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NASCAR fans know Lowe's (NYSE: LOW) Motor Speedway for the Coca-Cola 600. Well, that will soon be a thing of the past, as the hardware giant has decided to back out of its naming-rights sponsorship.
The hardware firm had an 11-year relationship with the racetrack, and it was the first racetrack to have naming rights. Unfortunately for the racetrack, Lowe's decided in the past two weeks to not extend the agreement. The initial agreement between the two was for 10 years and $35 million -- an agreement that lasted through last year. When that initial $35-million contract expired, the company decided to agree to a one-year extension through 2009.
Some have said that it is not inconceivable for Lowe's to change its mind, because five months remain on the original extension and the economy could turn around. Nevertheless, it appears that only a last-minute agreement will keep the speedway from going back to its old name -- Charlotte Motor Speedway. The speedway will survive, as it is one of the busiest tracks in NASCAR, boasting two races along with the all-star race. Unfortunately this is what cost the track its sponsorship. The popularity of the track gave it reason to ask for $9 million a year while Lowe's was only offering $3.5 million. Although the racetrack has backed off a bit, it has not come down enough for Lowe's taste, and the company is ready, willing, and able to walk away from the bargaining table. Certainly, Lowe's holds all the bargaining chips.
There also remains some question as to whether Lowe's will maintain its sponsorship with Hendrick Motorsports and the number 48 car of Jimmie Johnson. The three-time series champ's deal with Lowe's runs out at the end of 2010 and renewal discussions are supposed to take place at the end of this year. Best guess is that Lowe's is biding its time and is trying to save some cash in order to keep the sponsorship on the most dominant driver in the circuit's car. The home improvement company isn't naive; it knows where its bread is buttered and should keep its name emblazoned on the 48 car.
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Reader Comments (Page 1 of 1)
8-07-2009 @ 12:37PM
Art Northrup, Jr. said...
Lowe's not renewing the "naming rights" sponsorship for the speedway outside Charlotte says a lot, as the corporate headquarters of Lowe's is not all that far away & there are Lowe's stores all over the area. Main competitor is Home Depot & there are a lot of those stores in the general area too, but Lowe's has more, including several relatively new ones.
Evidently Lowe's doesn't see a return on investment for sponsoring the speedway & sponsoring the #48 car costs a lot more. I seriously doubt Lowe's will drop the car sponsorship, but it all comes down to whether they (or any other sponsor) think they get enough business from the sponsorship to be worth the expense.
8-07-2009 @ 2:17PM
Duke said...
NASCAR has to downsize as well. More cars being sold are foreign made and there needs to be more foreign sponsorships, now that America has turned its back on American made cars. Very sad to see Americans go to foreign cars but this is what happens when American money goes to foreign countries instead of staying here. Lowes is in the middle of this recession as well. Trying to find sponsors now days is like finding a needle in the hay stack.
8-08-2009 @ 4:16PM
ij70 said...
Duke, by foreign do you mean Fords, Chevys and Dodges built in Canada and in Mexico?
Or do yo mean Hondas, Toyotas, Nissans, Kia/Hyundai built in Louisiana, in Inidana, in Georgia, in Alabama?
Have you wondered why American government did not protect US automakers? The government did not protect them from Toyota and Honda in late 70s and on. The government did not protect them from Hyundai in early 90s and on.
8-09-2009 @ 7:04PM
mikemiloserdoff said...
How did the Charlotte Motor Speedway arrive at the $9 million per year figure? Isn't that like a seller determining its own buying price for the buyer? Doesn't fair market value have any say-so in the equation? Doesn't the pool of buyers determine the fair market value when the hammer drops? Has the Charlotte Motor Speedway overstated the amount of their goodwill in their calculations of what they are worth?
8-09-2009 @ 7:30PM
mikemiloserdoff said...
Based on Lowe's 2009 net profit of 4.5%, increase in sales attributable to Charlotte Motor Speedway endorsement would have to be about $200,000,000 just to break even with endorsement of $9 million per year... Perhaps Lowe's isn't taking the bet for good reason. About six years ago, it was said that if it said NASCAR, it would sell, from a marketing perspective. Perhaps the honeymoon is over with that statement for consumers...
8-09-2009 @ 7:52PM
Ken said...
It should be clear to all that NASCAR is really slipping. I have been a fan since the Daytons race was run on the beach and really have enjoyed the expanding schedule of more races over the years, but the mess they have now has to be corrected. The whole pre-race fiasco should be cut back and be far less of a rock star atmosphere. You have to endure that ( or change channels ) and end up with some screeching idiot degrading our national anthem. Use local high school bands or choral groups. Lets get back to what worked before. It wasn`t broke so why did someone try to fix it?