Lenders, Start Your Engines: NASCAR Mortgage Sponsorships Return
Things can't be too bad in the mortgage industry when companies are getting back into NASCAR sponsorships, right?
LendingTree announced Thursday it would sponsor the rookie driver Parker Kligerman in Sunday's Daytona 500. LendingTree joins Quicken Loans among the first mortgage brands to re-emerge as NASCAR sponsors after the housing crisis.
Given the number of now-defunct former racing sponsors from the mortgage industry FirstPlus, Argent and Ameriquest come to mind it may be surprising to see companies re-enter the sport. But the reasons that drove those subprime lenders' sponsorship strategies are still relevant in today's industry.
"NASCAR's fans are fiercely loyal. They understand that sponsorships make their sport possible and they embrace those companies in the sport," says Aaron Emerson, a spokesman for Quicken Loans.
LendingTree's last-minute, one-race deal came a day after Kligerman was involved in a wreck during practice that sent his car airborne, ripped a hole in the track's perimeter fence before landing on its roof — forcing his small upstart team, Swan Racing, to resort to a backup car for Sunday's race, which kicks off the 2014 Sprint Cup Series season. The LendingTree "spokespuppet," Lenny, donned the hood of the backup car, No. 30, which started in 41st place.
"This is a short-term deal and we are looking to see what sort of performance and reaction we get to it," says Fred Saunders, LendingTree's senior vice president of marketing. "Part-in-parcel with that is also determining how we can leverage this sort of promotion as a bona fide business driver and to build awareness and business at the same time."
No longer a lender after selling its mortgage origination business to Discover Financial Services in June 2012, LendingTree has refocused on its core business of lead aggregation. The company is headquartered in Charlotte, N.C., where the teams that compete in NASCAR also operate. The Daytona 500 sponsorship is LendingTree's first professional sports marketing effort.
"'When banks compete, you win' has been our tagline forever, and we've come back into the marketplace with a refreshed platform to help support our mortgage, auto and home services verticals," Saunders says. "We wanted a platform that was broad enough to support the new expanding profile of LendingTree."
Mortgage brands were a common sight on the hoods of racecars during the housing boom. FirstPlus Financial appears to be the first, sponsoring Jeff Ward and Eddie Cheever in the 1997 Indianapolis 500. A year later, FirstPlus moved from the open-wheel Indy Racing League to stock cars, sponsoring a NASCAR team co-owned by the NFL's Dan Marino and driver Bill Elliott.
But the sponsorship — which featured the FirstPlus name on the turquoise and orange No. 13 car resembling Marino's Miami Dolphins uniform — was short-lived. The race team struggled on the track, with rookie driver Jerry Nadeau getting replaced midseason after failing to qualify for 4 of 18 races. Meanwhile, FirstPlus had its own struggles off the track. The lender, which specialized in high loan-to-value home equity and subprime lending, suffered staggering losses, and later filed for bankruptcy protection and was sued by the race team in 1999.
GMAC's subprime consumer-direct brand may best be remembered for its "Lost another loan to Ditech!" ads. But Ditech also sponsored Hendrick Motorsports drivers from 2003 to 2005. GMAC's relationship with the Hendrick organization (whose current drivers include Dale Earnhardt Jr. and six-time and reigning Sprint Cup champion Jimmie Johnson) dates back to 1993, and its brand replaced Ditech's from 2006 to 2007.
This was of course, during the throes of the financial crisis. GMAC was spun off from General Motors in 2006 and later received a $17.2 billion bailout from the Troubled Asset Relief Fund in 2008. The Treasury Department announced plans last month to reduce its ownership stake in the finance company, now known as Ally Financial, to 37%.
The Ditech brand lives on, after being acquired by Walter Investment's Green Tree Originations business. Selling the name was part of Ally's efforts to reorganize its mortgage business into an entity called Residential Capital, which was put into bankruptcy.
For a time, it seemed like a mortgage tradeshow exhibit hall just wasn't complete without at least one racecar on display. Before Danica Patrick was GoDaddy's spokeswoman, she was Argent's, and a regular fixture representing the subprime wholesale lender at events like the annual National Association of Mortgage Brokers convention.
Subprime lending's obsession with motorsports marketing seemed to know no limits, driven largely by Argent and sister brand Ameriquest, the retail lending division of parent company ACC Capital Holdings. While Argent was sponsoring Patrick in open-wheel racing development leagues, its logo was also emblazoned on the winning car of the 2004 Indianapolis 500, driven by her teammate Buddy Rice. Argent continued its relationship with Patrick when she moved up to the Indy Racing League, where her fourth-place finish in the 2005 Indianapolis 500 landed her (and Argent's logo) on the cover of Sports Illustrated and remains the best-ever finish by a female driver.
Meanwhile, Ameriquest was staying busy in NASCAR. It arranged a unique promotional package with Roush Racing to sponsor four drivers in what was then called the Busch (now Nationwide) Series, the NASCAR equivalent of baseball's triple-A minor league.
While a typical sponsor will have its logo on a single car, the four Roush drivers split up the driving duties on two Ameriquest-sponsored cars throughout the 2006 season. In two events that year, all four drivers took to the track. Dubbed the "Ameriquest Dream Team," the drivers combined to win five races in 2006, including a race in California where Carl Edwards started from the pole and finished third, and teammate Greg Biffle started third and won the race — with the Ameriquest logo on both cars' hoods.
