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Stewart's Lethal Accident Could Cause NASCAR Sponsors To Rethink Deals

Reuters, August 12, 2014

By Steve Ginsburg

NASCAR driver Tony Stewart's involvement in a fatal on-track accident over the weekend may wave a caution flag for the big-money corporate sponsors backing the three-time champion's team, industry analysts said.

While no charges have been filed against 43-year-old Stewart, who is one of auto racing's biggest names, the incident that killed Kevin Ward Jr. during a race in upstate New York on Saturday could still spook the backers whose brand logos cover Stewart's sleek race car.

"For any of those companies that have relationships with Tony Stewart or his team, I think they're all probably in a 'Let's take a step back and assess this relationship' mode in light of the tragic incident," said Jim Andrews, senior vice president at IEG, a consulting firm.

While sponsorship is a factor across the professional sporting world, NASCAR teams rely heavily on backers from companies that foot their hefty expenses in exchange for the exposure in front of the thousands of fans who head out to tracks and millions that watch the races on television.

Stewart's sponsors include outdoor retailer Bass Pro Shops, which as title sponsor pays up to $20 million per season, according to sports marketing analysts, and secondary sponsors ExxonMobil Corp and Coca-Cola Inc, who pay lesser amounts.

Police on Tuesday said they would take another two weeks to investigate Saturday's incident, in which Ward jumped out of his car and, while standing on the middle of the track, pointed angrily at Stewart, who struck the 20-year-old when he came around on the next lap.

"If there are no criminal charges here, I think they have to at least go through the process of saying, 'Has this diminished the value of this association because he got involved in this incident, even if it was an accident?'" said Andrews.

"Whether any of those companies will say, 'This is the tipping point for us and we need to take a hard look at ending our relationship,' I'm not sure."

Stewart, despite his brilliance as a driver, has gotten into fist fights with rivals and has a take-no-prisoners approach with other drivers concerning his position on the track.

"NASCAR isn't going to be any different than golf with Tiger Woods or Michael Vick and the NFL," said Michael Cramer, director of the Texas Program in Sports and Media at the University of Texas-Austin.

"But when bad boy goes to an incident that involves the death of another person, whether it was intended or not, it will impact sponsors, as we've seen in the past for lesser activity than this."

Andrews said the accident on Saturday has to be viewed with Stewart's overall attitude.

"If you look at the sum total here, you start to say, do we have a pattern of behavior here that is going to open the possibility here that this is going to happen again," he said.

The speed with which sponsors can cut ties with a sports franchise was illustrated this spring after racist comments by former Los Angeles Clippers owner Donald Sterling emerged, prompting backers including auto dealer CarMax Inc, Virgin America airlines and State Farm insurance to pull back from their dealings with the team.

The team on Tuesday was sold to former Microsoft Corp chief Steve Ballmer, according to the National Basketball Association.

Despite his volatile personality, Stewart remains a valuable mouthpiece for sponsors.

"Tony Stewart has very, very deep and long-lasting relationships with his sponsors," said Ramsey Poston, a former NASCAR executive now the president of public relations firm Tuckahoe Strategies.

"These sponsors depend on drivers who can connect with this very passionate fan base. And he's done that probably better than anyone. He's the rare driver who has crossed over into the mainstream. He's known outside the NASCAR world."

Bass Pro Shops issued a statement after Saturday's fatality that read, in part, "We send our thoughts and prayers to the family and friends of sprint car competitor Kevin Ward Jr. and also to Tony Stewart and everyone at Stewart-Haas Racing."

Exxon also voiced its condolences.