This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
Imagine that you were only allowed to watch one sport on television for a whole year. Worse yet, imagine that you had to choose between two very popular sports all by yourself. The choice is up to you. Which will it be, NASCAR or the NFL? Will you select the gridiron wars or the need for speed? I shudder just at the thought of having to make such a life-altering choice.
On the one hand, I revel in the bone-crunching, close contact rivalries that play out every week on those hundred yard fields. The talent, the strategy, the sheer brutality of it. On the other hand, horsepower runs in my blood. The tension is palpable when watching those precisely tuned cars fighting for inches of superiority at the hands of fearless drivers. How could I choose between the pavement or the mud? How unfair would that be?
This post is one of several on business heirs apparent. Let us know in the comments whether you think Roger Penske, Jr., should take up the reigns of Penske, and be sure to check out the other heir apparent posts.
Roger Penske is as much a fixture of the auto racing world as any person could claim to be. At 70 years old, he's still an effective if not brilliant leader, with his hands on the wheel of a carefully built, racing world success. You have to wonder though, if Roger Penske is getting ready to step aside and let some new talent slip into the driver's seat. If a change in leadership fits into his immediate or mid-range plans, who might his replacement be?
With four sons and one daughter, Roger has no shortage of Penske offspring who might be considered for stepping into the racing patriarch's formidable shoes. The question is, are any of them fit for the job? We may have gotten just a glimmer of what's to be expected by the recent stepping down of Roger Penske, Jr., from his position as president of Penske Automotive Group Inc. (NYSE: PAG). Roger, Jr., is reported by Crain's Detroit Business to be retiring from Penske Automotive and purchasing four California auto dealerships from Penske Corp. Is this change to facilitate his being groomed to step into his dad's position? No source I've seen appears to be sure if that is the case.
NASCAR may be a good place to test engines, but the three U.S. car-makers all maintain budgets for the wild races that top $100 million each. A Chrysler executive quoted by Reutersexplained the love affair by saying that "there are still 75 (million) to 80 million NASCAR fans out there ... and being in the automobile business, this is exactly the types of folks we want to be talking to."
For companies like General Motors Corp. (NYSE: GM) and Ford Motor Co. (NYSE: F), who count on middle America and pickup buyers for most of their sales, the venue is probably priceless. It is notable the the more successful Japanese manufacturers tend to keep a lower profile. While GM's U.S. market share is 25% overall in the domestic market, the car company says that number is closer to 40% among NASCAR fans.
It is, in almost every way, an example of what is wrong with Detroit. The companies love marketing to themselves. With their market shares at the lowest level in years, they are probably already down to their core customers bases. Rolling out pickups for the "good old boy" segment of the market doesn't do them much good.
They should be trying to win over people who own a Prius.
Douglas A. McIntyre is an editor at 247wallst.com.
On the Periodic Table of Elements, the symbols Kr, Ne, He stand for krypton, neon, and helium, three of the so-called noble gases. Noble gases are chemically stable, and can be easily overlooked because they are colorless and odorless. They have boiling and melting points that are close together, meaning that they have a very narrow range of temperatures at which they are liquid. And noble gases have industrial applications in lighting, welding, and lasers.
On the New York Stock Exchange, KR, NE, and HE stand for Kroger, Noble, and Hawaiian Electric Industries. Do these companies exhibit similar characteristics of stability, a tendency to be overlooked, and scarce liquidity? Well, no analogy is perfect, especially one as arbitrary as this. But here's a look at these stocks nonetheless.
Cincinnati-based Kroger Co. (NYSE: KR) is the largest traditional grocery chain in the U.S. (though Wal-Mart is the largest seller of groceries). Kroger has more than 2,400 supermarkets under several different names, as well as more than 750 convenience stores.
Three weeks ago, Dale Earnhardt Jr. announced that his move to the Hendrick Motorsports team would come with a new endorsement from Sony (NYSE: SNE). At the time of this revelation, the popular NASCAR driver was notably mum on his standing contract with Anheuser-Busch (NYSE: BUD), whose Budweiser brand has adorned the hood of Earnhardt's car since 1999.
