Valvoline: In the Driver's Seat at Daytona
When the checkered flag is waved on Sunday afternoon, Feb. 18, at the conclusion of the grueling Daytona 500, up-and-coming driver Johnny Benson hopes for a dash to the winner's circle in his #10 Pontiac. But no matter how Benson -- who's starting the race well back in the pack -- finishes, Valvoline Co. figures it's already a winner.
How come? Because after years of shelling out millions for motor-sports partnerships on both sides of the Atlantic, Valvoline, a car-care-products company in Lexington, Ky., has decided to become the first U.S. sponsor in the championship NASCAR Winston Cup series to buy a race team lock, stock, and bumper.
Like most commercial sponsors that desire the exposure gained from plastering their logo on a competitive race car, Valvoline has been spending close to $15 million a year for its Winston Cup program. Last year, company President Jim O'Brien had a better idea. He acquired a controlling interest in race team MBV Motorsports and, in an instant, put Valvoline in control of MBV's NASCAR effort. "We wanted a seat at the table," explains O'Brien. "Who will the driver be? How should the car be designed? What about the budget and tie-ins with our marketing efforts? We just felt we needed a say."
In Europe, where sponsorship expenses in the Formula One racing series are easily 10 times that of U.S. stock-car racing, the concept of owner-sponsors is old hat. For years, companies such as Benetton have operated their own race teams and designed their own cars. But for NASCAR, the idea is novel, and other teams are watching closely to see how Valvoline fares.
What does Valvoline hope to get out of this arrangement? For starters, cost control. With the economy in the dumps, some sponsors are slamming the brakes on expensive racing programs. O'Brien, who typically would sign a three-year contract with a race team and renegotiate yearly, complains that "sponsorship costs are going up exponentially" even as the economy cools. One reason for that is television. Thanks to a lucrative new deal with Fox Sports and the NBC/Turner sports channels, NASCAR now has network coverage for its full season. The TV package is another incentive for team operators and marquee drivers to jack up their demands.
As the owner of the #10 Pontiac, Valvoline hopes to rein in future development costs and to recover several million dollars a year by selling secondary sponsorships to other commercial outfits. In addition, says O'Brien, he's launching a national marketing campaign around the NASCAR bid, mainly by slapping Valvoline Racing logos on a line of consumer products and fan sportswear.
"To us, Valvoline Racing has become a brand," O'Brien says, "and we're trying to create an emotional appeal around that brand. We see this more as a long-term investment than sports participation." And Daytona, the premier event of the stock-car racing calendar, is a strong starting point.
By Lee Walczak in Washington
Edited by Douglas Harbrecht