Indy Sponsors Lose When Drivers Don’t Qualify : Promotion: Millions are spent each year on top racers. Companies bank on 8 million TV viewers seeing the logos.
Al Unser Jr. said it all without speaking: The defending Indianapolis 500 winner, after failing to qualify for this year’s race, walked from his car looking stunned and holding his head with his right hand.
His corporate sponsors probably had the same reaction.
Unser and 1993 Indy 500 winner Emerson Fittipaldi--who drive for the team of renowned race car owner and businessman Roger Penske--both failed to get into the race, shocking not only the sports world but also the business world that spends more than $5 million a year to sponsor each of the drivers.
The companies include the team’s main sponsor, the Marlboro cigarette unit of Philip Morris Cos., along with Mobil Corp., clothing maker Hugo Boss and the automotive paints and glass concern PPG Industries Inc.
“It’s very disappointing,” said Carol Wilkins, PPG motor sports manager.
And expensive. Though figures aren’t publicly disclosed, analysts estimate that the 10 largest sponsors of a Penske car each spend upward of $500,000 to sponsor the car all year, with primary sponsor Marlboro paying well in excess of that.
They pay those sums to have their logos plastered on the cars and their drivers’ racing suits so that those logos are front and center for fans to see each time the contestants appear on television or in photographs.
Unser’s and Fittipaldi’s cars, with their red and white colors, resemble Marlboro cigarette boxes traveling at more than 200 m.p.h. Many other sponsors are directly tied to the auto industry and include producers of motor oils, tires, spark plugs and the like.
Sponsorship, in turn, is what makes this caliber of racing even feasible. Although some car owners such as Penske have deep pockets, Indy racing teams need corporate backing because their cars cost more than $1 million a pop and can be destroyed in an instant in a crash.
But the stakes are even higher at the Indy 500 and with the Penske team.
Probably the most spectacular event in racing, the Indy 500 not only draws more than 400,000 spectators to the track, it’s also watched on TV by 8 million viewers--many of them only casual fans who watch just this one race.
“This is their Super Bowl,” said Eric Wright, a vice president of the Sponsors Report, a trade letter published by the research firm Joyce Julius & Associates in Ann Arbor, Mich.
Moreover, sponsors that put their money on Penske expect a return on their investment, particularly because they pay 1 1/2 to two times more to sponsor his drivers than less-successful drivers, said Max Muhleman, who runs a sports marketing consulting firm bearing his name in Charlotte, N.C.
Penske’s drivers have won 10 Indy 500s since 1972, and his backers understandably plan not only to be in the race, but to win .
That’s the payoff, of course: To have Unser’s and Fittipaldi’s cars constantly on TV as among the leaders during the race and then one of them in front of the cameras, drinking Indy’s traditional glass of milk in Victory Lane, giving the sponsors’ logos the maximum visibility.
But not this year.
“Obviously it hurts,” Dan Luginbuhl, a vice president of Penske Corp., said. “But it’s not the end of the line.”
Still, the Indy shutout also takes away one of the big tools that Penske--perhaps racing’s savviest businessman--uses to help promote his privately held firm’s other ventures. Penske Corp.’s holdings include a major truck-leasing business and several auto dealerships in Southern California--led by giant Longo Toyota in El Monte.
Penske’s woes also could cause headaches for ABC Sports, a unit of Capital Cities/ABC Inc., which broadcasts the race. With two of the sport’s most popular drivers on the sidelines, viewership of this year’s race might sag. ABC declined comment Monday.
What’s the financial loss to sponsors?
It’s difficult to break down the impact of failing to qualify for just the big race because sponsors typically have a single annual budget devoted to each driver and team. But Joyce Julius & Associates calculates what the exposure would have cost in commercial advertising time on the broadcast.
The firm studies videotapes of each year’s race and measures each second that a sponsor is either plainly visible on TV or mentioned on the broadcast. They then add those seconds together and multiply them by the cost of a 30-second commercial on ABC’s broadcast, which last year was $190,000.
Marlboro alone totaled $7 million “in exposure value” at the 1994 race, the highest of any sponsor.
“We know there are highs and lows that are associated with this sport,” Philip Morris said Monday in statement. Marlboro is an “associate” sponsor of other teams, but won’t get anywhere near the exposure as it does with the Penske cars.
However, some of Penske’s other sponsors are buffered from his failure at Indy. PPG, for example, sponsors every driver in the field and also is the sponsor of the Indy cars’ season for the full year, known as the PPG Cup.
Penske’s other sponsors, their families and clients also won’t be shut out next Sunday, when the green flag drops at this year’s race. Penske, Unser and Fittipaldi will all be there to greet them, Luginbuhl said.
Still, he added, “there’s no question it won’t be the same.”
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