Jeff Gluck | September 4, 2018
Furniture Row shows NASCAR teams’ precarious sponsorship situations
In the wake of Furniture Row Racing’s announcement it will shut down after this season, there was a telling quote team president Joe Garone gave to the Denver Post.
“There needs to be a runway when a partner leaves,” Garone said, referring to the loss of a sponsor. “… Had 5-Hour (Energy) not quit, we’d still be racing. That’s the truth. They did (quit) and we weren’t able to replace them.”
Though Tuesday’s news was a shock in many ways — after all, when was the last time the defending championship team announced it was ceasing operations? — it also exposed a situation many NASCAR teams are facing.
What happens when a major, big-money sponsor leaves in 2018? In an era where the cost of running a championship-caliber car has wildly outpaced new sponsorship revenue, teams have built themselves a house of cards to try and keep up with their rivals.
A decade ago, it was fantastic for NASCAR and its teams when major corporations or brands wanted to throw $25 million a year at race cars. Many of them did, and NASCAR was flourishing at the same time.
But companies aren’t spending that way these days, and they haven’t been for awhile now. So when a high-paying sponsor exits the sport — even if it’s “only” $10 million compared to the budgets in the spending heyday — that can be a fatal blow to a race team.
The reality is exactly what Garone said: There’s no runway if something goes wrong. If a major sponsor leaves a team, the chances of finding a replacement are about the same as landing a passenger plane on a cliff without going over the edge.
In that case, there are two options: Spend way less money — which means no more wins or competitive finishes — or call it a day and go home. That is, of course, unless the team owner is a super rich dude with disposable income.
That used to be Visser, but after burning through tens of millions and finally getting sponsorship to fund the team, he couldn’t go back. Not after winning a championship.
There are more teams than not in Furniture Row’s position — the teams who rely on sponsorship to survive and don’t have a billionaire to fall back on. As such, those teams could find themselves in the same situation: One sponsor decides to leave, and that could be it.
I’m not trying to be an alarmist here, but here’s an example: What if FedEx pulls out of racing at some point? Do you think the No. 11 car can find sponsorship at the same level? Maybe, but…
Look, I understand being jolted by the Furniture Row news. It’s a serious situation. But if this is really a wake-up call for you, then you either haven’t been paying attention to what’s happening in NASCAR or you’ve been in a bit of denial about it.
Either way, nothing is going to change at this point. I highly doubt teams are going to agree to some sort of spending cap, and NASCAR can’t take costs out of the sport fast enough. So this is the reality.
Where does that leave things now?
For one, questions about where Martin Truex Jr. and Cole Pearn will land next season — while interesting and relevant — don’t speak to the big picture.
After all, if there are no race teams, there’s nowhere to race. The current team model in NASCAR is broken — and has been for some time now — and everyone can only hope the Furniture Row news is an isolated case due to unique circumstances rather than the start of a frightening trend.
http://jeffgluck.com/
