UP FRONT - TWO SUBJECTS THAT CANNOT BE IGNORED

7-23-07asherupfront.jpgCan we finally address some difficult subjects that the NHRA hierarchy would not only prefer we didn’t discuss, but would like us to ignore completely?

I’m not wondering about anything. I know these are subjects that we can no longer pretend aren’t impacting NHRA in a potentially damaging manner. Well, in all candor, these subjects probably aren’t bothering NHRA in the slightest. Rather, they’re “bothering” the competitors sharp enough to pay attention and alas, the sanctioning organization can no longer count on a racer’s need for speed to blind him or her to the fiscal realities of major league motorsports. Competing at the top level of drag racing demands a monstrous expenditure of dollars, and anything that doesn’t produce positive results for the sport has the potential of actually holding investment in drag racing back.

In the last year or so more and more competitors have been outspoken in their total disdain for series sponsor POWERade. Those same competitors wistfully recall the 27 years that Winston sponsored the series, and long not necessarily for the return of a tobacco sponsor (obviously not happening), but for any series sponsor who would show the kind of support for NHRA drag racing that Winston did.

asher05.jpgCan we finally address some difficult subjects that the NHRA hierarchy would not only prefer we didn’t discuss, but would like us to ignore completely?

I’m not wondering about anything. I know these are subjects that we can no longer pretend aren’t impacting NHRA in a potentially damaging manner. Well, in all candor, these subjects probably aren’t bothering NHRA in the slightest. Rather, they’re “bothering” the competitors sharp enough to pay attention and alas, the sanctioning organization can no longer count on a racer’s need for speed to blind him or her to the fiscal realities of major league motorsports. Competing at the top level of drag racing demands a monstrous expenditure of dollars, and anything that doesn’t produce positive results for the sport has the potential of actually holding investment in drag racing back.

In the last year or so more and more competitors have been outspoken in their total disdain for series sponsor POWERade. Those same competitors wistfully recall the 27 years that Winston sponsored the series, and long not necessarily for the return of a tobacco sponsor (obviously not happening), but for any series sponsor who would show the kind of support for NHRA drag racing that Winston did.

By way of quick and far from comprehensive review, when Sports Marketing Enterprises, the corporate arm behind the Winston brand, was involved in the sport there were always Winston corporate representatives at the races. While it’s true there is usually at least one POWERade rep at the track these days, rather than being out front and highly visible while walking the pits and visiting with the racers, supporting manufacturers and yes, even the fans, they’re all but invisible.

 


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More and more drivers are finding it “convenient” to have their own sponsor’s hat ready to wear for finish line photo ops as they’ve come to the obvious conclusion that one provides meaningful financial support while the other provides little more than lip service.
The Winston reps made it their business to know everyone. Their informality, friendliness and obvious willingness to do whatever it took to not only promote their brand, but the sport itself, was above reproach. Not so with POWERade. There probably aren’t more than a dozen racers who can say they’ve had regular interaction with the POWERade people. In fact, when we’ve questioned professional racers about POWERade most of them can’t name a single representative of the company, many for the simple reason that they’ve never been introduced to one.

As a purveyor of tobacco Winston was limited by law as to what they could do to promote the sport, but regardless of those limitations, they went right up to that proverbial line in the dirt on a regular basis. Their in-market promotions on behalf of NHRA drag racing were impressive. From point of purchase (POP) displays in convenience and grocery stores to the promotional materials they placed in service stations and liquor stores, Winston went all out to enhance both their product and the sport. The results were difficult to argue with. The senior Winston executive in charge of their motorsports programs told us during their last year of involvement that their NASCAR efforts had brought them eight million new customers. At the same time their involvement with NHRA drag racing had netted four million new customers. The difference between the two sponsorship programs was that NASCAR cost the company five times what it cost them to go drag racing.

We can’t quantify any market improvement for POWERade since they signed on with NHRA, but we do know they know a good deal when they see one (at least cost-wise). That’s probably why they hastily signed an extension of their sponsorship agreement with NHRA through 2011. When we queried NHRA president Tom Compton about this extension a few years back, this is how it went:

“Congratulations on the extension, Tom. What’s the money deal?”