This weekend, Hendrick team owner Rick Hendrick shed some light on matter, saying in a statement to reporters: "We have agreements in place with sponsors for the 2008 NASCAR Sprint Cup season, which prevent us from having a relationship with Budweiser ... " While there is a deal in place with Sony, Earnhardt's primary sponsorship has not been announced, nor is there a timetable for doing so.
Meanwhile, Anheuser-Busch is looking beyond its former partner to its next endorsement. Wishing Earnhardt the "very best," an Anheuser-Busch executive told reporters that "Budweiser will remain an active sponsor of NASCAR, and we look forward to building upon the legacy of the iconic Budweiser red car in 2008 and beyond."
The deal is estimated to earn Coke $50M a year over the next 10 years, with all of Coca-Cola's North American brands exclusively on sale in ISC's 10 racetracks. More importantly, Coca-Cola will gain thousands of hours of face time in front of millions of loyal sports fans. Coke will also take over the historic Pepsi 400 at Daytona, which had ties to Daytona's first event back in 1959.
The move to Coke comes as NASCAR was starting to gain popularity outside the boundaries of the Mason-Dixon line.
Coca-Cola isn't new to NASCAR. The soft-drink giant already has a contract with the six Speedway Motorsports (NYSE: TRK) tracks and continues to sponsor several drivers, including Tony Stewart, Denny Hamlin, Jeff Burton, Carl Edwards and Kevin Harvick. Taking the ISC contract from Pepsi now gives Coke majority control of non-alcoholic beverages at most of NASCAR's tracks.
Pepsi's not completely out of the race though. The soft-drink maker will still have an affiliation with NASCAR, maintaining a link to ISC through its parent company PepsiCo, whose Gatorade name will remain the title sponsor for victory lane at all ISC tracks. Pepsi will also continue to sponsor Hendrick Motorsports and driver Jeff Gordon.
From a new racing team to a shiny new car, Dale Earnhardt Jr. appears to be starting fresh. The NASCAR favorite is leaving Dale Earnhardt Inc. (the racing company founded by his late father) and signing up with Hendrick Motorsports, which also employs household racing name Jeff Gordon.
To coincide with this change in lifestyle, Earnhardt has announced a new partnership with Sony Corporation (NYSE: SNE), whose logo will now adorn the hood of his new vehicle. Sports Illustrated reported earlier today that he told reporters: "I'm a big electronics fan. I'm a big computer guy. It's [sic] products I can dig." He also noted that he was given a digital camera as part of the endorsement package (he can't afford one on his own?).
What Earnhardt - dressed in Puma tennis shoes while mentioning hopes of a future additional alliance with Adidas - failed to mention is what this new deal means for the future of his relationship with Anheuser-Busch Companies, Inc. (NYSE: BUD). Budweiser has sponsored Earnhardt since 1999, complete with a hood decoration, and this contract is still valid. Forbes indicates that BUD will continue its personal-services contract arrangement with Earnhardt, which gives the beer giant the right to his likeness, name, and voice for its promotions.
The news hasn't benefited either of the stocks today - both SNE and BUD are showing modest losses in late-afternoon action.
Nascar has filed a suit against AT&T (NYSE: T) alleging "breach of contract, fraud and misrepresentation, and conspiracy to aid and abet wrongful interference." The $100 million being claimed is a lot, even for AT&T.
AT&T has been trying to get the branding on its car changed from Cingular, the former name for AT&T Wireless, to its current logo. Nascar's largest sponsor is Nextel, a unit of AT&T Wireless rival Sprint (NYSE: S).
AT&T has already sued Nascar, claiming it has the rights to change the logos on the cars it sponsors. These cars have already switched their signage to the new name.
Nascar probably has the better case. Under its agreement with AT&T, the phone company does not have the right to alter its branding. The racing body also says that it has the right to expel the AT&T cars next season.
Cingular was a good brand. Why change the name in the first place?
Nearly three weeks ago, a U.S. District Judge ruled that AT&T Inc. (NYSE: T) could replace Cingular logos with new AT&T logos on the #31 car in the NASCAR Nextel Cup. Last week an appeals court judge refused to move the August 18 hearing for an appeal from NASCAR and Sprint Nextel Corp. (NYSE: S) to an earlier date. According to Scene Daily, Sprint Nextel is arguing that the ruling allowing the new logos has diminished the sponsorship value, which is estimated at $700-750 million.
