Caught in the middle of a storm

Blog Category: Motorsport,Nascar — Blogged by: admin on November 22, 2008 at 11:46 pm

“We live in really uncertain times, and we’re all just doing the best we can to maximize what we have,” said Larry Peck, Buick’s promotions manager. “Every line in every budget for the Buick Open is being scrutinized.

“It’s a time of a lot of examination of everything we do, in every aspect of the business.”

For now, organizers of the Buick Open are planning on everything proceeding as planned for the 2009 tournament, scheduled for late July at Warwick Hills in Grand Blanc.

The Motor City Bowl, played at Ford Field on Dec. 26, already has felt the pinch. Chrysler withdrew as a major sponsor last month, but bowl organizers signed on the Michigan Carpenters and Millwrights Union as a replacement.

David Carter, executive director of the University of Southern California’s Sports Business Institute, sees cause for great concern.

“The Big Three has been a vital part of the sports industry for decades, right alongside beverage companies,” Carter said. “The prospect of filling any void created by their scaling back their investment in sports is slim for the foreseeable future.”

Pulling the plug

The Big Three spent more than $1 billion on television advertising in 2007. But hard times mean changing priorities.

GM, the largest advertiser of the Big Three, canceled its presence for the 2009 Super Bowl earlier this year, well before the present economic storm hit. GM aired 11 ads during the 2008 Super Bowl, at a cost of $2.7 million each.

Cadillac will not advertise on broadcasts of the 2009 Masters.

Steve Tihanyi, GM’s general director of media operations, said his department is examining the return-on-investment of all sports marketing and advertising plans.

“The economy makes you think twice about everything you potentially do,” Tihanyi said. “That’s where the process comes in to our benefit, we can make good, informed decisions. Some may think we’re bailing out on sports, but that’s simply not happening. We have a huge commitment. Look on any network, you’ll see our advertising.”

But you might not see traditional marketing campaigns.

Fewer freebies

Ford and Dodge have withdrawn financial support from the NASCAR truck series.

“We’re standing firm with all of our teams and contractual commitments for 2009, but anything beyond that scope is being examined,” said Tim Duerr, the NASCAR marketing manager for Ford Racing. “We’re very committed to being in motorsports, especially NASCAR, because it’s the best way for us to remain connected to our fans and customers.”

Buick will end its courtesy car program with the PGA for the John Deere Classic, U.S. Bank Championship, The Transitions Championship and the AT&T National. Other tournaments could be added.

An arrangement Michigan International Speedway in Brooklyn has had with GM to provide 35 service trucks could end.

“We’re prepared for anything — you have to be right now,” MIS president Roger Curtis said. “The prospect of even one of the Big Three going down is frightening because of the trickle-down to our fan base. It’s not just the sponsors or the series that get affected. We’re in Michigan, so we’re all going to suffer along with them on this.”

Year-to-year

GM and Ford remain on board for the 2008 Motor City Bowl. But Ken Hoffman, executive director of the bowl, understands the reality: contracts run year-to-year.

“We’re very optimistic that Ford and GM will be with us for a while,” Hoffman said. “They’re in a different situation than Chrysler, as they haven’t been bought and sold. They’ve all been very supportive of this game, and we’re grateful for that.

“But you never take anything for granted, you always have to have a Plan B or even Plan C ready to go.”

Some sports business experts see the downsizing as a form of Darwinism.

“I see a lot of sports business marketing people spending a lot of sleepless nights right now trying to figure out the right thing to do,” said Rick Harrow, a sports business consultant and commentator. “This is a quintessential shakeout period. We’ll know six months, a year from now, how things developed. Some will be winners, others won’t be around anymore.

“Right now, we’re in the middle of the storm.”

Big spending

Here’s the amount in millions the Big Three spent advertising on sports programming over a five-year period:

Company 2003 2004 2005 2006 2007
Chrysler $66.4M $64.3M $87.5M $65.1M $46.9
Ford $315.2M $311.1M $336.7M $387.0M $338.0M
GM $517.5M $718.0M $666.1M $903.4M $667.8M

Source: The Nielsen Company

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