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Lowe's won't�return as title sponsor of Charlotte track
Track�expected to go back to Charlotte Motor Speedway
By Sporting News Wire Service
July 31, 2009
03:06 PM EDT
Lowe's has decided not to renew its naming-rights deal at Lowe's Motor Speedway after this year, ending an 11-year relationship that began as the first race track naming-rights sponsorship.
After more than a year of renewal talks, the home improvement retailer informed Speedway Motorsports Inc., the track's parent company, of its decision within the last two weeks, industry sources said.
The initial 10-year, $35 million deal ran through 2008 and last year the two sides agreed on a one-year extension through 2009 when they could not finalize a long-term deal. Talks continued this year, but the two sides have not been able to reach an agreement.
Sources said it's not inconceivable for Lowe's to change its mind, given that five months remain on the current deal and the unpredictable nature of the economy, but such a change of heart is considered unlikely.
Marcus Smith, president and general manager of Lowe's Motor Speedway, said, "Both companies have benefited as strategic partners for 11 years and we are finishing a one-year extension. Currently, we're still working on and discussing the components of another extension to continue our relationship. Those components have not been finalized, but the process is moving along and we are confident to have this completed in the near future."
Barring a late agreement with Lowe's or the signing of a new corporate partner, the track is expected to go back to its former name, Charlotte Motor Speedway, in 2010.
The Lowe's sponsorship, signed in February 1999, never started the trend of track title sponsorships that many predicted a decade ago. SMI sold one other title deal to Infineon Technologies at its Sonoma, Calif., track in 2002 for $34.6 million over 10 years, and rival International Speedway Corp. sold a 10-year, $40 million title sponsorship to the Automobile Club of Southern California for its Fontana, Calif., track last year, but the slew of title-sponsored tracks that many expected never materialized.
When the deal was initially struck in 1999, it marked a first for a speedway. Charlotte Motor Speedway under the guidance of former president Humpy Wheeler had become known as a trendsetter in the business, hosting the first night race in 1992 and building the first on-site condominiums that stayed open year-round.
It remains one of the nation's busiest facilities with a pair of NASCAR Sprint Cup dates, as well as the Sprint All-Star Race. But sources say that the entitlement became too pricey for Lowe's, which wasn't willing to significantly increase its current investment of $3.5 million a year.
Industry sources say that SMI initially came to the table asking for close to $9 million annually, and while that number dropped over the course of their discussions, the two sides could not come together.
There were other factors. Lowe's must also consider its future with driver
Jimmie Johnson, who has won three consecutive Cup championships and stands as the sport's most dominant figure.
The Lowe's deal with Johnson and Hendrick Motorsports expires at the end of 2010 and those renewal talks are expected to begin later this year. Industry sources say that Lowe's will be expected to pay a hefty increase to maintain its position as the only primary sponsor on Johnson's No. 48 car, which is uncommon in this time of co-primary and "tri-mary" sponsorships on a car. The most expensive sponsorships go for the mid-$20 million range annually.
Lowe's also is navigating the recession, which has struck the home improvement and building sector especially hard. Lowe's earnings fell 22 percent in 2008 and 60 percent in the final quarter of the year.
Lowe's first-quarter earnings for 2009 were down 21.6 percent year over year and overall sales were down 1.5 percent, but the company offered improved guidance for the rest of the year, suggesting the category might have reached bottom.
Still, Lowe's stock price has dropped in the last year, falling from a 52-week high of $28.49 to $13 in March before a spring recovery lifted it over $21 a share.
How much those business difficulties played into the decision is uncertain, but it didn't help SMI's efforts to renew the deal.
Smith, the son of SMI chairman Bruton Smith, led the talks on the SMI side, while Bob Gfeller, senior vice president of marketing, led the team on the Lowe's side, although sources say the ultimate decision came from the top, CEO Robert Niblock.
