By Toby Christie, NASCAR Editor
News broke Monday, that Dollar General will not be back in 2017 as the primary sponsor of Matt Kenseth’s No. 20 Toyota Camry, which is fielded by Joe Gibbs Racing. This comes on the heels of Kenseth’s first win of the season two weeks ago, and the overall insanely stout start to the season by the entire JGR team.
Immediately upon hearing this news, people were saying that this means that there is something wrong with NASCAR if the current top team can’t keep their sponsor.
No, things aren’t perfect in the sport today. Ratings are on a downward trend, attendance isn’t where it used to be, and sponsorships in NASCAR have do have an extremely high price tag, especially when companies sign on to sponsor 30 of the 36 races in a season like Dollar General is doing in 2016. The price is high, but I don’t think sponsoring a Sprint Cup Series car is an outlandish price tag for companies.
According to the report from Adam Stern of Sports Business Journal, sources have said that Dollar General’s new CEO Todd Vasos, wasn’t as big of a fan of sponsoring a NASCAR team as former CEO Rick Dreiling, who retired last year.
Even with that report, I personally don’t think Dollar General’s exit from the sport has anything to do with NASCAR. I honestly think the decision falls more in line with where the retail sector is at in the United States currently.
It’s been a rough year to say the least for people in retail. In the last 12 months companies like RadioShack, Aeropostale, Sears, JCPenney, Macy’s, Office Depot, Barnes & Noble and many more have started closing stores around the country. Online marketplaces like Amazon, Etsy and eBay have really thrown some haymakers to the industry.
Even Wal-Mart is attempting to evolve to keep up with the likes of Amazon.
As a result, stocks have been sliding industry-wide among retailers.
Shares of GAP — a clothing store — for instance, usually sits at around $30 per share, but currently they are trading in the $18 range. There are several other stores in this exact spot right now.
One company that hasn’t really suffered much from the hard hit in the retail industry though is Dollar General. The reason is that the store fits a unique niche. They cater name brand products at a very discounted price, and according to this report from Forbes back in March, the company should be adding around 2,000 stores by 2017.
So why would they pull their NASCAR sponsorship if the company is doing so well?
Because it just makes business sense.
Adding stores when others are closing theirs adds up to great timing. The demand for opening a store is currently low, which in essence means retail space should come at a lower cost to the company. Overall, opening stores, and especially that many stores, costs a lot of money. With the recent down turn in the retail sector, Dollar General has found itself to be the exception to the crash. Knowing all of those facts, I fully understand why the company would want to employ their capital to open more stores instead of plastering their logo on the side of a 200-mile-per-hour billboard, for now.
That being said, we should all be grateful that Dollar General has given as much to the sport as they have, and perhaps the company can go out on top with a championship.
Image: Robert Laberge/Getty Images
