary sponsor of the No. 18 car for 30 races during 2008. Mars will feature the M&M's colors for certain races, and Snickers and Pedigree colors for others. Additionally, Combos, Twix, Skittles, Starburst and Milky Way brands will provide support as associate sponsors.
- Associate sponsors: Associate sponsors spend less to sponsor a team, but they don't enjoy premium placement of their brand on cars and uniforms. Costs depend on the level of associate sponsorship. The highest level is the major associate, which is just below a primary sponsor. A major associate sponsorship can cost up to $5 million a year.
Making and selling NASCAR-branded merchandise is another important way for the sport to make money. But a company, large or small, can't simply slap the NASCAR logo on its products and start selling them. The company must obtain a license -- for a fee -- to sell merchandise bearing the NASCAR name or the names of its drivers. Once it makes this investment, however, a company can tap into a very lucrative market. Each year, fans purchase more than $2 billion in NASCAR-licensed merchandise, from T-shirts and caps to watches and jewelry.