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GM cuts may affect NASCAR spending

The series, already hit hard in sluggish economy, nervously awaits auto company's decisions.

August 28, 2008|Jim Peltz | Times Staff Writer

A few years after NASCAR was founded in 1947, a General Motors executive named Charles Wilson uttered the memorable line that "what was good for our country was good for General Motors, and vice versa."

But what's good for GM today might not be good for NASCAR.

As NASCAR's Sprint Cup Series arrives for the Pepsi 500 on Sunday at Auto Club Speedway in Fontana, the sluggish economy already is making it tough for the series, race teams and tracks to attract all the corporate sponsors to help pay their bills.

GM is reeling from huge financial losses and the giant automaker plans to slash annual spending by $10 billion. Its support of NASCAR and other auto racing is not exempt from possible cuts.

GM's slump added to economic problems now buffeting NASCAR stock-car racing, the IndyCar Series, the NHRA drag-racing circuit and smaller niche circuits such as sports-car racing.

The tough economic times, combined with high gas prices, also are keeping many fans from attending races. That's causing problems not only for the series and teams, but for the top two operators of U.S. race tracks, International Speedway Corp. -- whose properties include the Fontana venue -- and Speedway Motorsports Inc.

In addition, two other major U.S. automakers, Ford and Chrysler (Dodge), are struggling as well and reportedly are weighing whether to cut back their motor sports activities.

"The Detroit manufacturers have been dissecting their involvement in NASCAR with a fervor not seen since, well, ever," Peter M. De Lorenzo, a former auto advertising executive, recently wrote on his website Autoextremist.com.

Three of the top Cup teams -- Hendrick Motorsports, Richard Childress Racing and Dale Earnhardt Inc. -- race Chevrolets. Roush Fenway Racing is the leading Ford team, Joe Gibbs Racing is the top Toyota team and Gillett Evernham Motorsports and Penske Racing head the Dodge teams.

GM hasn't provided details as yet. "We're in a very early stage of evaluating all of our marketing initiatives and I just can't elaborate" on what might get scaled back, said Terry Dolan, Chevy's racing manager.

While GM evaluates what to cut, some in NASCAR are growing more anxious.

"It concerns me," said Elliott Sadler, who drives the No. 19 Dodge for Gillett Evernham. "Everybody's scared because they don't know where it's going."

While GM won't divulge what it spends on NASCAR annually, some within the NASCAR community put the figure at $120 million to $140 million.

The automakers provide cash, parts, engineering and testing services for race teams; pay for naming rights at races such as the Chevy Rock & Roll 400 in Richmond, Va., on Sept. 6; and pay tracks for marketing and promotional rights at certain races.

For instance, last month's Cup race at the Indianapolis Motor Speedway was sponsored by Chevy. The automaker's signs were placed throughout the facility, dozens of Chevrolet Corvettes were on display in the infield and the drivers were carried in Chevy vehicles for their pre-race introduction lap. The cost of such a promotion can be $2 million or more. Ed Peper, Chevrolet's general manager, told SportsBusiness Journal that "we are very concerned about escalating costs" in NASCAR and that some of Chevy's spending "where we don't see a direct return we aren't going to do."

Even so, some in NASCAR believe GM and the other automakers will be selective in trimming their spending.

Ford driver Greg Biffle, for instance, said Ford knows "the NASCAR community is a large part of their customer base. They're not going to leave this market because they sell so many vehicles and they get so much support from race fans."

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NASCAR on Wednesday placed Kyle Busch and Carl Edwards on probation for the next six races after they banged their cars into each other on the cool-down lap at Bristol (Tenn.) Motor Speedway on Saturday. Edwards won the race after bumping Busch out of the lead.

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james.peltz@latimes.com

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PEPSI 500

Where: Auto Club Speedway, Fontana

Qualifying: Friday, 3:30 p.m., Speed Channel

Race: Sunday, 5 p.m., ESPN

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