Sponsor announcement teleconference, part 1

NASCAR Teleconference October 23, 2008 An interview with: BRIAN FRANCE MARCUS LEMONIS HERB BRANHAM: Good afternoon, everyone. We have a couple of special guests with us today for a very special announcement. To start things off, we'll hear...

NASCAR Teleconference October 23, 2008

An interview with:
BRIAN FRANCE
MARCUS LEMONIS

HERB BRANHAM: Good afternoon, everyone. We have a couple of special guests with us today for a very special announcement. To start things off, we'll hear first from NASCAR's chairman and CEO, Brian France.

BRIAN FRANCE: Good afternoon, everybody. We are happy to announce the addition of Camping World into the national series with respect to our truck entitlement sponsor. It's a multi-year agreement. We couldn't be more happy for a variety of reasons.

Number one, the folks at Camping World, which you'll hear from in just a moment, have really made a strong connection in recent years to the sport by various sponsorships and partnerships in and out of events, in and around teams, throughout. They really have a good feel for NASCAR.

Frankly, the other thing that gets us excited is the type of company that they are and the connection they make to the various RV owners and campers who are synonymous with NASCAR events. You don't have to go very far looking around the facilities at a NASCAR race to see all the various people that tailgate and camp and so on. Camping World has become now a very valuable partner for them.

In various stores that they've put up, temporary stores, things they've done to accommodate the campers' needs, they know the camper as well as anybody in the country. So there's a lot of good reasons why Camping World is going to be a good fit for the Truck Series.

So with that I just wanted to welcome them into our national series and make one other comment about the timing for the Truck Series itself. It doesn't take a lot to realize that this series is one of the series that a lot of our fans would tell you is the most exciting, most competitive form of NASCAR racing that we have. The TV ratings are evidence of that, up 19% this year. Of course, it's the premiere franchise for the SPEED Channel, outrates all other motorsports combined on their particular channel. They have treated the Truck Series with a lot of esteem. We certainly appreciate that. Camping World, their respective position, I think that will be a really, really good three-way partnership between us all.

Finally, I would like to mention Craftsman for a moment. Most of you realize that Craftsman has been, first of all, the only sponsor that the Truck Series has ever had. They were the ones that stepped into an unknown division many years ago when we decided to launch a third national division wrapped around the trucks, which was very unique at the time. They believed in the series then and they believed in the series for a long time. They were and will remain a partner with NASCAR, but it's going to take on a different approach beginning in 2009. But I want to give them a real salute for all they've done.

Again, we're excited today to make the announcement. With that, I will let someone else speak.

HERB BRANHAM: Thank you, Brian, for that opener. We're now going to move over to Camping World chairman and CEO Marcus Lemonis.

MARCUS LEMONIS: Good afternoon, all of you. Thank you for being part of this. We're obviously extremely excited to expand our integration into the sport. Obviously we believe that the Craftsman legacy is a tough act to follow. We feel like we have a lot of work to do to maintain the brand integrity and the brand loyalty that they've created. We're going to work hard to do that.

But this was a good fit for our business. Obviously I'm sure some of you are thinking about the economy. But this is a good fit for our business, as we represent about 20% of the entire RV marketplace for us to grow our market share and for us to bring our products and services closer to the consumer. We have seen an unusual amount of success at local store track activation programs, our rental program, our RV sales program, et cetera.

This commitment was one that all 3500 employees were behind. We talked about it internally. We believe that our opportunity to gain market share and communicate our offering, as well as give the consumer really a great place to have customer service was what made this an easy decision for us.

We will continue to support in different ways the partners that we've done business with for the last three years. We still have and enjoy relationships with ISC, SMI, and Dover Motorsports on the trackside. KHI, Kevin Harvick, Incorporated, will continue to be a very, very important marketing partner, strategic partner, for us, not only with what we're doing with Ron Hornaday and Kevin himself.

Our ability to leverage our brand and his sponsorship opportunities and his brand, I would expect that the integration of the two companies will continue for many, many years to come. That's largely driven by what we believe Kevin has done for our brand and what we think he can do for some others.

We obviously have enjoyed a relationship with ESPN and SPEED, and we'll be continuing those relationships as well.

We are pleased and honored to be a part of this. We are very focused on really three main topics; that is, selling more RVs and accessories, helping the manufacturers sell trucks, and providing NASCAR fans and NASCAR themselves an opportunity to fill the stands and have an affordable, fun family experience that we believe is better than any sporting event out there.

HERB BRANHAM: Marcus, thank you very much for those openers.

We'll now go to the media for questions for Brian France and Marcus Lemonis.

Q: Marcus, can you talk about what this sponsorship gives you that maybe you weren't getting out of either the team or track sponsorships.

