What To Look For In A Title Sponsor – Part I

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On just one hand, I can count how many times I’ve done a two-part article on this site. My posts are longer than most, but I generally cover most or all that I want to say in one single post – even if it is over two-thousand words. This time however, I started writing and just couldn’t stop. Therefore, this subject will be spread out over today and Friday, so bear with me.

Not that anyone has noticed or cared; but this past May, I stopped referring to the IndyCar Series on this site as the “IZOD IndyCar Series”. For the last three months, I have just referred to it as simply the IndyCar Series. Not to name drop (is it name-dropping if you don’t mention an actual name?), but I overheard a high-ranking official with IndyCar tell someone in the Media Center that “IZOD” would be fairly invisible at IMS during the month for “obvious reasons”. Interpret that as you wish.

Before I eavesdropped on that conversation between two heavy-hitters, I had already noticed that the familiar “IZOD IndyCar Series” logo had been replaced by the generic and not so appealing INDYCAR logo in several gift shops and around the track. Yes, there was still an IZOD presence, but it seemed almost an afterthought compared to the past few years.

It has been more or less a foregone conclusion that after this season, IZOD would be going away as title sponsor for the IndyCar Series after only four years.

One of the longtime commenters on this site, “SkipinSC”, made a comment regarding IZOD on Monday’s post. It got me to thinking about the four years that IZOD served as title sponsor and the expectations each party should have when entering into such an agreement.

When I look back to long-running and successful partnerships in motorsports, the two that most readily come to mind are RJ Reynolds tobacco and PPG.

For thirty-two years, the top series in NASCAR was known as the Winston Cup Series. You needn’t look any further than RJR, Winston & NASCAR for a prime example of how a title sponsor can grow a sport while growing their brand at the same time. Winston poured countless millions into the points fund coffers over the years. All the while, the top level of racing became synonymous with Winston and RJ Reynolds tobacco.

But along the way, two major events took place. The President of RJ Reynolds Sports Marketing Division, T. Wayne Robertson, was killed in a boating accident in January of 1998. Business insiders will credit Robinson, even more than Bill France, as being the one person responsible for taking NASCAR from a regional sport of the Carolina’s to the international success that it is today. He believed that relationships and long-term partnerships were instrumental in growing sports entities. His vision prompted The Sporting News to name him one of the fifty most powerful people in sports in the early nineties.

The other event was legislation that was designed to end all tobacco sponsorships in sports by the end of 2006. With that deadline looming, NASCAR was proactive and started a search for a replacement sponsor several years earlier. By the end of 2003, it was announced that the Winston Cup Series, as it had been known since 1971, would become the NEXTEL Cup Series in 2004. When telecom giant Sprint purchased NEXTEL, the series changed names again following the 2007 season, to be called the Sprint Cup Series as it is called today. To the casual racing fan, that name still brings confusion between stock cars and sprint cars.

On a smaller scale, PPG Industries was synonymous with American open-wheel racing in the eighties and nineties. Jim Chapman was a public relations consultant when he brokered a deal in 1981 and established a prize fund in CART funded by PPG. A year later, he spearheaded the deal to merge the USAC-sanctioned Indianapolis 500 into what became the CART-PPG IndyCar World Series. Chapman oversaw the corporate sponsorship which grew more than ten-fold in the coming years until his retirement in 1993. Chapman died in the fall of 1996. It was not considered much of a coincidence that PPG began scaling back their involvement soon after Chapman’s retirement. By the time of his death, it was all but certain that CART would be seeking a replacement title sponsor.

By the end of the 1997 season, word had spread that CART had landed overnight shipping giant FedEx to be the new title sponsor for the 1998 season. With the split in open-wheel racing already into its third season and the name “IndyCar” in legal dispute, the new partnership would be known as the FedEx Championship Series. This was considered quite the coup by CART Commissioner Andrew Craig and his marketing staff. FedEx was expected to carry the series to new heights (no pun intended). CART had secured a big-time household name as its new title sponsor, while the fledgling IRL touted its laughable new title sponsor, Pep Boys.

It seemed like a natural fit – a delivery company that had built its reputation on speed and dependability, sponsoring a nine-hundred horsepower racing series. Unfortunately, the FedEx title sponsorship became a case study in how not to be a title sponsor. The shipping giant signed a check every year for the next five seasons and did nothing else to promote the series they were invested in. By the time the agreement expired at the end of 2002, neither side could wait to get away from the other.

