The Effect of the economy on Corporate Sponsorships

I was interested in this blog because I enjoy studying sports since I have been an athlete all of my life. Overall I thought the blogger compiled a relatively thorough analysis but there were certainly a few aspects of the piece that could have used some further detail in order to better prove the argument.

Just after reading the first paragraph of this blog, I am convinced that economic fluctuations are reflected heavily in the NASCAR world. It is an obvious fact that NASCAR is an organization that relies heavily on corporate sponsorship as a significant revenue stream. When one thinks of NASCAR, he or she can picture the cars and uniforms that are decorated with advertisements and endorsements. It is a dominant component of the business; however, sponsorships are very susceptible to economic changes. The author of this blog mentions how corporate sponsors are lost during economic recessions such as the one we are currently experiencing. These businesses are in a situation where they are forced to cut expenses, and apparently a popular place to cut these costs is by eliminating NASCAR endorsements. I think it would be interesting if the author would describe why it is that corporations are choosing to cut NASCAR endorsements. Obviously it is because they are trying to cut costs, but are they choosing to cut NASCAR endorsements over other endorsements they have? And if so, why? Is it because NASCAR appeals to a smaller market than most other professional sports? I think some insight into those questions would be valuable to this blog.

The author also mentions how ticket sales decline during economic hardships. He gives an example to support this trend by mentioning how the biggest NASCAR race on the planet at the Daytona International Speedway had to reduce prices for thousands of tickets in order to sell out the event. But why is it that ticket sales are struggling? In a quote the blogger provides from Rick Hendrick it is highlighted that much can be learned from NASCAR’s troubles regarding the way consumers are spending their money. I think it would strengthen the blog if the author explored this insight and perhaps provided some statistics that detailed the decline in spectator event spending as a result of the recession. It would also be interesting to see a comparison of the decline in NASCAR ticket sales as compared to the ticket sales of other spectator events, such as concerts. I would also be curious to hear the author’s reasoning as to why NASCAR’s ticket sales might be affected differently than other spectator events.

The author explained how the declining ticket sales and lost sponsorships are affecting the NASCAR business, which was helpful to my understanding of the circumstances. He mentioned how many teams have merged together to combine resources. When the author mentioned how Petty Enterprises, a competitor in the event since 1949, was forced to merge due to the loss of their Cheerios sponsorship it really highlighted the severity of the situation and revealed to me as the reader how heavily NASCAR relies on sponsorships. Although this statement made me convinced of the significance of sponsors to the teams of NASCAR, I would like to have been provided with some of the following statistics: how much of the revenue that NASCAR teams’ receive is from sponsorships?; how many sponsors does one team usually have?; what percentage of a team’s revenue is derived from their largest sponsor (such as Cheerios)?

I like how the blogger then transitions into addressing the effects of economic downturns on other professional sports. His argument is that regardless of the sport, or the team, the fact that these organizations are relying on sponsorships during a recession is resulting in a need for wiser spending and altered organizational structures. The blogger does a good job of detailing the impact on one team in particular, the NY Nets. He discusses how the Nets have to push back the construction on their new stadium and he also talks about their struggle to sign Lebron James as a result of the delayed Barclay’s Center project. I think it would have been beneficial for the blogger to discuss the impact on ticket sales for professional sports, similar to how he did for NASCAR.

The blogger concludes his post by advising that sports’ organizations, which rely heavily on corporate sponsorships, need to implement wiser spending techniques and alter their organizational structure. I thought this was a sufficient conclusion to summarize the blog. It was an interesting piece but I think it could have been a more effective argument if it was accompanied by more empirical data to support some of the conclusions made.

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One Response

  1. Jeez the guy who wrote this pst must have been a genious! NASCAR has been recieving a ton of press over ther first female drive, Danika Patrick. HHave you seen any of the marketing campaigns? I wonder if attendence or sponsorships have improved at all.

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