NASCAR Green-Flags Liquor Sponsors

Spirits companies get the O.K. to sponsor stock-car racing teams, which could see a $100 million windfall as a result

By David Kiley

The National Association for Stock Car Auto Racing (NASCAR) on Nov. 10 said it's lifting its decades-long, self-imposed ban on liquor sponsorships. It's launching a new effort with spirits marketer Diageo (DEO ), which will sponsor a race team with its Crown Royal brand.

NASCAR's policy shift likely will mean more than $100 million a year in new revenue for race teams in a sport growing ever more popular, as spirits companies scour the media landscape looking for new advertising venues.

Diageo and several racing teams lobbied NASCAR hard for 18 months to lift its ban. Diageo, for one, has been especially pleased with the results of its sponsorship of the Roush Racing team with Smirnoff Ice, a malt-liquor beverage. Companies that make these drinks were already allowed such sponsorships as opposed to the hard-liquor outfits. Crown Royal, like Smirnoff Ice, is an associate sponsor of Roush, which costs Diageo an estimated $5 million-plus per year.


  A principal sponsorship, which gets brand signage on the side of a car and in the garage area of racetracks, costs about $15 million per year. Sponsors benefit from having their brand shows up on the cars during TV broadcasts, on posters, and the like, as well as in the sports media. NASCAR's TV ratings are routinely higher than those of Major League Baseball. Some 75 million American adults call themselves NASCAR fans.

NASCAR's ban on spirits goes back to the sport's conservative Southern roots and the similar decades-long ban by major TV networks. The spirits industry, too, voluntarily stayed away from cable-TV ads until the late 1990s. As liquor advertising has become more common on cable TV -- which has been grabbing a bigger share of viewers from broadcast networks -- and as NASCAR races are increasingly broadcast on cable, voluntary bans are falling by the wayside.

NASCAR already allows spirits advertising in racetracks, as does Major League Baseball in its stadiums. And another racing circuit, Indi Racing League, already permits on-car liquor sponsorships.


  "The core fan of NASCAR represents Americana, and they tell us that they're O.K. with spirits, whether they are here [in NASCAR] or not. The American public understands that it's part of everyday life," says NASCAR President Mike Helton. NASCAR last year began a ban of tobacco sponsorships from racing teams. The only other two categories Helton sees banning for now, he says, are online gaming and pornography.

The lifting of the distilled-spirits ban was the personal mission of Zak Brown, founder of motorsports-marketing firm Just Marketing, which represents Diageo. "We began an intense lobbying effort some 18 months ago with NASCAR and its partners, concentrating on one simple premise -- how inclusion of responsible spirit producers would be good for the sport," says Brown. The rationale that won out in the end: There's no difference between the spirits companies and the malt-beverage group that were already allowed to sponsor teams.

Liquor companies have increasingly promoted responsible drinking as they have turned to cable TV, radio, and sports sponsorships -- all of which attract an abundance of under-age eyeballs.


  "We are excited to grow our relationship with Diageo because we have firsthand knowledge that social responsibility is at the forefront of their marketing efforts," says Geoff Smith, president of Roush Racing. "We are in our second year with Diageo, and their commitment to promoting responsible drinking is in accordance with the adult beverage industry's highest standards."

NASCAR's Helton says his organization consulted with the Distilled Spirits Council of the U.S., the industry's main trade group, and The Century Council, an industry-funded group that promotes responsible drinking. He also notes that Mothers Against Drunk Driving, a harsh critic of advertising practices of spirits and beer companies, had been consulted.

But according to MADD President Wendy Hamilton, the only contact with her group was an invitation to be on an advisory committee. "We are interested, but we have made it clear that alcohol is alcohol, and beer and distilled spirits should not be treated differently when it comes to advertising practices," says Hamilton. "Both industries have a track record of not adhering to the standards that they set up, such as not using youthful actors [that could be taken for being underage], using animals, and depicting risqué situations."


  NASCAR says only about 12% of its TV audience is under age 21, and just 5% of race attendees are underage. The industry's guidelines say liquor advertising shouldn't be in venues where the underage audience is greater than 25%, according to Distilled Spirits Council spokesman Frank Coleman.

In the end, NASCAR just couldn't justify refusing the dollars being offered by spirits companies. "We weighed the pros and cons, and the pros outweighed the negative," says Helton, adding, "We can open up a new category that benefits the teams and the garage area economically."

Kiley is Marketing editor for BusinessWeek in New York

Edited by Beth Belton

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