| | HUNGRY EYES | UPS: Edwards in Brown? | |
| | By Michael Smith / SportsBusiness Journal Office Depot is in the midst of an exclusive 60-day negotiating period to extend its sponsorship of Carl Edwards’ No. 99 Ford, but industry sources say UPS is waiting in the wings to make a run at the hot Roush Fenway Racing driver.
Edwards, winner of a season-high three Sprint Cup races this season and one of the busiest spokesmen in NASCAR, is perhaps the sport’s most-wanted free agent. Like Dale Earnhardt Jr. a year ago, Edwards’ contract with his team is up at the end of this season and his next step could create ripples among potential sponsors. Most industry experts, however, expect him to stay at Roush Fenway.
Office Depot, meanwhile, is in the final year of its three-year deal with the team.
While any prospective driver and sponsor changes on the No. 99 car won’t create the shock waves felt when Earnhardt Jr. switched teams and sponsors last year, Edwards and Roush Fenway appear to be in position to push the first of many sponsor dominoes in the coming four to six weeks.
“We value our relationship with Carl, and we’re working to continue that relationship,” said Mindy Kramer, spokeswoman for Office Depot.
Kramer would not comment on Office Depot’s negotiating window with Roush Fenway, but industry sources said that it expires in the next three weeks.
If Office Depot, which has used Edwards out front for its annual “Official Small Business of NASCAR” promotion, doesn’t have a deal done by mid-May, industry sources say UPS will pursue sponsorship of Edwards’ car.
UPS has been considering several options, from staying at Michael Waltrip Racing to Edwards to Jeff Burton’s No. 31, which is scheduled to lose AT&T as its primary sponsor at the end of this season, but sources said Edwards has emerged as the top option.
Office Depot will launch its “Official Small Business” program later this month, and Edwards is again the face of the promotion, although it does not currently call for a TV commercial, as it has in the past. The thrust of the promotion will be carried out online at officedepotracing.com, Kramer said, in addition to radio and print advertising.
The issue between Office Depot and Roush Fenway, sources said, is the price tag for the No. 99 car has increased significantly from three years ago when Edwards was considered more of an up-and-comer than a bona fide star. He now pitches for Claritin, Dish Network and Aflac, in addition to Office Depot, and his on-track success — 10 wins in the last three-plus seasons — has made him a hot commodity.
The Davie Brown Index rates Edwards among the top 12 NASCAR drivers in several attribute categories among avid fans and ninth in overall appeal. Edwards does not have an agent and handles his own business affairs.
If Edwards stays in the No. 99 as expected, Roush Fenway hopes to extract $22 million to $24 million a year in the next contract, sources said, a significant step up from the deal Office Depot signed three years ago in the $14 million to $15 million range annually.
It’s uncertain how aggressively Office Depot will pursue another three years on the No. 99 at the higher price. The office supply retailer is embroiled in a proxy fight with a shareholder group that is attempting to oust CEO Steve Odland from the company’s board after an 85 percent drop in fourth-quarter net earnings year-over-year.
Office Depot’s stock price has dropped from a high of $37.05 nearly a year ago to $11.51 at Monday’s close, which has prompted questions about its ability to win a bidding war for the No. 99 car. John Miller, a former Roush marketing executive who now owns his own agency, Xceed Sports Marketing, is representing Office Depot in these negotiations.
UPS is in the second of two years at Michael Waltrip Racing, where it followed retiring driver Dale Jarrett to maintain their longtime association. If UPS leaves Waltrip’s shop, Burton’s No. 31 will certainly be among the most attractive landing spots. Burton leads the Sprint Cup points standings going into this weekend’s race at Talladega. But industry sources say UPS will first pursue Edwards.
“We’re in discussions with a number of teams about many different opportunities,” said Laura Kouns, UPS’s motorsports marketing manager.
Kouns said the process of securing sponsorship for the following year continues to unfold earlier and earlier in the season, mostly because of the size of the spend.
“You’re talking about millions of dollars,” she said. “You can’t wait for the normal budget cycle, you have to get out in front of that. Whether you’re talking about exiting a sponsorship or signing a new one, budget is always an issue in today’s market in these economic times.”
Kouns also said the best opportunities are usually the first ones to go.
“The longer you wait, the fewer choices you have,” she said.
And then there’s the need to create activation plans, a paint scheme for diecast cars and marketing materials for other departments within UPS that want to activate their own programs using the new driver.
The team that stands to lose the most in the sponsor transition is Michael Waltrip Racing, which could lose its top two primary sponsors, UPS and NAPA, by the end of the season.
UPS’s negotiations for its next sponsorship deal are being led by Just Marketing International, Indianapolis.
Kouns said that UPS’s “Race the Truck” campaign, popularized by Jarrett, probably will not continue with a new driver.
| | Posted April 23, 2008 , 5:42 pm EST
Last Updated November 19, 2008 , 7:29 pm EST | | | | | | |