When CART emerged from bankruptcy for the 2003 season, it was rebranded as “Bridgestone presents the Champ Car World Series powered by Ford”, which was more than just a little wordy. Meanwhile, the IRL burned through Pep Boys and then became the Indy Racing Northern Lights Series in a five-year deal that saw little cash, but lots of stock promised by the search engine that couldn’t match Yahoo. This was in the days when Yahoo was king and Google was still finding its way. The five-year deal lasted for only two years.

After the 2001 season, the series was again sponsorless, and back to being simply the Indy Racing League. The series was rebranded as the IndyCar Series in 2003 and went through the unification with Champ Car in 2008. By the 2010 season, the unified series finally had what looked like a dream partnership. Clothing giant Phillips-Van Heusen Corp (PVH) had signed an agreement to promote the series through one of its many brands; IZOD. The series would be renamed the IZOD IndyCar Series, with new colors, new logos and a fresh public image.

The first season in 2010, started out with a bang. The party that the company threw in LA prior to the Long Beach race is still being talked about. The Hollywood presence rivaled anything from Oscar night and the series suddenly had a major-league image to the general public. Although their first-year commercial got old after the first three hundred times, IZOD pumped a lot of money and energy into the series and did a lot of good. As bad as FedEx was in marketing their racing series, IZOD was writing the book on sponsorship activation for a title sponsor for open wheel racing.

The following year brought new commercials, but there were already signs that IZOD was scaling back. The lavish parties were few and far between and what functions there were, reportedly had a feel of doing it on the cheap. By 2012, there were rumblings that IZOD was going away. There had been a change at the top and the new CEO saw no value in motorsports marketing like the previous CEO did. It appeared that IZOD was now following the blue-print set by FedEx – pay the check and do the bare minimum required by the contract.

Although nothing has been officially announced, it now seems that it is now a question of when IZOD announces its departure and not if. I am assuming the powers that be have been anticipating this for some time and have been working to fill the void almost seamlessly whenever that announcement comes…but that is only an assumption on my part. That is part of what I’ll discuss in Friday’s post.

When IZOD originally signed the $60 million deal in 2009, the agreement was to run through the 2015 season. On the surface, it would be easy to say that IZOD did not achieve what it wanted out of this partnership. I think it is more accurate to say that the present team of marketing executives at PVH see little or no value in maintaining this relationship.

Allen Sirkin, who was the longtime PVH President and COO was bullish on IndyCar and what both entities could do for each other. Unfortunately, he has retired and his replacement, Michael Shaffer, reportedly does not care for the deal at all – and that’s putting it lightly. The company supposedly pays IndyCar about six million in cash annually for rights fees and another five million on media expenses and activation costs.

Executive Vice-President for Corporate Marketing Mike Kelly was also very high on the IndyCar deal, but he is now focusing his energies on golf and other areas not involved with motorsports. Kelly and Sirkin were interested in the fact that IndyCar was going to expand into overseas markets such as Brazil (which they did) and China (which they did not). When plans to expand globally did not fully materialize, Kelly reportedly lost interest.

I would say that IZOD got somewhat of a return on their investment in IndyCar, just maybe not what they had hoped. Then when the new leadership came in and his disdain for motorsports sponsorships became known, the writing was on the wall. But I also think it’s safe to say that IndyCar got the most benefit out of the four-year relationship. In IZOD’s first year as title sponsor, they claim they brought fourteen new sponsors to the series. Whether that’s entirely accurate or not, I have no idea. But it does demonstrate what you want a title sponsor to bring to the table.

Unlike what FedEx did with CART in the nineties, a series should expect way more than an annual check from its title sponsor. The relationship should be a true partnership, where both parties enthusiastically share their network of business partners with each other. The idea is to produce a (corporate buzzword alert) synergistic effect where all boats rise.

Target Chip Ganassi Racing have perfected this concept at the team level. All of the sponsors on the Target cars benefit from their association with each other. Team Penske and Andretti Autosport excel at this as well. I don’t think it’s a coincidence that these three teams are considered the three most successful teams in the series.

The more associate sponsors the series can assemble, the more attractive the portfolio will be for the next potential sponsor.

