TONY’S BUSINESS DECISION

We’ve been on vacation so I’ve been a little neglectful about writing. But the last couple of days I’ve been thinking about Tony Stewart’s dilemma — you know, whether to stay with a winning team (think, two Sprint Cup Championships) or buy into a second-tier (hey, we all know that) team. What I’ve been thinking about is how I made my decision to stay or leave my position as chair of the Department of Management back in 1992 — I made a list of pros and cons (and, in my case, the “cons” won out).

So here goes:

Pros: He’s part-owner and has some say in the operations. Hendrick makes the engines. He’s back driving Chevys. He’s part-owner and has some say……got the idea?

Cons: He leaves a team that gave him his start and supported his two championship runs. He leaves a team that has, arguably, one of the most honest, straightforward owners in racing and one who has defended Tony on many occasions. He leaves a team that probably has the greatest potential in the coming years as any team currently running — Kyle, Denny, and most likely Joey — and he can be the “poppa” figure directing their climb to fame. He’s part of a stable that has the top running racer in the Sprint series — and that can mean continued sources of shared information.

Now the business part — which is the real essence of Tony’s decision. He’s buying into a second- to third-tier team (sorry, but when have they been consistent winners?). Who has the seven post shaker rig? Where’s the wind tunnel time? And, most importantly, how much R&D money will trickle down to Tony’s team given the economic times and Motor City’s need to ration its resources when it comes to NASCAR teams (remember Hendrick and Childress?)?

Geez, don’t you think Gillett/Evernham is worried? And Ganassi with his Reed “here’s your pink slip” Sorenson, Dario “this looked easy” Franchitti, and Juan “I’m looking at an oval win” Montoya isn’t real sure about Chrysler. Even Toyota announced that it’s revising its sales goals for 2009, in light of economic conditions, so what’s that say about its involvement?

Tony’s no novice when it comes to business. But, really, is this the time for Tony to “go on his own?” I certainly don’t know — but again, that’s the view from here.

Jon

P.S.: If I were a betting man (and I’ve played the lottery so that tells you something about why I seldom bet!), I’d put my money on Tony leaving JGR. Why, even though I make a pretty solid argument for staying? Because Tony is his “own man” — Tony believes what he wants, says what he wants, and does what he wants — and I think he wants to show everyone that he can DO what he wants.

The Year of the Kyle

According to some texts, “Kyle” as a name has roots in old Scotland and can mean “fair and handsome”. So while many boo birds have difficulty warming to Mr.Busch, we do know that he is certainly adding a fair and handsome amount of value to not only himself, but to his owners, and sponsors.

If others aren’t careful this could be a runaway year for M&M’s. After all “Dale” means valley and well, what does “Kasey” mean?

That’s the (abbreviated) View from Here

Michael

Reputation: A Fleeting Thing

So,what is the public face of NASCAR? Is it the face of the happy American nuclear family? No? How about the faces represented throughout North America? Is it 북아메리카 (that’s Korean) or L’Amérique du Nord (French) or even Norteamérica (Spanish)? Perhaps its face is Tex-Mex, Southern, or even Creole. Maybe it is the face of the surfer culture of California or that of the Midwestern farmer or the urbanite deep in the canyons of NYC.

Whatever the face of NASCAR is, it is surely a face that has character and one that has deep value. While the recent lawsuit has yet to show what fruit it will bear one thing is sure — it can not be taken lightly or NASCAR will slip back into the world of shadowy stereotypes. You know, the stereotype which stunts the acceptance of NASCAR as a ‘legitimate sport’ and which turns away the ‘might-be’ fan.

I won’t belabor the point here. I hope NASCAR’s house is in order. And if not, that it is restored soon.

Because,a good reputation can be fleeting.

“Quella è la vista di qui”

(‘That’s the View From Here’ for all you fans of Italian)

Michael

WILL SPONSORS REVOLT?

A couple of years ago, Dale Jr. uttered a four-letter expletive during a post-race interview. NASCAR hit him with a sizeable fine. Several other drivers have been known to cuss over their headphones when talking with their crew chiefs. When that has happened, NASCAR fined them for behavior unbecoming the sport.

