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It's lights out for one title sponsor - The Biz - Northern Light ends sponsorship deal with Indy Racing League - Brief Article

Auto Racing Digest, June-July, 2002 by David Stone

IN JANUARY 2000, NORTHERN Light, an Internet search engine, signed a five-year title sponsorship deal with the IRL worth an estimated $50 million. At the time, the agreement was fairly historic, as it represented the first long-term marketing partnership between a major series and an Internet company. Now, two years later--after the bursting of the dot.com bubble--the IRL has become the latest company to be victimized by the sector's troubles. In early 2002, Northern Light ended its five-year relationship with the IRL three seasons earlier than expected.

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As long ago as late 2000, Northern Light re-evaluated its business plan due to changes in the economy and financial markets, ending all of its sponsorship activities except for the IRL program. A little more than a year later, it was forced to take its name off of the former Northern Light Indy Racing League Series. "Northern Light has been proud to contribute to the momentum and growth of the series, and we are saddened by the necessity to scale back our involvement," said Northern Light CEO David Seuss. "Everyone at Northern Light appreciates the hard work the IRL put into making our sponsorship a success, and we appreciate the accommodation the IRL has shown in response to the environment that has developed for Internet companies."

After the announcement, IRL founder Tony George said that the series will attempt to replace Northern Light, but another title sponsor may not be found until 2003. Even so, other companies have stepped up to help ease the loss. "Strengthened partnerships with General Motors, Firestone, Infiniti, and the fact that Marlboro, Red Bull, and Hollywood have recently chosen the IRL as a marketing platform proves that interest in the series has never been higher," said George, "But it's more important for the series to find the right long-term partner than it is to simply have a title sponsor for 2002. We're set to continue moving forward."

In February, the Chicago Motor Speedway announced the suspension of its operations and the cancellation of June's planned CART Target Grand Prix and August's NASCAR CTS Sears Craftsman 175. After three seasons in the country's third largest market, which was a big part of auto racing's geographical expansion, the races ceased making financial sense to its owners.

Less than one month later, the race was back on thanks to CART's decision to lease the venue and run its own race, in the process saving the Series presence in Chicago.

The first CART race at that speedway, 1999's inaugural Target Grand Prix, attracted a capacity crowd of 75,000. But the crowds dwindled in succeeding years --eventually bottoming out at 30,000 last year--and when CART and the track failed to agree on a sanctioning fee, the Chicago Motor Speedway decided to shut down, at least temporarily.

CART's move to save the Chicago Motor Speedway balloons its 2002 race schedule to 19 events.

Because of motor sports' heavy reliance on advertising and sponsorship revenues, all series--including NASCAR's Winston Cup--have begun to have certain financial difficulties recently. Bruton Smith recently said that in NASCAR, increasing expenses for both fans and teams are a "major" concern, and the series is "out of control" in some areas, particularly ticket prices. However, Smith said he is limited in keeping down the cost of tickets at his tracks because of the high operating expenses, such as sanction fees,. that are inherent in motor sports. And Brian France, NASCAR's senior vice president of marketing, recently told The Sports Business Daily that the economic slowdown has affected the entire advertising market and has hurt all series' revenues.

In spite of the economy, Humpy Wheeler recently said at the annual Motor Sports Symposium that NASCAR is in a uniquely strong position. Although companies are spending less and ticket sales are down, Wheeler claims that "in all of pro sports, NASCAR racing is probably, right now, economically the most healthy of any of them."

NASCAR's Busch Series has been hit particularly hard by the economic slump. According to one report, more than 20 sponsors have left the series since the beginning of 2001. Since then, certain races have had a hard time filling out an entire 43-car field, and several teams may eventually have to fold. As of mid-March, only 26 Busch teams had secured full sponsorships for the 2002 season.

After a controversial decision last year to adopt a new engine formula in 2003, which led to Honda's decision to leave the series, new CART president and CEO Chris Pook announced a rules freeze that applies to both engine and chassis regulations. The freeze will bring a measure of stability to series operations from 2003 through 2006, the lack of which was cited by Honda as a reason for its departure. In other CART news, Pook has said that he is interested in moving the series' headquarters from Troy, Mich., to Indianapolis, which would bring his staff closer to its teams. Although Indianapolis is also the home of the IRL, CART's plan to move to Indy has nothing to do with a possible reunification, according to the series.

It's lights out for one title sponsor - The Biz - Northern Light ends sponsorship deal with Indy Racing League - Brief Article

Auto Racing Digest, June-July, 2002 by David Stone

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