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Hallman: As sponsors bail, NASCAR needs to re-evaluate its business model

September 6, 2018

What have we learned about NASCAR this season?

Well, try this on for size: In what is regarded as America’s top motorsports series, winning championships doesn’t necessarily guarantee a team’s financial success.

This week, Furniture Row Racing — the team that fields Toyota race cars for the Monster Energy NASCAR Cup Series’ defending champ Martin Truex Jr. — announced that it is shutting down at the end of the season.

Reason? One of the team’s major sponsors is pulling out, and with no replacement in sight, team owner Barney Visser knew he would have to borrow millions to keep the team going. He wasn’t willing to do that.

Thus ends one of NASCAR’s better storylines. In a series that has most of its teams clustered around Charlotte, N.C., Furniture Row’s racing shop is more than 1,500 miles away in Denver. Team members seemed to love the Mile High City.

Moreover, what happened in Denver — that is, the advantages the team developed in its dominant run to the 2017 series championship run — stayed in Denver.

And it worked. After winning seven races in the previous 10 years with a variety of teams, Truex had a breakout season with eight wins and the championship in 2017. He even outran the four drivers for the Charlotte-based Toyota powerhouse Joe Gibbs-owned team that supplied equipment and shared data with Furniture Row.

This year, Truex has won four more races so far and is a strong contender to win the series title for a second straight year.

Not strong enough, apparently, to keep sponsor 5-Hour Energy happy.

It has always been that way with sponsors and NASCAR. They come and they go, but in the past year, there have been other stunning departures or announced pending departures.

About a year ago, for example, Subway abruptly ended its backing of Daniel Suarez, a likable, marketable young driver from Mexico. Subway’s reason? Suarez had participated in an interact-with-the-fans segment filmed by NBC in which he and his network host passed out sweets from Dunkin’ Donuts — apparently considered a rival in the Subway boardroom.

That looked an awful lot as if Subway was just looking for an excuse to hold the lettuce.

Early this season, Lowe’s announced 2018 would be its last year backing seven-time champion Jimmie Johnson. The home improvement store has been on Johnson’s cars since he showed up on the Cup circuit in 2001, but doesn’t care to stick around to be part of his quest to win a record eighth title, provided he doesn’t win it this year.

It takes about $20 million in sponsorship or patron backing to keep a car running up front through the 36-race NASCAR season. With the series not as popular as it was in the go-go years before the Great Recession, some companies have been rethinking their involvement.

It has to be troubling to team owners that a seven-time champion and the defending champion of the NASCAR Cup Series lost major backers in the same year.

And it must be troubling to NASCAR as an organization that some sponsors are no longer willing to pick up the tab for running a contending team. For that matter, the cost of running a back-of-the-pack team is too much for some owners.

A series that once regularly drew more entries than starting spots available is now often a car or two short of a full 40- position grid.

The tour has a charter system that locks in 36 cars for every race, but fewer teams are willing to show up and take a shot at qualifying if they aren’t charter holders guaranteed to start.

Maybe the sport needs a new business model. Maybe NASCAR needs to make it possible for a close-knit team in Denver to remain intact and stay put.

For its part, NASCAR works to find ways to cut costs. The sanctioning body has shortened some race weekends and sharply limited testing. Ever more rigorous inspections are designed to rule out ever more costly engineering and materials that make the cars go faster.

Still, the well-heeled teams will find ways to spend money in search of an advantage. Some teams, for example, sped up tire changes during pit stops by spending hundreds of thousands of dollars to develop faster high-speed air wrenches.

NASCAR stepped in and decreed that this year teams would have to change tires with air wrenches supplied by the sanctioning body.

But it didn’t end there. NASCAR had to add a requirement that the wrenches would be powered by nitrogen, the gas for which they were designed. Some teams had switched to helium, which made the wrenches work faster. Helium is more expensive.

As noted, the exiting sponsors will be replaced by new ones — though the deals may not be as lucrative. Johnson and Truex will be fine. Johnson’s team will secure (or maybe has secured and hasn’t yet announced) a new backer. Another team will sign Truex.

A report at Motorsports.com, posted just hours after owner Visser announced that Furniture Row would shut down, said Truex and his crew chief, Cole Pearn, are headed as a package deal to Joe Gibbs Racing.

Truex will replace Suarez, who will likely be shipped to a lesser Toyota team, the report said.

That would be a bit of a rough ride for Suarez. None too smooth for the sport as a whole, either.

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