MARCUS LEMONIS: Well, I think there's two things. Obviously the brand presence that we believe this sponsorship gives us is the opportunity to have more people at least investigate or find out about our brand. We've seen and kind of watched very carefully the integration that Craftsman has executed both online, at track and in the media. We think they've been very effective in building their brand through this medium.

Secondly, we think it gives us significantly more B-to-B opportunities. As we leverage the promotion of this in our local and national markets, particularly Chicago and other big key markets, we think it gives us significant opportunity to tell our story.

Q: Are you still a subsidiary of the Affinity Group?

MARCUS LEMONIS: No.

Q: You're a completely separate company from them now?

MARCUS LEMONIS: Yes.

Q: Brian, are there any conflicts with any other existing sponsors that you had to work out with this sponsorship at all?

BRIAN FRANCE: Well, not directly. There are obviously some things that are relatively close in category. But, no. It's a rather good fit for us.

Q: Mr. Lemonis, it seems to me obviously economic times are tough here. We've seen a lot of companies actually pull back on sponsorship. I'm curious why and how is it that you're actually able to expand the sponsorship in this environment.

MARCUS LEMONIS: When we look at our entire advertising spend as a company, more than 80% of our entire spend, we're data minors. And the heavy direct mail, heavy catalog and sale flyers, not a lot of TV. And we serve, for the most part, the installed base, the over eight million RVers that exist today, four million of them shop in our stores as we speak.

We know that we have two challenges in the next couple of years. One, we have the challenge of not only maintaining but growing that installed base. But, two, we need to bring first-time buyers to the market. Because of the product offering, everything ranging from RV sales to rentals, we needed a forum where we could spend an affordable percentage of our total marketing spend on branding.

So when we look at the rifle shot, we know we can't afford to buy a TV spot on ABC on American Idol, but we know with the limited amount of branding that we can afford to spend, that we need to keep it so close to where we believe that crossover of consumer is, which is why NASCAR makes sense.

When you visit the track - and there's, you know, six, 10, 25, 35 thousand campers on the ground - you study the demographic of the NASCAR fan, you study the demographic of the Camping World customer, the crossover is really our best prospecting opportunity. Obviously, as we acquire those names through our interaction with that customer, they become part of our installed base, then they fall into our installed base program.

So we weren't finding enough avenues that we could afford to grab prospectors. To us, this is the most affordable prospecting tool because it has the highest level of crossover of anything else we do.

Q: Brian, is there an opportunity here for Camping World to get opportunities in the Nationwide or Sprint Cup Series?

BRIAN FRANCE: Well, I think they already do market across our entire fan base. The trucks run a lot of companion weekends. But they're going to have remaining positions. They've been entitlement sponsors at events, I know Loudon and other places, on the basis they work for them.

I think the trucks is just an opportunity for Marcus and Camping World to really own something very, very significant, being one of our national divisions that runs events week in and week out. I won't speak for Marcus, but I believe in talking to him he believes it's a nice complement to the other things he's already doing in the sport.

The whole idea is to impact every NASCAR fan who is going to look at RVing as something that is special to them and a brand that they can trust.

MARCUS LEMONIS: The piece I will add, we'll sell roughly 25,000 travel trailers, fifth-wheels a year. We have a big portion of our floor space in our Camping World accessories stores dedicated to hitching and towing. So when you take a look at the necessity of a truck to pull a traveler trailer and a necessity for our hitching and towing department, it's really an opportunity for us to grow that space and grow that segment.

It really is separate from what we do on the Nationwide side at Daytona, at Loudon and other markets. That's really more of an at-track retail store event environment. We believe although there's crossover in audience, we need to still dabble because there's still some people that don't necessarily watch all three series. We want to make sure we have a fully expanded but affordable program.

Q: Brian, with the economic conditions being what they are, several of the manufacturers have announced that they're going to perhaps scale back their subsidies to the Truck Series. There have been some challenges with truck counts this year. What on the competition side can you do or will you do to boost things up in the coming years?

BRIAN FRANCE: Well, first of all, the series is very healthy. Obviously with fuel prices that have been up and down, mostly up this year and the last 18 months, has gotten the manufacturers to have to really look at where they're spending their resources and what vehicles are selling more of today. So we're obviously affected by that. That's a legitimate issue.

So what we try to do, we try to do it anyway, but we'll accelerate the idea of trying to take even more cost out of the series for the team owners should certain subsidies or certain sponsorships might be contracted a bit. So we'll try to make things as easy on the team owners as possible to sort of get through this headwind of both the economy and the manufacturers going through their related challenges.

