Tuesday, December 7, 2010

Conspiracy Theories, Get your Conspiracy Theories Right Here!

Most the (official) news this week revolved around the Penske sponsor announcements and growing list of minor sponsors they have accumulated. Most other commentators have commented on the pillaging of Andretti sponsors by the Penske bully machine. I have a few completely random thoughts “based on nothing” that at the end of the day paint Penske in a little less “evil” light.

First: Part time sponsors Meijer and Izod Moved to Penske, with league assistance, in part to open up car space at Andretti for a full time sponsor for one if not two cars.

Let’s play six degrees of separation…AA employs Danica who once ran with Motorola sponsorship, Motorola is the manufacturer of the Droid phones that are used to record important votes within the IndyCar series. The Moto Droid phones are only available on Verizon who has been pushing and hoping that their ultimate success will not require them to give in and offer the iPhone. So far the droid has done ok for techy males and IICS bloggers but has not crossed over into a broader and more notably, female market.

Advertising campaigns in the cell industry are often mixed party efforts between the Cell phone manufacturer and the carrier itself. One way to tell…if the ad mentions nothing but the carrier, then the $ to place the ad came from the carrier only. If it mentions a specific phone, then the phone manufacturer pitched in to buy the placement. More Verizon customers will mean that the Verizon manufacturers will sell more phones, so the manufacturers have an interest in seeing the carrier do well.

Verizon joined the league on Will Power’s car last year and was apparently quite happy with what they got out of the deal. SO the worst kept secret during this off season is that another “large sponsor of IZOD’s magnitude or greater” was to be announced any moment (at least in Angstadt time). Curt Cavin has mentioned on Trackside, that this sponsor was going to enable cell phone users to stream IndyCar races live over a mobile device…one would assume that this sponsor was either a cell carrier or hardware manufacturer, ie Verizon or the maker of their most advanced phone, the Droid by Motorola.

I think we all presumed that increased sponsorship from Verizon might mean that Briscoe or Helio might get to carry Verizon colors next year in addition to Will Power. But here’s the fly in that ointment, what if part of the money for Verizon’s involvement was coming not from Verizon, but from Motorola. Motorola who was sweet on Danica and by association, Andretti? Motorola may want to have a say in which drivers they have access to for their part of the effort to sell more Droid units. More specifically, they may want Danica (to help sell the Droid to women) and secondarily they may prefer an American male to compliment Danica. Hence Andretti picks up an option on RHR at a moment when they lose 7/11 and cut TK loose and Danica mentions this week that “She would love to be around in 2012 to drive the new car” and presumably cash in on a big new sponsorship deal.

Where this is all going, what if Izod and Meijer were swapped to Penske so that Motorola and Verizon had access to specific drivers who happened to be on contract at Andretti? Might we see a Verizon Droid car driven by RHR and a BIG associate deal with Danica as well? Roger would not have let Exclusivity to Verizon go without getting a piece in return…As I say… just thinking out loud here…

Another tidbit to think about here. I read somewhere that the Meijer money is in part coming from Coke, I have no way of knowing if it is true but... Again, business deals like this happen all the time, coke in particular will pay for all the Marketing research that a restaraunt chain will do on it's beverage line and will also do lots of research to support the sale of its products in a particular retail chain. Actual promotion dollars spent by a vendor like coke, to support a retailer like Meijer is not an uncommon arangement, right Chip? So what if the Meijer money does come from Coke? Well then Meijer can't spent it at AA. Why? Because Seven Up/Dr Pepper is already at AA with its Venom brand of energy drinks. Everyone in a the sandbox has to play nice and Meijer never would have gotten the Coke $$ if they had stayed at Andretti.

Second…this chapter is subtitled “IMS kicks ISC in the crotch in the one small way that it can”

The biggest story that accompanied the release of the 2011 schedule was the absence of any track that contained an ISC in the spelling of it’s name. This was met with:

  • Angst from many IndyCar fans who were losing their favorite or home track
  • A slight tinge of remorse from the folks up in Watkins Glen
  • Apathy from the track managers at Chicagoland, Kansas and Homestead, who hadn’t even realized that they hosted IndyCar races to begin with.

But besides the fans who was hurt the most from IndyCar’s decision? The track manager at Fontana. Huh? What? Fontana didn’t even have and IndyCar race. Correct, but what made the IndyCar race in Kansas expendable was its gaining second cup date that in turn was taken from Fontana. SO Fontana had some time available on its schedule and more importantly, it had a sponsor, Auto Club, who had in 2008 paid upwards of $75m over 10 years to put their name on a facility that now sat empty for what was supposed to be a second large event crowd. ISC bait and switch in action thank you.

ISC no doubt understood that it would have to find a replacement for that second cup date, which is why they were pitching that IndyCar close its season there and not Vegas. So when IICS pulled the plug on all ISC tracks, including Fontana that was lobbying the hardest, they left ISC in a sticky position with a sponsor who had written a big check.

Of course I have never seen the contract between ISC and Auto Club, but I wonder if there are event provisions in it that specify the number and standards for events to be held at the speedway complemented by punitive remedy clauses that kick in if those standards are not met. And so today Auto Club announces that they are sponsoring Helio at Long Beach and Texas… I wonder where the $ came from? I also suggest that the #3 will wear AAA colors at the Vegas, once it becomes official, as Vegas is another large Auto Club market.

Chapter 3, Are Sponsors fearing the dips in nascar ratings beginning to hedge their bets by dabbling in IndyCar?

Over the past few days we have seen Shell Pennzoil, Auto Club and Chevrolet all enter the IndyCar series as sponsors. While none of these companies have left nascar behind, they have stuck their toe into the IndyCar pond. But why? At this point IndyCar ratings would not really support a move into the series for most sponsors, but at the same time the nascar juggernaught seems staggered and wavering, unable to deliver the same growth that has experienced over the last 15 years. Are sponsors dabbling in IndyCar to have alternatives if nascar can’t right the ship?

Suppose you were a sponsor and were looking to get involved in racing. You enter the sport in 2002, seven years after the IndyCar split and at a period where nascar is in its ascendency and IndyCar is in the middle of its Mid split freefall. Looking at the ratings trend, you decide to throw your dollars behind a nascar effort. Five years later, in 2007, things have gone well on that initial investment, and you start negotiating with your nascar partners. They tell you how great it was to have you around and that because of the growth in the sport over the past five years and because of the growth they EXPECT to see over the next five they are going to charge you substantially more for the same sponsorship package. Because the first 5 years were such a success, you agree to the offer.

But now suppose that instead of following the red line upwards that your contract assumptions were based on, nascar ratings followed the blue line into decline. While at the same time IndyCar, which you had long written off as dead, reunified and seemed to right it ship financially and again looks destined for relevance. Knowing that your contract was up in 2012 and knowing that you are likely to place a racing sponsorship somewhere, would you start testing the water Before your 2012 renewal came up?

Aw hell it’s late and I am tired. Going to bed now thanks for reading – again this was based on NOTHING. Be sure to write your congressman and governors letting them know that The National Guard should spend your tax dollars hiring an outstanding young American driver like JR Hildebrand. Guten Abend.

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