Sprint Nextel is certainly attempting to protect its investment, but AT&T should not be forced to go to court in order to legalize the company's name change on a car of all things. The Cingular brand is dead, so why should that logo remain on the car? Obviously it is gone because of the first ruling, but if Cingular's sponsorship of that car did not dampen the Nextel logo in the four years it was on there, why would the new AT&T logo change that fact?
We should also remember that when Nextel began sponsorship of the premier NASCAR series it was only Nextel. Since then it too has gone through a merger and become Sprint Nextel. That may have no consequence or bearing on the ruling or any outcome, but AT&T has as much right to be in the sport as Sprint does. After all, they both have essentially bought into the series buy buying and merging with companies already in the sport. No the Nextel Cup will not become the Sprint Cup, but Nextel still "exists." Both companies stocks rose yesterday with Sprint closing at $23.34 and AT&T at $40.90.
Shares of Build-A-Beat Workshop (NYSE: BBW) have been fairly lackluster performers since the company's IPO in 2004, but a new concept store called Ridemakerz could change all that, as Build-A-Bear owns 25% of the new venture.
Build-A-Bear has about 300 locations globally, offering children and their parents an opportunity to customize their own teddy bears. Ridemakerz, whose first location just opened last week, will offer fathers and sons a chance to build their own toy cars. According to the New York Times, "Customers select a chassis type (street or monster); body styles (stock or custom, a Ridemakerz brand hot rod, a Ford Mustang GT, or Dodge Ram pickup, to name a few options); paint schemes; sound effects (for example, sirens or race sounds) and style of locomotion (free wheel or radio control) ... After the 10- to 12-inch cars are assembled, there are ample customizing and accessorizing options: tire treads, grille guards, side pipes, snowboard racks and decals. Mr. Andreini estimates that a fully tricked-out vehicle will run about $75, including $25 for radio control. For the budget-minded, there's a stock tuner car for $12."
If this does catch on, and it seems likely that it will, the growth could be explosive. Build-A-Bear grew from one store to more than 300 in ten years and, with the support of Build-A-Bear already there, Ridemakerz could much more quickly.
With the huge popularity of NASCAR and cars in general, Ridemakerz could be the catalyst for shares of BBW to rapidly gain in value. The shares are trading right around their price from a year ago, indicating that much of the upside of Ridemakerz is not yet priced in.
AT&T (NYSE: T) announced yesterday that the company has been given the legal go-ahead to rebrand its NASCAR-sponsored car. The #31 Chevrolet featured the Cingular name and brand on its panels since 2001 when the company began its sponsorship of the Richard Childress Racing team. The phone service was created by BellSouth and AT&T in 2001 and with AT&T's purchase of BellSouth last year, AT&T initiated the rebranding.
Jeff Burton, a Virginia-native and driver of the #31 car, currently sits at #5 in the Nextel Cup championship points and debuted with new decals on his car last weekend in Charlotte, North Carolina. The former Cingular Wireless decals were replaced with AT&T's globe image. The orange color of Cingular remains.
Over the weekend, when the judgment was made, AT&T's stock remained roughly the same and closed at $24.95 on Tuesday. Sprint Nextel Corp. (NYSE: S) rose early in the week, despite the "new" sponsor in the NASCAR series it sponsors, closing at $21.46 on Tuesday. With AT&T holding such a high position in the point standings of the Nextel series, this may be a massive blow to the rights Sprint Nextel seemed to hold on wireless service promotion in the series. The race broadcasts have always featured Cingular text polls though, which seem to overshadow the $700 million, ten-year deal Nextel made with NASCAR in 2003.
As someone who thinks everyone should invest and that most people would enjoy it if they would just get started, I'm always on the lookout for ways to make investing exciting for non-investors. I recently read an article on TheStreet.com that discussed that StockCar Stocks Fund, which invests exclusively in companies that are involved stock car racing and NASCAR.
According to the Google's Fund Summary,"The investment seeks growth of capital and current income. The fund invests in the companies of the Conseco StockCar Stocks index. The index consists of 51 companies that support NASCAR's Winston Cup Racing Series. The companies in the index either sponsor NASCAR Winston Cup racing teams or races, or they earn money from NASCAR Winston Cup events."
