Sunday, May 09, 1999
Race for money
A mad ad scramble is on at Kentucky Speedway - before a single race scheduled
BY JOHN ECKBERG
The Cincinnati Enquirer
As earthmovers at the Kentucky Speedway race to dig a track into these Commonwealth valleys by June 1, 2000, track owners in Florence are doing some heavy lifting of their own.
Telephone calls pour out daily from Kentucky Speedway headquarters to consumer-product, telecommunications, banking, motor oil, meat and beverage companies — among others. While track workers are moving dirt, the marketers back at headquarters are trying to move dollars.
The effort to nail down sponsorships for the $152 million racetrack only now taking shape about 40 miles southwest of Cincinnati is a high-stakes game that is being played out, even though there is no guarantee that the speedway will ever have a prime slate of races.
“We are talking with over 100 companies,” said Mark F. Cassis, vice president of business development. “We have so many deals going on right now ... I just left the lawyer's office and my head is spinning.
“There are eight deals on my desk at some stage — either letters of intent or contracts that need tweaking. With each program we have to make sure the client is getting a benefit. It's not like. "OK, you get a billboard and a suite.' Each deal is totally different.”
The marketing department of the speedway has an annual goal of $20 million from race sponsorships, suite sales, track naming rights, sponsorships, grandstand-seating revenue, and cash from billboards and other track signs. Sponsorship cash will more than likely arrive in increments of $200,000 for companies to be, for instance, an exclusive oil sponsor or an exclusive meat provider.
Naming rights for the track, which plans 65,000 grandstand seats growing to 120,000 and perhaps 180,000, will bring in even more money. That plum, a deal that lasts for a decade, could bring the track a one-time commitment of $15 million. The track is not likely have any trouble finding a deep-pocket naming sponsor, said Lance Helgeson, managing editor of IEG Sponsorship Report, a Chicago newsletter that monitors sponsorships in North America.
There are two major reasons why companies shell out big dollars for sponsorships, Mr. Helgeson said. Racing's primary brand is NASCAR (the National Association for Stock Car Auto Racing) — and that group has convinced consumers that supporting sponsors of racing teams and tracks are effective ways to lower ticket prices and bring higher purses to races.
Better purses mean better drivers, and better drivers bring the track a better race. Though few companies care about fattening a professional driver's bank account — who needs any more 200-mph millionaires? — they do care about selling products. Why does Tide sponsor a racing team? Because it works.
“Some numbers thrown around in the industry show that more than 70 percent of the fans are predisposed to buy products from companies that sponsor their favorite team or their favorite racing sport,” Mr. Helgeson said.
There is no doubt about that, said Molly Humbert, spokeswoman for Procter & Gamble Co., which sponsors Ricky Rudd's Tide car. The major associate sponsor for the car is Downy fabric softener, another P&G product.
A sport on the go
“NASCAR is the fastest-growing sport among families,” Ms. Humbert said. “We are always looking for ways to reach consumers.”
Race fan Melvin Parker, a 47-year-old Anderson Township resident and custom clockmaker for the Verdin Co., spent $2,400 for two seat licenses at Kentucky Speedway, plans to attend at least three events annually and will spend another $150 for tickets to a Winston Cup race, if the track gets one.
He notices sponsors and supports them, too. “I'm more prone toward their products,” he said. “I buy Tide because I know that Tide and P&G are spending good money supporting what I enjoy watching. It just makes good sense.”
Jim Stutz, marketing manager for Cintas, said a NASCAR presence is an effective way to reach business-to-business customers. The uniform supplier in March signed a five-year contract with the speedway to make Cintas the official uniform supplier for track personnel. It also will supply most of the racing apparel sold at a gift shop that will be part of the raceway.
Cintas is not alone.
Tri-State Quality Ford Dealers last month agreed to provide pickup trucks, sport utility vehicles, cars and club wagons to the track in return for luxury suites, billboards and choice signs. Advertising is selling well, even though there are no scheduled races. Already, half of the track's 24 double-sided billboards are sold, and plans call for up to 12 more billboards. There are also 100 concourse signs and 40 signs along the tunnel under the track to the infield that will carry advertising messages.