That's nothing new. The good news for us is we've got a proven model here where the series is from a cost standpoint already pretty reasonable in the grand scheme of a national division, have a lot of value for a lot of sponsors, and is currently producing just great, exciting racing. So we've got a lot to build on and a great foundation.

Q: Brian, I know NASCAR has ridden the highs and lows of the U.S. economy for decades. In the broadest sense I was wondering if you would characterize the challenge of this current economy for all three of your series, kind of how you would place it against some other times and share with us how optimistic or not you feel about the next five or ten years for NASCAR.

BRIAN FRANCE: Well, I would tell you a couple things. One, you know, it wasn't that long ago that the tech bubble and 9/11 occurred, which really had, as you recall, a significant short-term but significant nonetheless impact on the leisure activities and sporting events and all the rest, and travel. So that was very concerning back then. We've had various other times where the economy has been very difficult.

This probably to everybody is more significant, at least on the surface. So there is a big uncertainty about people's ability to do all the things that they want to do financially, given the backdrop of the credit crisis and all the rest.

You know, you have to look at it over a long period of time. We're off, but only in sort of single digits as it stands now. We tend to fare much better than other industries thankfully. That's because sports are so culturally ingrained to fans. It's one of the last things that they want to not participate in.

We're fortunate. We are nervous like everybody else. We're taking every precaution we can in terms of getting costs out of our system on behalf of the team owners, on behalf of the track operators. But this is also a time when you can't freeze either. You've got to still be aggressive and still push hard your product. I know Marcus is doing that in his business and we're doing the same.

Q: Brian, is there any consideration whatsoever at NASCAR in the Sprint Cup Series of reducing the size of the field in 2009?

BRIAN FRANCE: No. We've had some events, many events, where we've had to send cars home. Obviously in the last 10 or 12 weeks, you're seeing some of the cars on the fringe there that aren't making it to the events. But still we expect full fields in 2009.

Q: With regard to the fact that we may have one of the four manufacturers taken out through a merger, we also are hearing lots of talk about potential mergers between the secondary teams especially in the Sprint Cup Series, when you talk about trying to make things easier, taking costs out, can you give us one or two examples of how NASCAR can take costs out to make it easier for the teams to survive.

BRIAN FRANCE: Sure. I can tell you a number of them. There's none more significant than the new car. What we said is once you get through the spooling up process of the teams figuring out that they don't need to build 15 or 20 cars per season as an example, and that they can do with far less, because there's little that you can do with the car. There's not the specialty cars, road course, superspeedway cars, so on. That's been proven. So as we go along into 2009, the teams will be building less cars, hiring less engineers or that kind of expertise.

There are many, many other rule adjustments that we can make. What we can't do is tell somebody exactly what their total budget can be. They can redeploy money. They can pay for talent and all that accordingly. But we can take a lot of cost out.

What's important for us is, when we say 'the cost,' what we mean is if you want to spend and extra $5 million on a team budget, obviously it's a free country, you can do it. What we're trying to do is make it where that's an inefficient way to spend your money. You don't have to do that. That lowers the barrier entry for new teams. That makes it easier on teams with smaller budgets to be competitive with the same amount of money.

Q: Brian, I think the numbers that I read estimated a deal like this worth somewhere in the $3 to $5 million a year range. Is that close? And whatever the number is, how much more might you have expected in a strong economy?

BRIAN FRANCE: Of course you know we don't comment on any of our financial arrangements. But there's an economic piece to any sponsorship like this. That was met. Everything worked out fine.

But there's another important thing in these kind of sponsorships that are equally or more important, and that's the kind of company that you get and what they're going to do from an activation standpoint with this sponsorship, how they're going to help grow our franchise that they're going to be sponsoring.

You heard Marcus in his opening remarks, and this is what he told me directly, we have a good relationship to be able to work through this, which is, you know, one of his stated goals is to help grow the franchise and also help the manufacturers sell more trucks. You just can't put a dollar amount on that commitment. He's committed to doing that. We'll work very carefully with him in the future to accomplish those goals.

Q: Marcus, kind of a clarification on something you said regarding the Milwaukee Mile, saying your brand will not be back there. As a series sponsor, I assume you would have to have some presence at the track on a race weekend or, Brian, do we need to make a schedule announcement today, too?

MARCUS LEMONIS: The answer is that our brand in its previous form and fashion will not be back there. Obviously you know about the article that was out this morning. It does not apply at least in 2009, and I would guess hopefully many years to come, does not apply to the Truck Series. That's not Camping World's decision to make, that's NASCAR's decision to make. We're not a party to the decision whether the trucks run there or not.

Continued in part 2

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Series NASCAR Truck
Drivers Kevin Harvick , Ron Hornaday Jr.