Argent and Ameriquest's motorsports sponsorships were part of a wide range of professional sports marketing efforts. Ameriquest was heavily involved in Major League Baseball, including buying the naming rights to the Texas Rangers' ballpark. And who could forget Ameriquest's "Don't judge too quickly" ads that ran during the Super Bowl?
As the 2006 season came to a close, Ameriquest announced plans to move its sponsorship to Biffle's team in the Cup Series the following year. But the Ameriquest dream came crashing down just four months later. Amid growing troubles at the lender, it asked to be released from its multiyear sponsorship with the Roush organization.
In addition to being the "Official Mortgage Company of NASCAR" from 2005-2006, New Century Financial Corp.'s subprime lending subsidiary Home123 adorned the hood of Jamie McMurray's No. 42 racecar for six races in 2005.
US Mortgage Corp. and its CU National Mortgage subsidiary were also NASCAR sponsors. CU National was at one time the largest independent mortgage wholesale provider to credit unions. But the company was brought down in 2009 by a $140 million fraud scheme that left its former president serving a 14-year prison sentence. And Mike Ashley, the former NHRA drag racer/team owner and Lend America executive accused of numerous acts of mortgage fraud in a 2009 civil lawsuit filed by the Department of Justice, had ties to US Mortgage, not to mention a need for speed.
As a drag racer, Ashley set a funny car world record by reaching 334.32 mph in 4.725 seconds. As chief strategy officer of Lend America, Ashley allegedly told loan officers "loans should not be closed in two weeks or a month, but in eight hours," which the Justice Department claims fostered a culture that encouraged fraudulent lending practices.
Others mortgage brands that have sponsored race teams over the years include American Liberty Mortgage, Arbor Mortgage, Benchmark Mortgage, Champion Mortgage, Henderson Mortgage, and M&M Mortgage Corp. There's even one example of an individual loan officer getting in on the action: Carl Ent, vice president and mortgage loan officer at Bank of Ann Arbor in Michigan, was an associate sponsor of a team in the Nationwide Series for one race in each of the 2009, 2010 and 2012 seasons. The bank's website and Ent's email address appeared on the side of Mike Wallace's racecar.
Before it began sponsoring NASCAR driver Ryan Newman in 2012, Quicken Loans got its first taste of racing sponsorship when its logo appeared on open-wheel cars driven by Helio Castroneves and Gil De Ferran in the 2003 Indianapolis 500.
Quicken Loans founder Dan Gilbert also owns the Cleveland Cavaliers, which plays at the Quicken Loans Arena, nicknamed "The Q," and it's involved in other professional and college basketball promotions. But NASCAR is the centerpiece of the lender's marketing strategy.
It followed Newman to a new race team in 2014, serving as the primary sponsor for 12 races and an associate sponsor when the construction equipment maker Caterpillar appears on the hood (as it will in the Daytona 500). But the marketing campaign goes beyond having its logo on the car and getting its name dropped in the post-race show known as Victory Lane. The lender has a variety of complementary promotions and advertising to maximize its exposure — what's known in the NASCAR marketing business as "activation."
For the past two years, Quicken has been the title sponsor of a race at the Michigan International Speedway, which is located in the suburbs of its Detroit headquarters. This year, Quicken will also be the title sponsor of the season's penultimate race, held at the Phoenix International Raceway, where Quicken has another large office.
"As a Detroit-based company, the spring race at Michigan International Speedway made a lot of sense to sponsor. We are able to invite nearly 1,000 team members and their families to the event. It is a very prized ticket to receive around the office," Emerson says.
Quicken runs TV commercials during races and has the naming rights for the "ESPN Quicken Loans Pit Studio" where the network's analysts shoot programming throughout the race weekend. It also has a racing-themed website that it uses for lead generation and runs a promotion to make a monthly mortgage payment for five fans whenever Newman finishes in the top five in a race, which it did for 80 people last year. It all works together to maximize the marketing payoff, the company says.
"Our involvement in the sport centers on integration," says Emerson. "While each piece could stand on its own, from a visibility and authenticity standpoint, we feel the entire package is the best way to be part of motorsports."
One thing that's evolved since the heyday of the mortgage industry's motorsports marketing is the rise of social media. NASCAR fans engage with the sport's stars on Twitter, and during races, there's a vibrant discussion among fans, NASCAR and team officials, sponsor brands and media covering the event — all of which can be tracked, measured and valued.
"The teams and NASCAR are getting savvier about how to measure the value of what they sell beyond just TV rating points and PR pickup," says LendingTree's Saunders. "There's a lot more out there in terms of the share-ability and viral nature of the drivers, teams and what the fans are saying, which gives us a lot we can measure."
Numerous financial institutions have also participated in NASCAR sponsorships over the years. Bank of America and the credit card issuer it later acquired, MBNA, each issued NASCAR-themed credit and debit cards and served as the title sponsor of races. GreenDot currently issues a NASCAR-themed general purpose reloadable debit card. Banks like BB&T, One Main Financial and Fifth Third have sponsored teams, but the sluggish economic recovery has kept activity low, at least for now.
So with the economy getting back on track, are more lenders ready to start their marketing engines?
"NASCAR represents a pretty interesting opportunity for a variety of brands, so I wouldn't be surprised to see more financial institutions get involved in NASCAR, or any sport for that matter, as we as a country, and the industry, get healthier," says Saunders. "But the difference this time around is there is a much sharper eye on the return on investment.
"We're not on the car just to be on the car. We're there as a door to a more robust bottom-line return. That will be the new dynamic behind these types of promotions."