The Cintas agreement was a comfortable fit for the nation's largest uniform supplier, which sponsors the Joe Gibbs Racing team and driver Bobby Labonte, and has a one-year deal to be the preferred uniform supplier of NASCAR.
In return for the Kentucky Speedway sponsorship — the value was not disclosed — Cintas gets first pick of 18 billboard sites between the track's first and second turns, controls most retail space in the gift shop, supplies towels to crews from two Cintas trucks in the infield, and receives a suite at the start-finish line.
Cintas agreed to the deal because the company recognizes that NASCAR-related direct mail for new business brings a follow-up appointment rate that is double the rate for other direct-mail initiatives. In other words, new customers are twice as likely to set up a meeting with a Cintas sales executive if NASCAR is involved.
“Fans are just wide-eyed,” said Mr. Stutz. “They truly have a great time. It's a full-day experience — not like shooting to a Bengals game and heading home for dinner. You go there and it's wall-to-wall motor homes. People show up on Thursday and leave on Sunday after the race. They put up with four-hour traffic delays, and they are happy to do it.”
Barry Bronson, 51, director of sports marketing for the Valvoline Co., a division of Ashland Inc., based in Covington, said his company is looking closely at the Kentucky Speedway for sponsorship opportunities. “We sometimes think a logo on a winning race car is worth more than a commercial,” he said. “It's a high-performance winning image that is attached to our brand.”
Valvoline sponsors Mark Martin's No.6 car, a Ford Taurus, and Gill De Ferran's Honda Reynard in the CART Fedex Championship series. Industry observers study each telecast and measure the time that a logo appears on television.
Valvoline calculates that in 1998 it received the equivalent of $56 million in commercial exposure from auto racing. “Racing is a real hot button for our target consumer,” Mr. Bronson said.
Naming rights for a track are expensive because they bring the sponsoring company a lasting impression on regional race fans, many of whom arrive for a full weekend from a 300-mile radius. Within 300 miles of this track in Gallatin County are 52 million people.
“That title will have a lot of cachet,” Mr. Helgeson said. “What companies are looking for is impressions. Companies still look at sponsorships as: How many eyeballs saw my logo?”
And when it comes to auto racing in America, there are plenty of eyeballs.
“It is growing in popularity, with a wider television audience and broad exposure, even international exposure,” Mr. Helgeson said. “And the audience is more upscale than you might think. It is not just folks from the country who like motor sports. Urban professionals are going and really like it. Those folks have money.”
NASCAR has come a long way from its first event nearly 50 years ago, a dirt-track race on a 3/4-mile track in Charlotte, N.C., in June 1949. Motor sports are roaring down a revenue straightaway, and the first turn slowdown is not in sight. According to NASCAR, the sanctioning body for 13 divisions of racing:
• More than 11 million people attended NASCAR races in the United States, and 252 million watched NASCAR events on television in 1998, putting NASCAR'S television ratings in second place behind the National Football League.
• Licensed product sales have rocketed more than tenfold in eight years, from $80 million in 1990 to $950 million in 1998.
• Unlike many — if not most — sports, the fan base is not exclusively male. Women represent 38 percent of NASCAR fans — and because women are most likely to make household purchase decisions, that could explain why NASCAR fans have a brand loyalty of 72 percent, compared with 52 percent among tennis fans, 47 percent among golf fans and 38 percent for Major League Baseball, according to a NASCAR report.
The high-banked, three-turn Kentucky Speedway is the largest single construction project in the history of Kentucky, said Jerry Carroll, chairman and owner of Carroll Properties Inc., builder of the speedway.
Talk-show beginnings
The idea for a track was born after Mr. Carroll appeared on the Bill Cunningham talk show on WLW-AM 21/2 years ago. Callers lit up the switchboard for two hours. “And what was different about this: Whenever I talked horse racing, like 38 percent of the calls were negative — but here, 100 percent of the calls were positive,” Mr. Carroll said.
“I've been lucky in life, but sometimes it's a matter of doing your homework. We studied this. When you travel a lot and meet and talk to a lot of people, you get an idea or feeling for what trends are happening.”