Some of its top holdings include ExxonMobil Corporation (NYSE: XOM), Chevron Corporation (NYSE: CVX), and DaimlerChrysler AG (NYSE: DCX). The fund's expense ratio is 1.52%, which is pretty high. Morningstar only gives the fund a rating of 2 stars. While this is clearly a "novelty fund" intended to capitalize on the growing popularity of NASCAR, it just might be a way to get a young NASCAR fan interested in investing, with its minimum investment of just $250.
This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.
When you have to send a package and it needs to be there yesterday, who do you call? It usually depends on a few key items: speed, price, and peace of mind.
Let's take a look at each company's marketing practices:
UPS: "What can brown do for you?" The UPS shield is one of the most recognizable icons in shipping, as is the trademarked brown uniform that office secretaries go ga-ga over. Brown is the official sponsor of NASCAR, the NHRA, NTRA, and the Olympics. When looking at the gold shield, a person could think of security and strength. UPS prides itself on those ideas and has become the largest package delivery company in the world.
FedEx: "Relax, it's FedEx" was the well-recognized slogan of the second-largest package delivery company in the U.S. The company's logo has a right-pointing arrow located in the negative space between the E and X. While the arrow becomes quite obvious when pointed out, most people do not notice it. The arrow has been occasionally pointed to as a mild form of subliminal advertising, the arrow suggesting forward movement and thinking (check it out). FedEx is the official sponsor of the NFL, the NBA, the FedEx Cup, FDX Racing, the FedEx Orange Bowl, FedEx Field -- the home field of the Washington Redskins -- and the FedEx Forum in Memphis. With the subliminal arrow and company's name targeted all over the sports world, a person could think of FedEx as a fast company that gets around.
The Busch series, the minor-league version of NASCAR's Nextel Cup circuit that usually runs on the same track the day before the NASCAR races, has been titled by Anheuser-Busch Companies Inc. (NYSE:BUD) for the past 26 years. In a surprising turn, given the popularity of the sport, the brewer has decided to drop its sponsorship of the series.
The reasons seem to be twofold. First, the series is struggling for participation. Designed as a venue to showcase up-and-coming drivers, the series has been taken over by teams' A-list of Nextel Cup series regulars. In 2006, all but two of the races were won by big-name drivers. Since these teams already gain a great deal of exposure through their Sunday race participation, some sponsors may question whether racing a second day gains them much additional bang for their buck.
The other factor is an abrupt increase in the sponsorship fees demanded by NASCAR. After signing an eight-year deal with ESPN to televise the series, NASCAR has apparently raised the title sponsorship price from $10 million to $40 million.
Among those corporations rumored to be interested in replacing Anheuser-Busch are Wal-Mart Stores Inc. (NYSE:WMT), Subway, and Samsung.
Sirius Satellite Radio (NASDAQ: SIRI) is simply eating XM Satellite Radio's (NASDAQ: XMSR) lunch. Mel Karmazin continues to plow forward while XM management wanders aimlessly.
Karmazin reiterated targets set in late 2006, expecting revenue to jump from $637 million in 2006 to $1.0 billion in 2007. Sirius also generated free cash flow, after capital expenditures, of $30 million for the 4th quarter -- a big accomplishment.
Karmazin also said, once again, that Sirius' growth from nascent business to $1.0 billion in revenue is the fastest growth in radio history.
What is more impressive is that while XM backed away from virtually all of its guidance for 2007 and pushed out much of its OEM growth to 2008, Sirius did not do the same. Chrysler will install Sirius in 40% of cars, Ford goes from 4 models to 22 models and Mercedes will install Sirius in two-thirds of its autos.
Not everything will be rosy. Sirius warned that data coming out regarding January 2007 comparisons with January 06, as year-over-year comps will be weak because of such strong comparisons last year due to net adds resulting from Howard Stern. Starting in February, the comps will begin to improve.
Also, churn will jump up to 2.0%-2.4% as some OEM deals reach their anniversaries, up from 1.6%.
All told, stay focused on Sirius. Content of Stern, NBA, NASCAR plus lots of other stuff appear to be driving subscriber adds. Do not run away from this industry due to XM's weak results.