May 21, 2007

Will Chrysler Sale Doom Dodge Racing?

The company that was DaimlerChrysler has decided that it will be much happier being just Daimler, thank you. So, the German-controlled parent of Chrysler, Dodge and Jeep decided to toss them back as if they were so many undersized fish. In fact, the Germans were so eager to get rid of the American brands that they practically paid the buyer -- Cerberus Capital Management -- to take them. It was just as if the husband seeking divorce not only found a new mate for his soon-to-be ex-wife, but also financed their wedding. (Which is probably not such a bad idea, when you think about it.) The question is, where does the pending sale leave Dodge Motorsports and Dodge's participation in the Nextel Cup Series?

In the immediate wake of the announcement, Dodge Motorsports officials were making bold pronouncements that the brand's participation in NASCAR would remain sacrosanct. (And it wouldn't change, either.) For instance, Mike Accavitti, director of Dodge Motorsports, was quoted by ESPN as saying, "Under any scenario, as far as we're concerned, we see us remaining involved with NASCAR." But this statement was made in March, when the sale of Chrysler was just a rumor. Now that the sale is about to occur -- and it seems like nothing will stop it -- odds are that everything will change.

That does not mean that Dodge will immediately pull out of Nextel Cup racing, but it does mean that once the new owners are in place, everything (and we mean everything) will be open to question. To read the tea leaves, first you have to look at the character of the buyer of Chrysler Group. Cerberus Capital Management, named after the three-headed hound who guards the Gates of Hell, is a company known for its slash-and-turn management style. The privately held firm acquires distressed companies, puts them on strict expense diets, and then, when they recover, reaps the benefits. With that in mind, one can expect that Chrysler's new management will take a long, hard look at the cost-benefits of its Nextel Cup program.

Sadly, this has not been a very good year for Dodge Motorsports. If the hellhound Cerberus believes in the phrase "Win on Sunday, sell on Monday," they will likely question the effectiveness of motorsports as a marketing tool, since Dodge has won exactly zero Nextel Cup races this year. Only the presence of Toyota, a company in its first year in Nextel Cup, has kept Dodge out of the cellar. So while we all wish the Dodge Motorsports people well, we have to believe that they will have their hands full trying to convince new management to invest in Nextel Cup for the long haul.