If the financial picture was cloudy for Mr. Carroll two years ago, it came into sharp focus when he saw and heard 200,000 fans one weekend in 1997 in Fort Worth, Texas, at the Primestar 500 Winston Cup race.
“You could see the butts in the seats, and they were there for three days,” he said. “I realized right there that that's what I wanted to do.”
Racing will not be the Kentucky Speedway's only revenue stream. Revenue from advertising and sponsorships, deals for concessions and seat licenses, and luxury box sales also bring in cash. What's more, Mr. Carroll is planning a 250-seat conference center. And Outback Steakhouse — restaurant co-founder Chris T. Sullivan is a Kentucky Speedway investor — will be the official caterer.
Speedway backers are keeping the throttle open to other ideas. “If not a race every week, I can see an event a week,” Mr. Carroll said. “A rodeo, a concert, maybe a car show — and car shows are big time. One in Louisville draws 500,000 every year.”
The location near Warsaw also has enough room for another megafacility: perhaps a casino, if Kentucky ever legalizes casino gambling, or an indoor coliseum for a professional sport such as basketball. With no Winston Cup race lined up, Mr. Carroll's team plans to bring other races to the track, including open-wheel races of the Championship Auto Racing Team, the Indy Racing League, NASCAR Busch Series Grand National, Slim Jim All-Pro race and Goody's Dash race. Automobile Racing Club of America and American Speed Association races could open the track in June 2000.
Winston Cup the grail
The Winston cup remains the gem. “If we can get a date, we will put in 120 luxury suites and 120,000 grandstand seats,” Mr. Cassis said. A Winston Cup date could double or even triple projected annual revenues to $40 million or $60 million, Mr. Cassis said.
There is little doubt that racing fans are fervent fans.
“We have a lot of people who buy a lot of collectible model cars off us,” said Rob Stetson, assistant manager at the NAPA Auto Parts Store, 1200 Gest St. in Cincinnati. “I hear people are scalping some high prices on them, too, maybe $80 per car at some flea markets.”
But some wonder if in the years to come, all that auto-racing cash will amount to little more than a pot of gold in search of a rainbow. When hundreds of advertisements are clumped, branding messages can get lost, especially when the clutter is zipping along at 200 mph.
“A sense of dilution will occur. There is concern that there might be too much clutter,” said Mr. Helgeson. “It is expensive to do these deals — $8 million to be the title sponsor of a team on a Winston Cup car.
“The terms of a beverage deal may vary, but you're looking at $300,000. Lowe's titled the Charlotte Motor Speedway with home-improvement warehouse status at six other tracks, and that costs the company $3.5 million annually. It is expensive.”
Mr. Carroll says his track is something of a gamble, nothing new for the former owner of Turfway Park Race Course. But what, exactly, has been left to chance?
NASCAR revenues are at a record high, and the sport is ready to expand. The Kentucky Speedway is the only 11/2-mile track under construction in America, and NASCAR favorite William W. Moss, who designed and built the Talladega Super Speedway in Alabama and the Las Vegas Motor Speedway in Nevada, is project engineer and designer.
Frank Holbert, who also worked on the Las Vegas Motor Speedway, a stop on the NASCAR Winston Cup circuit, is Kentucky Speedway construction manager. And there is an obvious market of fans. Two hours north in Indianapolis, the Brickyard 500 NASCAR race has a 100,000-person waiting list for tickets. A four-lane highway is planned from the Kentucky Speedway to the Ohio River and Vevay, Ind., for better access to millions of Hoosier race fans.
Where's the gamble?
“The risk you take on this thing is this,” Mr. Carroll said. “You are guaranteed absolutely no races going in. That's the risk. It's not if you build it, they will come. It's if you build it, they will think about coming.”
Has a 11/2-mile state-of-the-art track ever been built and not gotten a Winston Cup date? Mr. Carroll leans back, smiles and shakes his head. Nope, he said, that has never happened.
Tracks are built — races are scheduled.
He'll take those odds any day.
Race for money
Lazarus leader serious about customer service
Cincinnati Bell avoids strike
TIPOFF
Immelt may be GE's CEO in waiting
Need led to financial successes
Taking paper out of paperwork
SMALL-BUSINESS DIARY
PRICIEST HOMES
