NASCAR & the Big 3

[Jag_Warrior]

Has any motor racing journalist taken an honest assessment of this topic based on the following points;

How much money in total has Detroit poured into NASCAR racing over the past 10 years at the team, track promotion, and sanctioning body levels (I would love to see this number)?

What has Detroit received in return far as tangible sales results, car development, and stature?

In this era of Detroit auto manufacturing on its deathbead while depending upon federal bailout and loan assistance, what exactly legitimizes the continued expenditure of marketing funds to the tune of millions of dollars into NASCAR by the Big 3?

Has any reporter in the employ of a major media organization dared to take this sacred cow by the horns?

Good questions. I've read a number of articles over the years that tracked or estimated the spending of automakers in motorsports. Here's a fairly recent article which estimates GM's NASCAR spending to be at $85 million, down from $125 million.
http://www.washingtonpost.com/wp-dyn...401520_pf.html

I'm sure there are other articles which speak to the aggregate motorsports spending of the Big 3. Honda is surely the hands down winner (at over a billion dollars "served" in F1 alone), but I don't recall seeing numbers on the Big 3 and/or NASCAR over a ten year time horizon.

As far as what Detroit (and now, Toyota) has received in return, I believe that's MUCH harder to quantify... in fact, I think it's impossible to quantify an actual ROI, if it's based on tangible, incremental sales at the margin. Everyone seems to fall back on the old "sponsor exposure value". Does that reflect reality? I don't know. Does it have any real value? I don't know. Can it be reflected on an income statement or balance sheet? Not really.

Car development? In ALMS, we could talk. But on the NASCAR side, I'm not aware that the automotive OEM's have gained anything of note in the past decade or so. Some automotive suppliers have gained cyclical data relating to components and fluids. But because NASCAR puts so many limits on electronic data collection, F1 and ALMS remain better test beds, even in those areas, IMO. Maybe Goodyear has gained some sort of data from its participation, but I'm personally not aware of anything there either.

I can't answer your question about what legitimizes these expenditures. They certainly must continue to market their brands, if not particular vehicles. But in light of their dependence on the U.S. taxpayers for survival, what amount is too much? I don't know.

[Jag_Warrior]

The biggest flaw in their buesness model is labor costs , bankruptcy is their only way of changing that . How many trillions are you willing to give them to continue to operate at a loss ? And why wont you adress the union issue ?

It's not so much (current) labor costs as the legacy costs, specifically those costs related to retiree healthcare. And yes, that does have to change... one way or another.

Chapter 11 is one way of addressing the current dilemma. But as I've explained on other boards, unless there is DIP financing available, Chapter 11 (reorganization) may become Chapter 7 (liquidation) rather quickly. As the availibilty of DIP financing has fallen by 70% or more (especially on large amounts) over the past 12 months, that option probably isn't there for GM, or even Chrysler right now. IMO, the best option would be a sort of pre-packaged Chapter 11 with the DIP financing guaranteed by the U.S. Treasury.

The reason that I believe this would be the best option is, if done right, it would not necessarly require direct financing from the Treasury, but would allow GM (and Chrysler) to restructure its fixed obligations, while not disrupting the supply base... which if that collapses, most of the major OEM's in the world will be affected to some degree. GM and Chrysler in Chapter 7 (or a messy Chapter 11) will collapse the supply base, which will drag down Ford (first) and cripple Toyota, Nissan, Honda and any others that build in the U.S., Canada and Mexico. People tend not to realize that you cannot ship or sell a car if it is missing so much as a single chassis bolt or a lug nut. Even the most basic tool transfer (to a different supplier) takes 3-4 months. And with hundreds of suppliers knocking on death's door right now, it wouldn't take much to bump more than a few into the grave... so there would be few places to transfer those tools to. So there would likely be massive supply chain disruptions across what was left of the industry.

