Dollars and Sense: Ganassi Racing and the "Value" of Creating "Value"
Tony Lumbis, Frontstretch.com
When the checkered flag flew ending the Air Guard 400 at Richmond, the 2010 Chase field was set and there was not an Earnhardt Ganassi Racing driver to be found in the top 12. Jamie McMurray and Juan Pablo Montoya finished 14th and 16th in the “regular season” standings, respectively. However, the last thing this season can be considered is a failure for Chip Ganassi and his organization. Both his drivers won races, with McMurray taking what many consider to be NASCAR’s two most prestigious events; the Daytona 500 and the Brickyard 400.
The success doesn’t stop there, however. Dario Franchitti, who drives for Ganassi in the IZOD Indy Car Series was victorious in the Indianapolis 500 in May, which helped give his owner the first ever “trifecta” (Daytona 500, Indy 500 and Brickyard 400). As if that weren’t enough, Team Ganassi also took home the 2010 GRAND AM Rolex Sports Car – Daytona Prototype championship with drivers Scott Pruett and Memo Rojas while setting a record with nine victories.
Achieving success in one racing series takes hours of hard work and preparation. Replicating that success in three divisions in the same year can only be achieved by a first class organization that recognizes opportunities in any environment. Steve Lauletta, president of Chip Ganassi Racing and Earnhardt Ganassi Racing explains that the achievements of this race team are possible because of the owner’s management style and the organization’s abilities to build synergy between the units.
Racing has become so advanced that it has evolved from a sport into an industry. Gone are the days where drivers and mechanics could still race competitively at the nation’s highest level on the side while holding down other jobs. To be on top of the game in today’s day and age, one must eat, sleep and breathe racing. That is exactly what this organization has in Chip Ganassi. “Racing is all he does” said Lauletta, referring to his boss. “He doesn’t own car dealerships or other companies. He thinks about racing 24 hours a day, 7 days week, 365 days a year. If he’s not at one of our facilities, he’s going to be at one of the race tracks.”
A continuous presence alone is no enough to warrant the kind of success Ganassi has enjoyed, but rather it is the quality of time that is put in to the organization. “Everybody in our company is looking to do one of two things; win races and championships and deliver value to our sponsors” explained Lauletta. “It’s about finding people who want to focus on those type of things like Chip does.”
Finding those type of people who fit the culture of the team is one thing, keeping them is another and apparently for Ganassi, having them want to come back is an entirely different category as well. Lauletta said creating an environment where people want to come to work starts at the top. “It goes back to Chip again. He has the relationship with the drivers that make them want to drive for him. Montoya left for F1 and came back. Jamie left for another team and came back. Dario came to our team on the NASCAR side, and when it didn’t work out, moved to our Indy program where he’s won a championship and the Indy 500.”
While Ganassi has a keen eye for talent, putting the right people in the right places is only half the battle. Even the most talented drivers can’t run competitively in sub-par equipment and having fast race cars comes at a very steep price. In recent years, sponsorship dollars have become more essential to a team’s success due to increasingly sophisticated technology, and at the same time, harder to come by because of the economy. For Ganassi and his management team, more is better as they use all three of their teams as a point of differentiation over other teams when they pitch to sponsors in a very crowded market.
Lauletta states that the key to their selling strategy is using a “one team” approach. “If you’re a partner with us on the NASCAR side like Bass Pro Shops, and the Indy Car team wins the Indy 500, we want you to feel as much a part of that victory as when we won the Brickyard 400. It also cast a wider net for our partners. For example, we can do something for them in Utah, where our GRAND-AM team races but not NASCAR.”
Such an advantage has never been as evident as was the case with one of Ganassi’s rivals, Penske Racing and its new 2011 sponsor Shell Pennzoil. The oil company announced earlier this season that it was leaving RCR and then championship points leader Kevin Harvick for Penske to take advantage of the opportunities both in and out of NASCAR that Roger Penske could provide them. It is those very reasons why Lauletta and his team are always sure to look beyond sponsorship with just one team when pitching to a potential partner. “After we talk about motorsports, we talk about our team, Chip Ganassi Racing, Target Chip Ganassi Racing, Earnhardt Ganassi Racing and what all those opportunities mean to a potential partner. When you become a partner of ours, your become a partner of everything.”
Today, team marketers are placed in the difficult position of trying to extract millions of dollars from companies that are downsizing and watching every penny in the process. To successfully build a partnership, teams must be able to provide the value sponsors need for them to write a check for the amount of money it takes to keep the cars competitive during a race weekend. By building a racing empire, Ganassi puts his team in a great position to do just that.
“You’ve got to be aggressive and our approach is what we can provide on and off the track, it’s not about price” explained Lauletta. “We try to avoid the conversations involving how cheap of a price can I get for putting the logo on the car. Our positioning allows us to offer more and keep the integrity from a price aspect.”
Such positioning allows the team to weather the rough spots and continue to deliver value to its sponsors when the race results are not ideal. For example, even though Montoya has a win at Watkins Glen this year, the No. 42 team is well off the pace of its 2009 run that was good enough to give the Colombian his first ever Chase birth. Lauletta referenced the mid-year results of brand visibility by driver to explain this point. “Montoya is ninth on that list even though he is much lower in the points. That means he is ninth in terms of delivering value to his sponsors such as Target and TUMS. That helps because it shows that we’re doing all the right things from a PR standpoint and with our activation programs to get their brand up front.” Lauletta realizes that in the sport of racing, nothing is a guarantee and you have to adequately prepare for it. “You could be on top of the world one year and struggle the next. So you need to work out how to balance those goals both on and off the track.”
There are a lot of moving parts that go into running a multifaceted race car team such as the one overseen by Ganassi. To keep all those pieces in order, teams now rely on executives with marketing and business backgrounds to run their programs, such as Lauletta, who spent 11 years as director of sports marketing for the Miller Brewing Company. “I’ve worked with properties such as the Dallas Cowboys, the Chicago White Sox and the L.A. Lakers and now I do the same things from the other side. If I’m not successful understanding their business and then applying the knowledge that we have on the racing side to develop the program that helps them succeed, then it’s going to be a short lived relationship.”
Top level teams in all forms of racing need to work just as hard off the track as they do on it in order to be successful. Winning races and championships are no longer enough to persuade a sponsor to fork over the big bucks needed to achieve that success. Owners are challenged with hiring the right people who share their vision and have the skill set to implement it while creating value for sponsors that extend beyond a logo on the hood or wing of a car.
Chip Ganassi has accomplished both of those things by putting the likes of Montoya, McMurray, Franchitti and Pruett behind the wheel and experienced executives like Lauletta in the front office. He has developed three completely different race teams that compete in various markets and appeal to a diverse group of fans. Yet all presented as one team, his organization is giving potential sponsors a multitude of opportunities under one marketing agreement. While racing in America has endured its challenges over the past decade and the economy has been on a wild roller coaster ride, one thing is for certain and that is Chip Ganassi has positioned his teams to not only so survive but thrive through it all.