“All you guys care about is money,” he replied.

“Well, Tom, money is the only thing that does count. It won’t matter if this extension is through 2050 if it doesn’t bring drag racing a million dollar winner.”

Compton’s response was to turn 180 degrees and walk away.



 

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In the beginning NHRA told anyone who would listen that POWERade was going to make a major marketing effort on behalf of the sport, but in reality, they’ve done nothing. If there are in-store displays featuring drag racing, even in the national event markets during race weekends, we haven’t seen them. And we make it a point to check local grocery stores for that very purpose during each national event we attend.


POWERade commercials shown during an NHRA POWERade Series telecast count for nothing. They appear on programming that’s already preaching to that proverbial choir. If POWERade were really determined to promote NHRA drag racing and their involvement in it those commercials would be shown during NASCAR races, football, baseball and basketball games and in conjunction with any other “active” sports programming that’s likely to include an audience that might some day attend a drag race. In other words, they’d be advertising in the kind of aggressive manner that the newest sports drink on the market is doing – but more on that in just a bit.

Does anyone have any idea how many NHRA sanctioned drag strips are still painted in the red and white colors of Winston? That was one of their major programs. Tracks looking for an appearance update received one gratis from Winston. Yes, those tracks ended up with towers looking like packs of cigarettes, but they also ended up looking spiffier than they had before. POWERade has made no such effort, nor do we know of any such effort even being in the planning or discussion stage.

Regardless of one’s personal attitude towards tobacco products, it can never be said that Winston didn’t also distribute their products to the racing community at no charge. In the case of POWERade the competitors are being forced to buy the product at prices that many allege are higher than they can get at the local Sam’s Club or Costco.

 


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Tom Compton and his management team may have been too hasty in signing an extension with a series sponsor which has proven to be less than proactive in its support of the sport.
There’s something just plain wrong about a deal under which the people who are supposed to be helping promote your product are being forced to pay for the privilege of doing so. Kind of like paying to wear a shirt that says “Tommy Hilfiger” across the front in six inch lettering, only somehow worse.


And God forbid that anyone from NHRA find a racer with a bottle of Gatorade in his trackside cooler.

POWERade is in a difficult financial situation despite being a member of the Coca-Cola family. Their total annual advertising budget is less than $15 million, meaning they’re simply not in a position to challenge the likes of Gatorade for market supremacy – and things are about to get a lot worse. POWERade’s store shelf space is likely to shrink in the months ahead because Coca-Cola agreed to spend $4.1 billion (that’s “billion” with a B) for Glaceau in June. Among their products is Vitaminwater, the latest craze in bottled drinks, and according to industry publication Beverage Digest, it’s going to eat up some of POWERade’s existing store display space. That can’t be good for either the product or NHRA drag racing.

The bad news for POWERade, which is currently clinging to an 18% market share for sports drinks (Gatorade is the segment gorilla with 81%) continues.  On June 29th the New York Times reported that beverage maker Cadbury Schweppes would introduce a new sports drink called “Accelerade.”  Killer name, isn’t it?  Regardless, the Times estimates Accelerade’s first-year advertising budget at between $50 million and $100 million, and we’re already seeing the results.  Accelerade has appeared in full page, four-color advertisements in major newspapers and sports-direct publications like Sports Illustrated.  It’s also getting heavy rotation on ESPN programming.  POWERade may have been somewhat invisible before, but now it’s as if the product had never been on the market at all.

In the world of big business Accelerade’s arrival in the marketplace could ultimately spell doom for POWERade, at least as a member of the Coca-Cola family. If Gatorade’s market share drops due to the emergence of Accelerade as a major segment player, they’ll undoubtedly fight back with stronger advertising and other marketing ploys. But, if Accelerade takes an even bigger bite out of POWERade’s share Coca-Cola may decide to cut their losses and sell the brand to a smaller company, one that might be satisfied with a smaller portion of the market and still be profitable. Profits are a funny thing. The bigger the company, the bigger the profit margin needs to be to satisfy management and stock holders. If POWERade stops performing up to corporate expectations, it could very easily be unloaded.