There are around 6.5 million Americans receiving unemployment benefits right now. With a collapse of the auto industry in North America, add at least another 2 million to that number. That in itself would be expensive. To say nothing of the ripple effect through the rest of the economy. So my hope (with some selfish motivation) is that the industry can and will be restructured in the most efficient and cost effective manner.

I've seldom been on the same side of any issue with the UAW. And while I believe that organization has a major role in where the Big 3 find themselves, no one at the UAW had anything to do with designing the vehicle or engineering the manufacturing process for the Pontiac Aztec (among other duds over the past 10 or 15 years), or making the product mix decisions that caused Chrysler to be almost totally reliant on pickup trucks and SUV's. There is almost no way to get around my experience that when you have a "bad company", you likely have "bad management". There might be a number of other contributors as well, but you most definitley should be looking at the decisions made by management.

[muggle not]

Turn your sound up.

http://thefiftiesandsixties.com/CarsWeDrove.htm

[Mark in Oshawa]

But you're not a U.S. citizen and most U.S. citizens are for keeping GM solvent. Not keeping them solvent is not an option. Make no mistake, the U.S. auto industry will be back and profitable and the U.S. will lead the world out of the global recession..

I am for keeping them solvent but I think GM needs to go Chapter 11 if for no other reason to put the fear of god into the UAW and some the morons in management there that have turned this bloated carcass into such a well of red ink. AS for me being NON-American, it is first my opinion, and understand I am saying this even tho my father worked for GM for 13 years and gets a partial pension from them. I wouldn't want to see anything happen to that but I have lived in this GM town most of my life and have been in those plants. GM needs more than government money my friend....

Penske can't run a good Nasacar team. He is the last person I would want involved in the big 3 industry..

Penske has won everywhere BUT NASCAR, and has always made money on all his business ventures. Not being able to recognize racing talent doesn't mean Roger doesn't know efficiencies and business models.

Bush brought in businessmen and they were the biggest crooks of all. Remember good ole boy "Lay" and Enron.

Yes..and it was Bush's justice department that brought them to justice for crimes committed in the late 90's when Clinton was in office. Where was Janet Reno and her staff? Having a Nap?

[Mark in Oshawa]

I'm sure there are other articles which speak to the aggregate motorsports spending of the Big 3. Honda is surely the hands down winner (at over a billion dollars "served" in F1 alone), but I don't recall seeing numbers on the Big 3 and/or NASCAR over a ten year time horizon. .

Honda has gone nuts. I have never really figured out why f1 budgets EVER made sense to anyone in a boardroom. I would suspect the Big 3 are spending 50 to 75 million on NASCAR. The teams need their big sponsors besides the car makers so you have to think most of the big teams are averaging about 3 to 5 million per car in support from the big 3.

As far as what Detroit (and now, Toyota) has received in return, I believe that's MUCH harder to quantify... in fact, I think it's impossible to quantify an actual ROI, if it's based on tangible, incremental sales at the margin. Everyone seems to fall back on the old "sponsor exposure value". Does that reflect reality? I don't know. Does it have any real value? I don't know. Can it be reflected on an income statement or balance sheet? Not really. .

I agree with you there but someone in Detroit and in Tokyo believes it so there must be some empircal data somewhere that says it works.

Car development? In ALMS, we could talk. But on the NASCAR side, I'm not aware that the automotive OEM's have gained anything of note in the past decade or so. Some automotive suppliers have gained cyclical data relating to components and fluids. But because NASCAR puts so many limits on electronic data collection, F1 and ALMS remain better test beds, even in those areas, IMO. Maybe Goodyear has gained some sort of data from its participation, but I'm personally not aware of anything there either..

NASCAR may not allow electronics on the cars on race weekends, but on test days they were wiring the cars up from one end to the other. Also realize there is nothing even with the current testing band that stops the teams from testing at manufacturing test facilities such as the GM proving grounds in Milford Michigan or Chrysler's oval in Chelsea. Also know that the technology gained from all of this and shock dyno work may be helping in suspension and shock research.

