News & Analysis

An  aloof marketing department just doesn’t get it

By Darr Hawthorne and Jeff Burk

A serious issue for the National Hot Rod Association going into the 2012 season is the loss of spectators and series sponsors and, as a result, a serious shrinking in the NHRA’s bankroll. So NHRA president-for-life Tom Compton has made the difficult decision to cut staffing and, NHRA sources tell DRO, a return of the 10% across-the-board pay cut of a few years back. These are all painful but necessary actions that many CEOs are faced with due to the recession this country and most of the world is mired in. So, in the face of missing fans and unrenewed sponsorships, it is reasonable to assume that Gary Darcy, VP of sales and marketing, and Peter Clifford, Executive VP and general manager of the NHRA, and their staffs would be tasked with finding more revenue streams. 

The first move the management team has made is painfully familiar. Instead of improving the product so that perhaps more fans and sponsors would want to be involved, the NHRA management team did what they have in the past and decided to punish the loyal remaining sponsors they have by raising the cost of their involvement with the NHRA sponsorship programs. On Sunday, Nov. 6, a short and sweet edict from Charlie Neilson, manager of the NHRA contingency program, rolled into the email inboxes of aftermarket manufacturers who participate in the NHRA contingency program.

Neilson’s surprise email carried an attachment announcing a new $6,500 fee for the 2012 season for hanging fence banners at NHRA Full Throttle events. In addition to the new charge, sponsors were also informed that contingency fence banners by mid-season 2012 must follow the NHRA Marketing Guidelines for a new uniform size, placement, and other regulations. So, not only will it cost the sponsors more just to be involved, but many of them will have to make all new banners.

Scott Woodruff, Director of Media and Motorsports Marketing for JEGS, told DRO that he was completely surprised by the email from Neilson.

“They (NHRA) told us they were going to a uniform banner size, but never, never mentioned anything about charging $6,500 for the right and the privilege to be able to display banners at national events,” he said. Contingency is an important part of our (JEGS) business, we have been doing it for a long time, but I think we look at it a little different than other sponsors – we want to pay the racers, our goal is for our check to be the first check that they receive along with a personalized, embroidered hat celebrating their victory… and we manage to get that out within one week."

“Jegs pays out in the hundreds of thousands of dollars to racers every year,” said Woodruff, “and traditionally the fee NHRA takes for administering the contingency program included banners as part of the package. The only person that has any leverage here is the sanctioning body. In a perfect world, when you win or runner-up the sanctioning body should be writing you a check at the scales.  Because they (NHRA) know right then what decals appear on the racer’s car, what (decals) they don’t have, what they have claimed – they should know that dollar amount right then and be able to write one check and give it to the racer.”

Vic Wood, VP of Sales and Marketing for the Hedman Performance Group, had another take on the new fee from NHRA. “This (fee) is just another additional demand on what is already a very tight manufacturer’s budget for most of us – the manufacturers have not got a bottomless pit of money. There are so many options for manufacturers to invest in today and they are already carrying a very heavy load.”

In what has become a decreasing market for contingency sponsors over the years at national events, this fee is simply another nail into the coffin of that program set up to support the sportsman racer. 

“As I see it, there are less sponsors, there are less postings and it is harder for the racer to get his money on the whole, and that is not the way that it should be,” commented Woodruff.

Woodruff added that the new fee discriminates. “I am sure that all the Official Sponsors don’t have to pay $6,500 and I am sure that the Event Sponsors don’t have to pay that fee to hang banners, but the majority of the companies that support the sportsman racer will have to pay that figure.” 

In the difficult economic times the sport of drag racing is experiencing today, for the National Hot Rod Association to have their hand out charging existing sponsors an extra fee for bannering, is, we feel, wrong. This shifting of monies away from the racer can do nothing more than reduce the payouts that should ultimately end up in the racer’s pocket. 

If those contingency fees continue to rise as they have, what is the breaking point for the racer’s decision on whether to race at a national event, a bracket race or a divisional? It all comes down to where a racer can most efficiently spend his racing dollar in the quest for a trophy and payouts.

The NHRA has already made pay cuts and trimmed personnel this season, however reaching deeper into the manufacturers’ pockets in a further attempt to balance the NHRA budget and payroll – that, for example, pays Dallas Gardner over $400,000 a year for one hour of work a week -- needs to be rethought.  If a company in the entertainment business like the NHRA wants to charge more for their product then they have to give their customers more and better entertainment not just raise the price of participating while maintaining the status quo.

The NHRA’s 60-year-old business formula obviously needs a thorough overhaul starting with customer service and in particular the sales department.  Delivering to their customers and marketing partners - most of whom are suffering through their own  financial issues - good service at a reasonable price appears to be a concept they can’t quite grasp.