With their multi-billion dollar investment in Vitaminwater, Coca-Cola is going to be desperate to gain shelf space and exposure for its new line, and POWERade would appear to be the company product they can “afford” to let go – or essentially stop supporting prior to a possible sale. Under the circumstances outlined in this and the previous paragraph, how do you think NHRA drag racing is going to fare?

Accelerade has embarked on the kind of national advertising blitz that POWERade has never mounted, one that, had it been POWERade, would have absolutely enhanced the public’s perception of NHRA drag racing. If NHRA drag racing is to be considered one of POWERade’s most important “properties, certainly clips of quarter mile action would have appeared in those ads.

 


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The NHRA made a very bad deal by signing POWERade either without knowing they weren’t really going to support the sport, or by signing them without caring about the long term results. One suspects that NHRA’s managers were afraid to go into the season following Winston’s departure without a major series sponsor, thinking it would be seen as a sign of weakness. Just prior to the signing with POWERade Tom Compton publicly said that he would not sign a series sponsor unless the deal was very good for the sport. This one clearly isn’t.


We suspect this was a very good deal for NHRA because it enabled them to appear to have major corporate support while at the same time adding to their corporate bottom line. It was definitely not a good deal for the participants or their corporate sponsors because, as the series sponsor, POWERade has done so little to promote their involvement or the activity itself.

On a related subject, for years NHRA’s marketing department loudly proclaimed that no corporate entity could have an involvement with drag racing without first being a major team sponsor. That “rule” included becoming the “official” anything, or becoming the title rights holder to a national event. However, as time went by those same marketing types found it ever more convenient to ignore their own standards, as we began to see event title rights sponsorships being sold on a regular basis without those title rights holders being involved with any competitors.

That policy has reached its nadir with O’Reilly’s Auto Parts. Not only is O’Reilly’s the title rights holders to six NHRA national events – about 30% of the total – they have also obtained the naming rights to what used to be called Indianapolis Raceway Park, arguably NHRA’s most important facility because of its hosting of the U.S. Nationals.

Not a single penny of the money O’Reilly’s has paid for these privileges has worked its way into the pocket of a single competitor. Please. Don’t try to suggest that the O’Reilly name on the flanks of the occasional sportsman entry or one-off underfunded professional operation qualifies as being involved in a major team sponsorship.


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NHRA has done its part by decorating every national event venue with POWERade logos and colors, but what, exactly, has POWERade done for NHRA drag racing?
At least in days of yore as part of the title rights to a national event the racers were tossed a financial bone in the form of minimal payments for low qualifiers that was alleged to have come from the title rights sponsor. Even those paltry payouts have been discontinued, so it’s safe to suggest that every penny of title rights support goes into someone’s pocket other than the competitor’s.

Where is the outrage over this? You can hear it from any number of professional competitors, competitors who somehow seem reluctant to voice that same anger in meetings with NHRA officials. Maybe it’s because they know doing so is a waste of their breath.

If the NHRA management team really believed in what they were doing they’d go to Coca-Cola hat in hand and succinctly outline how the sport needs a massive influx of money to move forward, and how POWERade is obviously powerless to help. They might then suggest a co-sponsorship program of sorts that would financially involve other Coca-Cola brands that can afford to play in drag racing’s ballpark. If they’re unable to move the Coca-Cola managers, then maybe it’s time to ask them to let drag racing out of its current agreement so that a new series sponsor – one that might really support the sport – can be found and signed in their place.

In the case of O’Reilly’s, it’s time NHRA either enforced their own widely discussed “rule,” or just gave them an ultimatum: Either provide major sponsorship for a professional race team, or take a hike.

Right now the only ones benefiting from POWERade and O’Reilly’s is the NHRA. No one else has benefited in even the slightest manner.



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