by Lee Spencer

Updated: July 4, 2008, 2:11 PM EST 30 comments

add this RSS blog email Print

Without adequate sponsorship — $22 million annually as the break-even point, according to partner Felix Sabates — it simply didn't make sense to continue running a third team, particularly one that was 40th in points.

Ganassi is not the first owner to shut down a team, and he won't be the last. Ganassi was ahead of his time, purchasing majority ownership from Felix Sabates in 2001. When the Cup tour rolled into Daytona that July, 10 of Ganassi's fellow owners — Brett Bodine, Jim Smith (Ultra Motorsports), Travis Carter, Nelson Bowers (MB2 Motorsports, eventually Ginn Racing), Robert Yates, Doug Bawel (Jasper Motorsports), Andy Petree, Larry McClure, Mark Melling and Cal Wells — would inevitably resign from that fraternity.

Ganassi expanded to three cars two years later following a "growing" trend when uber organizations like Hendrick Motorsports, Richard Childress Racing and Joe Gibbs Racing continued to expand with both drivers and personnel.

That was well before gas hit $4 and rising energy costs triggered a trickle-down effect throughout goods and services — the pool of sponsors most targeted by NASCAR and its teams.

NASCAR Vice Chairman and Vice President Jim France has experienced this type of economic downturn before.

"This is a tough environment right now," said France, who is also the chairman of the board for International Speedway Corp. — the owner of 12 NASCAR tracks. "You have energy costs that have gone through the roof — that's a very difficult thing for working people to absorb. All of our products move through energy, whether it's trucks, trains or whatever, and as prices go up, it costs more to get things to the marketplace, and that moves inflation up.

"You have a lot of issues going on at the same time. We've seen this in the '70s. We've seen tough times before in a tight economy. When you look around, we still have a strong economy — when you look at the world. Our corporations are still in good shape. The Detroit auto industry is under a lot of pressure right now and the banking industry has been under a lot of pressure from sub-prime mortgages. Those are two key components of our economy, and it has had an effect on all of us."

Certainly, it didn't help that driver Dario Franchitti was injured nine races into the season. But other than perhaps rushing the rookie too quickly into the Sprint Cup season, Ganassi made it clear that Franchitti wasn't the reason he laid off more than 70 people this week at his race shop.

To quote political strategist James Carville, "It's the economy, stupid."

"It's not about Dario," Ganassi said. "We don't have a sponsor. It's that simple. We don't have a sponsor for his car. I talk to him every day, we are working hard trying to keep his career alive — his NASCAR career alive or wherever that takes us.

"I'm concerned about all my drivers. If they have other opportunities, I would hardly stand in the way. (It was) very difficult. I had a lot of sleepless nights. The fact of the matter is we just didn't have a sponsor. It was that simple. I think it's a difficult business environment."

Ganassi says that sponsorship acquisition is a never-ending process. Lately, the team's greatest competition has come from not only other teams, but also NASCAR. Given Franchitti's open-wheel resume — which includes the 2007 Indianapolis 500 and IndyCar Series championship — his natural charm, ease with the media and international name recognition, he should have been an easy sell.

For whatever reason, the necessary backing never came to fruition.

"I guess (Dario) is taking it about as expected," Ganassi said. "I mean, nobody wants to be in that position that he's in. I don't want to speak for him, but nobody wants to be in that position. We were a little bit late starting the program. I wouldn't have thought that (Dario being a European) was an advantage, but I think it was. I just think it's a difficult business environment right now."

No sponsor, no ride. It was that simple for Dario Franchitti. ( / Getty Images)

John Story, vice president of Dale Earnhardt Inc., experienced a similar situation last season when the organization absorbed much of the company formerly known as Ginn Racing, including their exorbitant payroll.

After a couple of sponsors committed to Ginn for the 2007 season and failed to follow through with payment, pink slips were inevitable.

"I think a lot of it depends on the driver," Story said. "Everybody gets to their numbers a little bit differently. It's expensive to run these cars, that's for sure. You have to have them funded. It's a really bad investment to put your own money into it."

Race teams can quickly turn into money pits if a full-time sponsor or an investor isn't available to subsidize the costs. And in most cases, when one squad isn't adequately funded, it drains the remaining teams. Over the course of NASCAR history, not once has an owner muttered, "I have more money to spend on a car than I know what to do with."

The opposite is quite true. Generally, teams are looking for a way to cut costs.

"As a company, we talk about it in the budgeting process, which is, 'What can we trim? What can we do differently?' It's very difficult to identify ways to cut corners or cut costs," Story said. "You have to be smart. You have to take advantage of the efficiencies that you have with multiple teams and multiple cars. A lot of the variables are in personnel. You can spend a lot of money in people by having too many. You have to be smart. You have to have people that are dedicated to it, which we feel we do at DEI. We feel we have the right number of people working on our cars. We compensate them well and take good care of them. The key is, if you take good care of your people, they will take good care of you.

"We all spend the same amount of money on pieces and parts and race cars and electricity, but the variables are in the personnel. People can spend big money on planes, where they keep the planes, where they buy their fuel, but normally that doesn't add up to tens of millions of dollars. You work hard to save $100,000 or $200,000, but saving millions and millions of dollars is very hard to do if you want to compete at the top level."

One area where DEI exercised an economy of scales was melding its engine program with Richard Childress Racing. Following Ford Racing's lead, where Yates Racing and Roush Fenway Racing combined its technological resources, DEI saw a noticeable difference in its bottom line.

"We were able to reduce our engine expenses for each car, which was a big savings for us," Story said. "Just having more than the three cars we ran last year and being able to combine our resources so that we now have a company that services seven teams, that was a big saving for us and I think for RCR."

Even powerhouses like Joe Gibbs Racing, with three teams in the top 10 in the standings, have fought the funding battle from time to time. But with its current success, JGR is currently looking to expand to a fourth car in 2009, and an announcement adding Joey Logano to the Cup roster could come as early as Monday.

Still, JGR president J.D. Gibbs believes the best solution in any economy is performance.

"If you look back over the years, teams come, teams go. That's nothing new," Gibbs said. "For us, that's what's frustrating year to year. There's no franchises here, so you have to perform. If you don't, you're going to have problems.

"I think if you're running well, you may not have as much as you like, but you'll be OK. Our goal is to perform. If you perform, the rest takes care of itself. If you don't, you're going to have problems."

Franchising would offer some guarantee to owners — particularly in giving an actual value to their teams and the insurance of making races — but Ganassi said he's "not waiting around for a handout from NASCAR." He knows that given the current economic climate, he and his teams must work harder through the difficult times.

Ganassi knows success. He's the king of the IndyCar Series garage. Drivers Scott Dixon and Dan Wheldon currently sit first and third in points with five wins between them in the first nine races. But that same success has eluded them in stock cars.

Still, losing a team hasn't soured Ganassi's view of NASCAR.

"I don't think this has anything to do with the popularity of NASCAR," Ganassi said. "I'm in NASCAR to stay."

When times get tough, people look to escape. And France still believes that NASCAR offers the perfect distraction.

"We have great racing," France said. "We have great sponsors, drivers and the fans continue to follow and attend the sport. They did back in the '70s, too.

"When times are tough, people still want to get as much enjoyment as they can out of their lives, and our racing and our drivers and teams really provide great entertainment and great role models and a lot of excitement for people."