Now that it is the general consensus that IZOD will be gone at the end of this season, it has become fashionable for fans to publicly bash the company that still has its name on the series logo. It’s sort of like the guy that goes around trashing the girlfriend that dumped him. Everyone knows he benefitted from their relationship, but when it was time to move on – he turned into a jerk. The thing is the next woman will be very wary of getting involved with the jerk. IndyCar is being very smart to not trash IZOD on their way out the door. It doesn’t look good when a potential future sponsor sees the way their predecessor was treated during their exit.

IndyCar benefitted greatly from their four-year association with IZOD. They got a lot of exposure they normally wouldn’t have gotten. They were introduced to many new partners and business opportunities and they received a lot of cash. As tough as it is for some fans to swallow, IndyCar got a lot more out of the deal than IZOD did. The deal for neither side ever came close to the results that RJ Reynolds got from their Winston Cup deal, or even CART and PPG; but IndyCar benefitted nevertheless.

So where does the series go from here? That’s what we’ll discuss on Friday.

George Phillips

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6 Responses to “What To Look For In A Title Sponsor – Part I”

  1. billytheskink Says:

    I’m surprised to see no mention of USAC’s failure to hold on title sponsorships in the 1970’s, the Marlboro National Championship Trail in 1971 and the Citicorp Cup in the late 1970’s.

    I think you are being a little hard on FedEx. Yes, they did not activate as much as hoped and certainly did not provide the cash PPG and R.J. Reynolds did in their respective sponsorships, but, from what I understand, they did provide the series with logistics and transportation for overseas races.
    They also collaborated with Honda on that excellent commercial where Gil de Ferran is a FedEx delivery option.

    The Indy Racing Northern Light Series is probably the all-time worst. Not because the sponsor was perhaps the most unmemorable player in the dotcom bubble so much as because the sponsored series name made it sound like a minor league or development series (insert joke from CART fans here).

    • Good point on the USAC failure at marketing. Lay that at the feet of Tony Hulman. He had little vision for a “racing series”. It was always about the 500. RJR/NASCAR had the vision to take a regional sport national. If Tony Hulman/USAC had only had a similar vision there never would have been a Gurney White Paper, and “CART” would have never existed.

  2. The one thing that puzzles me about the Izod / Indycar partnership was the difference in demographics. PVH was looking to appeal to a younger, urban audience. However Indycar has one of the older fan bases in sports (from what I’ve read on the internet. So it must be true). Seemed like a poor match at the start. Ideally, Indycar & Izod tried to reach a younger, more entertainment focused & personality driven demographic. That’s why RHR was wake boarding in a polo shirt, TK racing a jetski, and Weezer playing the soundtrack for Year #2’s commercial.

    OK, poll time again. Who here knows who “Weezer” is?

    My guess is about as many people at a Weezer concert that could tell you who Ryan Hunter Reay is.

    • billytheskink Says:

      Not really a fan, but I am familiar with Weezer. They always seemed to be one of those bands whose appeal never ventured beyond Gen-Xers, but that may just be my perception.

      I thought that year 2 Izod commercial was PVH’s best, both for its use of classic Indycars and for the amusement factor of Roger Penske appearing in a commercial with Weezer.

  3. Even though the present Indycar fanbase (me included) may be aging themselves right out of relevance to advertisers, I’m optimistic enough about the future of the series that I think the right deep pockets sponsor could help develop/promote the series into a successful venture. One that could appeal to a younger demographic. And that both the series and a sponsor could benefit greatly from a properly promoted partnership.

    So I look forward to reading your ideas, George, about who exactly would be a good partner for Indycar.

  4. I think, in general, whether the marketing chief is a “car person” or “into racing” or whatever personal preference he or she may have is playing less and less of a role in where the marketing dollars go. IMO there’s increasingly high expectations that all marketing investments generate acceptable ROI, whether in terms of actual profit or brand equity, and if they don’t then the marketing money moves elsewhere. If the numbers don’t work, well … If IZOD’s investment in IndyCar had been generating decent ROI, I believe they’d still be active, regardless of what the new bosses personally are into. ROI is ROI, and business is business. All conjecture, but IMO the new boss took a look at the numbers and said “are you insane?” and moved to minimize the losses.

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