Indeed, NASCAR likes to promote its clean, family-oriented sports image and likes its drivers and crews to reflect that image. In fact, sponsors and NASCAR have been blamed for the blandness of the sport, with fans citing the lack of the flamboyant drivers and hard-racing action they came to love in the past.

So, now that NASCAR is in the midst of a multi-million dollar lawsuit that weighs heavy on the clean-cut image that NASCAR has worked so hard to develop, what will the sponsors now think? Will we see a revolt of sorts by current sponsors as their contracts with team owners begin to expire? Will teams be faced with even more difficulty securing sponsors because of the nastiness of the charges along with the current economic situation that we’re all facing?

It’s hard to imagine NASCAR coming out of all this without some major bruises to its image as the sport without controversy, drugs, or scandals. Time will tell whether sponsors will reconsider the value of putting their names on cars to the tune of $20-25 million when the sport may be in court—legal as well as public opinion—for quite some time. This isn’t a “Kentucky lawsuit”; it’s a lawsuit that most everyone can identify with in one way or another.

And that’s the view from here.

Jon

WILL THE CofT COME OFF THE NASCAR ASSEMBLY LINE?

Well, I finished Mark Yost’s “The 200 MPH Billboard: The Inside Story on How Big Money Changed NASCAR” over the weekend. It was a very good “read” and put me onto several topics that I want to investigate further. Mr. Yost closed his book with an epilogue, “What’s Next for NASCAR?” Some of his observations were off. For example, he suggested that the company taking over the former Busch series could be expected to pay three to four times more than Anheuser-Busch did and we all know that wasn’t the case. Still, he raises some interesting topics.

One that struck me was that he saw NASCAR eventually building the Car of Tomorrow and selling it to the different teams. In that way, NASCAR accomplishes two important objectives: (1) make sure all the cars are the same so that no team has an advantage and (2) make MORE MONEY! NASCAR “owns” a great deal in the sport, including TV rights, merchandising rights for NASCAR merchandise, and even NASCAR Images, which controls photography and film. So, why not own the cars and have rights for building and selling them to teams? Seems like a possibility “down the road”.

And, in case you missed it (and that would be hard to believe), a former black female NASCAR official has filed a $250 million lawsuit for racial and sexual discrimination, sexual harassment, and wrongful termination. If, as they say, “perception is reality,” this will be a major blow to NASCAR’s drive for diversity.

And that’s the view from here.

Jon

Yes, He Can

Well, I think I can answer Jon’s below ‘can he sell ‘ question regarding Kyle Busch, who has been accumulating both victories and boos in impressive quantities. YES, he can. Apparently people are beginning to warm up to him (winning helps). See this May 7 article from Dustin Long, who covers NASCAR for the Roanoke Times, the Virginian-Pilot and the Greensboro News & Record. The relevant portion is below.

THE FAVORITE BUSCH

Fans might boo Kyle Busch, but somebody is buying his merchandise.
Mark Dyer, president and CEO of Motorsports Authentics, said Busch merchandise has seen among the biggest increases in sales from last year.
Part of that, no doubt, relates to M&M’s, which is Busch’s sponsor. The candy product is a popular souvenir item.
Busch is in the top 10 among drivers but hasn’t cracked the top five, which typically includes Dale Earnhardt Jr., Jeff Gordon, Kasey Kahne and Jimmie Johnson.
Said Dyer of Busch: “He’s captured the imagination of a lot of fans with his aggressive style and winning races. He’s been way up this year. It’s been exciting to see.”

Also note that this is even more interesting when considering that Mars, Inc., owns numerous brands that also appear on his (and others) car such as Pedigree, Snickers, etc. He also is linked with Pedigree in a campaign. I have pasted most of it below:

“From May 1, 2008 through October 15, 2008, NASCAR fans and dog lovers can log onto http://www.Dogsrule.com to make a monetary pledge to sponsor miles* of any of Busch’s Sprint Cup races during that window; a roster which will sport 25 races and more than 10,000 miles. Donations from pledges will directly benefit The PEDIGREE Adoption Drive Foundation, a non-profit organization that provides funding to 501(c)(3) status animal shelters and breed rescues nationwide. Kyle kicked off the program from Richmond, Va., where he raced the No. 18 PEDIGREE(R) Toyota for the first time during the Crown Royal Presents the Dan Lowry 400.