I can't answer your question about what legitimizes these expenditures. They certainly must continue to market their brands, if not particular vehicles. But in light of their dependence on the U.S. taxpayers for survival, what amount is too much? I don't know.

Marketing is keeping your name in the forfront. I think it was a false front the last two years but to have pulled out of NASCAR two years would have caused the buying public to think the company was about to go out of business. So it is putting on a brave face....

[wbcobrar]

to be honest "justafying" a racing budget in any series , at any time , is something of a fools erend. If one looks at anything in life ,and makes decisions in purely logical terms ,in my opinion , what a brutally boaring ,worthless existance they would have . This countary was founded on principalls that placed lifes decisions in the hands of its citicens , rather than its leaders . We are the land of the free and the home of the brave, danmit. Every law thats written , every burocrat put in place , every decision made to interfear in our lives , no matter how well intended ,erodes this self evadent truth . I'm not an anarchist by any strech of the imagination but enough is enough .

[muggle not]

to be honest "justafying" a racing budget in any series , at any time , is something of a fools erend. If one looks at anything in life ,and makes decisions in purely logical terms ,in my opinion , what a brutally boaring ,worthless existance they would have . This countary was founded on principalls that placed lifes decisions in the hands of its citicens , rather than its leaders . We are the land of the free and the home of the brave, danmit. Every law thats written , every burocrat put in place , every decision made to interfear in our lives , no matter how well intended ,erodes this self evadent truth . I'm not an anarchist by any strech of the imagination but enough is enough .

Yeah, lets do away with laws and regulations. Every person should have a six shooter on their hip and the fastest draw wins. We should be free to do what we want.

[Jag_Warrior]

NASCAR may not allow electronics on the cars on race weekends, but on test days they were wiring the cars up from one end to the other. Also realize there is nothing even with the current testing band that stops the teams from testing at manufacturing test facilities such as the GM proving grounds in Milford Michigan or Chrysler's oval in Chelsea. Also know that the technology gained from all of this and shock dyno work may be helping in suspension and shock research.

That's possible. I just don't know. Within the areas that are still open (not clamped down by the laws of "spec racing" that's all the rage now), there may be some track/street crossover. Maybe brakes, maybe shocks, maybe wheel bearings... I'm not sure. I'm aware of the exchange of technology from race track to street within the Corvette (and Cadillac XLR) program. I know that Subaru, Peugeot and Mitsubishi brought much of what they learned in WRC to the street. Maybe some of the suppliers are learning from their NASCAR involvement and improving their offerings? The OEM's I'm not so sure about. I'm pretty well removed from that circle of information now, so I don't know. If Hoop98 sees this, he may know of some devlopments.

[SportscarBruce]

to be honest "justafying" a racing budget in any series , at any time , is something of a fools erend.

No, it is not always a "fools erend".

A video is worth a thousand words

http://www.youtube.com/watch?v=mfS32l92MFs

If one looks at anything in life ,and makes decisions in purely logical terms ,in my opinion , what a brutally boaring ,worthless existance they would have . This countary was founded on principalls that placed lifes decisions in the hands of its citicens , rather than its leaders . We are the land of the free and the home of the brave, danmit. Every law thats written , every burocrat put in place , every decision made to interfear in our lives , no matter how well intended ,erodes this self evadent truth . I'm not an anarchist by any strech of the imagination but enough is enough .

I read that three times and still can't make sense of it. Expecting a struggling business to continue pouring millions of dollars into a motosport marketing black hole that has zero technical relevence and not even the slightest sales impact....why again, because this is America dammit?

[Mark in Oshawa]

I am of the opinion that with all the doom and gloom of last year some people are seeing the full fields for Cup races and thinking this is not going to be so bad but I think by the end of the year Chevrolet and Dodge may be FORCED out of any promotional spending in NASCAR (read team support) by the US gov't if they are as tough with dictating terms of bailout money as they seem to be with the wastrels that run AIG.