DuPont cuts track presence

27 Feb 2009

DuPont, long recognised as the leader in hospitality among NASCAR sponsors, is dramatically reducing its program this year as part of its companywide cost cutting.

Instead of entertaining the 17,000 guests it had at 37 races last year, DuPont will buy hospitality packages at six races this season and will host fewer than 2,000 guests.

"The economy has had a huge impact on us," said Larry Deas, DuPont's motorsports manager. "The current environment, along with the high cost of hospitality, has forced us to make significant cuts."

Whether DuPont's cuts signal the beginning of the end for its sponsorship of Jeff Gordon's #24 Chevrolet remains to be seen. DuPont, which has been on the car since 1993, has been the only primary sponsor Gordon has known at Hendrick Motorsports and together they own the longest driver-sponsor-owner streak in the sport.

DuPont's current contract with Hendrick Motorsports runs through the end of the 2010 season.

Deas would not speculate on how DuPont's team deal might be affected in the future, but industry experts say it's a bad sign that an iconic sponsor has made such deep cuts, which could represent a savings well into the seven figures, analysts say. Most high-end team sponsorships cost $20 million or more a year before activation.

"You usually don't see a company make those kinds of cuts and then come back to where they were," said Greg Busch, a senior vice president at GMR Marketing.

Tom Knox, a vice president in IMG's Charlotte office and a former executive at Richard Childress Racing, said DuPont 'could be going the way of Tide, GM Goodwrench and other long-time sponsors that just got priced out of the sport'.

DuPont had planned to trim its hospitality programme this year anyway, Deas said, but the need for sharper cuts became apparent late last year as the recession took chunks out of DuPont's business.

Deas called the economic hits on DuPont 'across the board and in virtually every region of the world'. The impact on housing and automotive has been especially hurtful. DuPont's automotive paint and Tyvek house wrap are products that have been at the forefront of its marketing through the Gordon sponsorship.

The thrust of DuPont's activity in NASCAR has been business-to-business, which is why it sometimes entertained as many as 1,000 guests at a race. "DuPont began focusing heavily on reducing costs across the board in every business and in every region late last year and continues with that focus," Deas said of the company with 60,000 employees and annual sales of $27 billion.

DuPont's six races this season will be the two Daytona events, two at Dover, one at Las Vegas and one at Kansas Speedway. Those venues were selected because they are among the tracks where DuPont is committed to buying tickets as part of long-term deals. DuPont's Wilmington, Del., headquarters also make Dover a natural.

DuPont had previously committed to ticket and hospitality packages at other tracks for 2009 as well and "we're working with the tracks to minimise the negative impact," Deas said. "Some are working with us more than others." Hospitality tents typically cost $5,000 to $10,000 each, depending on the track and the size of the party. DuPont also rented suites for about half of the races.

DuPont's hospitality programme is unique because about two-thirds of its guests pay $200 to $250 for a package, which includes a ticket, two meals, a gift bag, door prizes and time with Gordon. Some DuPont customers buy the packages to take customers of their own.

DuPont entertained 225 guests for the Daytona 500 earlier this month, down from 1,000 a year ago. Charlotte-based Performance PR Plus handles DuPont's hospitality and public relations.

"The cost of hospitality, the catering, it's gotten to the point that it's much, much harder to justify doing it," Deas said.

The changes in its hospitality programme also mean that DuPont will be looking for new ways to use Gordon. He was the star attraction at DuPont's hospitality tent in the past, and with only six events this year, the company will "use Jeff in ways that we haven't in the past," Deas said.

Deas said DuPont is currently evaluating how it will work with Gordon this year.

"Some of these changes will be good for us," he said. "Traditionally, what we've done is use Jeff in a face-to-face atmosphere, a hospitality appearance or a dinner. Now we've got to find other mechanisms to use Jeff so that he can impact our revenue without a lot of cost."
by Michael Smith