“As the owner of two dogs I know how happy they can make you, so to me it’s really sad that each year four million dogs end up in animal shelters and breed rescue organizations and two million never make it out,” said Busch. “Kyle’s Miles hopes to raise money and awareness for the dogs that are so often overlooked and I’m excited to be able to do my part to help.”
As an added incentive to the “Kyle’s Miles” program, anyone who sponsors miles* is automatically entered into a sweepstakes to win a trip for two to Phoenix in November to meet Busch and attend the Checker Auto Parts 500 at Phoenix International Raceway on November 9, 2008. Those who’d like to enter the sweepstakes but not sponsor Kyle’s Miles can also do so at http://www.Dogsrule.com .
The PEDIGREE(R) Adoption Drive
The fourth annual PEDIGREE(R) Adoption Drive launched in February 2008, with a goal to raise more than one million dollars for The PEDIGREE Adoption Drive Foundation. Because of their love for dogs, PEDIGREE(R) Food for Dogs created The PEDIGREE(R) Adoption Drive to help shine a spotlight on the plight of homeless dogs. Through no fault of their own, more than four million dogs end up in shelters every year. Sadly, nearly half of those canines never find a place to call home, a trend that the PEDIGREE(R) Brand and Busch hope to help reverse.
In addition to making a donation to “Kyle’s Miles,” there are several easy ways NASCAR fans can take part in The PEDIGREE(R) Adoption Drive all year long that help benefit the foundation:
– If you’re a dog owner, you can purchase PEDIGREE(R) products. Donations from product sales will benefit the foundation.** — Visit Dogsrule.com to browse Dogs rule.(R) gear, a line of merchandise and apparel for dog lovers. Proceeds after expenses from the sale of all Dogs rule.(R) items benefit The PEDIGREE Adoption Drive Foundation. — Additionally, those who adopt a dog from a local shelter or breed rescue anytime during 2008 are eligible for a FREE, one-month supply of food as a thank you from PEDIGREE(R) Brand.”

Finally, two other points.

1.Mars, Inc., has announced it is buying Wrigley’s for 23 billion.Think about who (JPM) drives the Juicy Fruit car (he finished second at Talledega). So now Mars will have a wider assortment of promo opportunities.

2.Since Mars’ fiscal year ended in December 07, I know that their 2007 sales were up a whopping 19% to 25 Billion.

Nothing to ‘snicker’ at …..

Sorry, just couldn’t resist.

Mike

BUT CAN HE SELL M&Ms?

A couple of weeks ago, Brian Tarcy (“The Complete Idiot’s Guide to NASCAR” and the blog “Free Cheezeburgerz”—at the right) sent me an e-mail in which he posed a very interesting question: Since fans don’t seem to like Kyle Busch very much, how has the sales of M&Ms been doing since that Kyle’s primary sponsor? Brian suggested that perhaps the popularity—or lack thereof—might have a serious effect on the sales of the sponsors’ products? I tried to find some financial data but am still looking for any impact on M&M sales (I’ll get my colleague Mike to research that topic—it’s up his alley).

In any case, the fairly phenomenal success of Kyle in all three series would suggest that Masterfoods is very happy with its primary sponsorship. We all know that Dale Jr.’s sponsor didn’t sign on because it likes the number “88” but because Jr. has such a great following. And we can, no doubt, find many such instances.

But still it begs the question: Does the unpopularity of a driver—regardless of his (her) success—have a negative effect on his (her) sponsor? Or, even more so, does the make of race car have a negative effect? For instance, when JGR announced it was switching from Chevy to “ota”, many fans indicated their displeasure and even suggested they’d stop rooting for Tony.

So, is there a problem for a sponsor if the driver simply turns off fans? Mr. Tarcy raises an excellent question—and one I intend to keep an eye on.

So, that’s the view from here.

Jon