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Why Budweiser Has To Stick With Dale

Dale Earnhardt Jr.
AP
Dale Earnhardt Jr.

About an hour or so ago, Dale Earnhardt Jr. announced that he would go to Hendrick Motorsports starting in 2008 for the next five years. But Budweiser -- which has a personal services agreement with Junior through 2008 and was the primary sponsor of his No. 8 DEI car -- wasn't part of the announcement.

The price will no doubt be steep. Little E's primary sponsorship is worth north of $20 million. But Anheuser Buschhas to do it. Why? Because active NFL, NBA and tennis players are prohibited from having alcohol deals -- so if you want to be associated with an athlete, you have to go NASCAR or golf.

With growth in beer sales stagnant, just like soft drink sales, Anheuser-Busch has to be to be more aggressive than ever. They spent the third most of any company -- behind General Motors and AT & T -- in sports last year ($307 million, according to Nielsen Monitor-Plus). Dale Jr. is a drop in that bucket.

There are two things to address here assuming Anheuser-Busch is still sold on the sport. The first is whether the Budweiser brand -- which has been struggling -- is the right brand to promote. It might be worth promoting Bud Light -- which has been one of the few brands to see measly growth. A critic would say that lights are for NASCAR fans.

Secondly, is it worth it to look at other drivers? I'd say no. True, Junior is in a slump. But I believe NASCAR fans are only loyal if a sponsor has built up a certain amount of loyalty. To sign another driver would mean years of buildup before return and investment could be realized.

Questions? Comments? SportsBiz@cnbc.com

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