At Daytona International Speedway in January, a high-performance Porsche Cayman GT4 Clubsport car made its global competition debut as it reached speeds of nearly 170 miles per hour on its way to a third-place finish and a place on the podium.
The sleek racing machine, with its metallic black hood and gunmetal body with a brownish tint, is peppered with advertisements from the types of companies that typically sponsor racing events, such as Champion spark plugs, Continental tires and the French oil company Total. But a prominently displayed sponsor of car number 33—with its name festooned across the hood, grill area and doors—is One Capital Management LLC, a Los Angeles-area independent wealth management firm.
For One Capital, its sponsorship of one of the two Porsche Cayman GT4 Clubsport cars owned by CJ Wilson Racing that compete in the IMSA Continental Tire SportsCar Challenge circuit is a bold, non-traditional attempt to reach a certain market demographic. But it’s also uncharacteristic of One Capital’s usual operating philosophy.
“We as a firm don’t usually do sponsorships like this; it has not been a part of our corporate culture,” says Brad Barrett, managing director at the Westlake Village, Calif.-based firm. “This is our first season with them and we have done three races, and it has progressed from there as a business development angle.”
Specifically, One Capital’s presence in the IMSA paddock has helped the firm forge relationships with key people in the motor sports and automotive industries, and appears to be opening doors for potential business opportunities down the road.
One Capital’s high-profile partnership with CJ Wilson Racing will ultimately produce a sponsorship in the six-figure range. It’s a pricey gambit that most independent wealth management firms wouldn’t be willing to take.
But on a smaller scale, other registered investment advisors have participated in lower-cost sponsorship deals for teams or events as a marketing tool to appeal to specific demographics and, hopefully, attract new clients. A small sample of them suggests the results have been mixed.
Vroom Vroom
One Capital’s path into the world of motor sports was greased by its sports and entertainment group, one of several practices within the firm that also include retirement plans, insurance services, subadvisory work for broker-dealers and a family office, all under the umbrella of holistic private wealth management. The company’s founder, Donald McDonald, is a Canadian who came to the U.S. in the late-’90s to open a private client practice in the L.A. area for Assante Asset Management, with a focus on catering to sports and entertainment clientele. He eventually started One Capital in 2001. Today, the firm has about 1,800 clients with more than $920 million in assets under management.
One Capital maintains a strong cross-border financial planning business in Canada, and its presence both in that country and in the world of professional sports led to an introduction to Danny Burkett of Winnipeg, one of the drivers on the CJ Wilson Racing team. A mutual connection brought together One Capital and Burkett to help with his finances, and it was during a discussion in mid-2015, which also included team owner C.J. Wilson and his attorneys, that things clicked and a lightbulb went on for One Capital.
“It was one of those meetings where it hits you that there is a lot of synergy that you can somewhat quantify but you know it would be a great partnership based on how we do business and how they do business,” Barrett recalls. “Add in C.J. Wilson’s enthusiasm for racing, and it was something we wanted to be a part of.”
Baseball fans should recognize C.J. Wilson’s name: the 35-year-old southpaw pitcher appeared in two World Series with the Texas Rangers before signing a huge free-agent contract with the Los Angeles Angels of Anaheim. He was recently on the disabled list with shoulder problems and was making rehab starts in hopes of rejoining the team by midseason. Fans also might know him from the Head & Shoulders commercial where he’s in his Angels uniform and a pretty woman is enraptured while sniffing his thick brown mane.
For Wilson, his racing team is a way to promote his post-baseball career plans in the automotive retail business, which includes the recent opening of his McLaren dealership in Scottsdale, Ariz.
The IMSA Continental Tire SportsCar Challenge where CJ Wilson Racing competes is overseen by the International Motor Sports Association, the NASCAR-owned sanctioning body of sports car and endurance racing in North America. According to CJ Wilson Racing’s spokesman, the team competes in what is effectively the second tier of professional sports car racing, or the “AAA” level in baseball terms.
Porsche’s Cayman GT4 Clubsport cars that power the CJ Wilson Racing team are the racing version of the Cayman GT4 line, which is a mid-engine car that’s important to Porsche’s longer-range plans as it expands beyond its long-standing rear-engine 911 platform. The IMSA Continental Tire SportsCar Challenge is where automakers—Porsche, Audi, BMW, Aston Martin and others—race their high-performance sports cars.
One Capital’s involvement in this milieu of high-powered cars is letting it rub shoulders with high-powered individuals. “Auto racing is like horse racing in that it’s a ‘sport of kings,’” Barrett says. “The sponsors are corporate businesses who have relationships with the team, and it’s not just the sales guys who are there but the CEOs, too—it’s a hands-on interest sport, so the connection points in the paddock are amazing.
“For example,” he adds, “we have been in discussion with a company regarding their retirement planning, and a major sponsor of IMSA—which is the race series—happens to be the parent company. So when it comes to seven degrees of separation, this happened within the first month of being involved with the race team.”
Auto racing fans are passionate about the sport, and they tend to be a wealthier demographic favored by One Capital. So when magazine articles profiling CJ Wilson Racing and its cars appear in automotive and racing trade publications, or when pictures of the number 33 racing car plastered with the One Capital Management name flash across social media, it’s free marketing for the company.
Plus, One Capital’s involvement in auto racing could potentially expand its existing sports clientele that’s focused largely on the National Hockey League and golf.
Barrett says One Capital didn’t go into its sponsorship as a one-year deal. “Our thought was this is a team we want to be involved with long term—it’s really exhilarating, and this is coming from a guy with no racing background whatsoever.”
Pink Wheels
RiverPoint Capital Management in Cincinnati last year began sponsoring a sporting event involving different sorts of wheels—the Women’s Racing Project, which started in 2015 as the first Cincinnati-based women-only, USA Cycling-recognized cycling team and has since expanded to include women from other parts of the Midwest.
Valerie Newell, RiverPoint’s chairman and managing director, says her firm likes its sponsorship of this team for two reasons. First, she notes, bicycle racing is a male-dominated sport, and her firm, where 40% of the wealth advisors are women, is also competing in what’s traditionally been a man’s world.
“We decided we want to support women in our same situation in that they’re competing in a male-dominated situation—for them sports, for us the investment advisory business. We felt a kinship to them and wanted to support them,” Newell says.
Second, Newell says RiverPoint likes cycling from a demographic perspective in that it tends to attract higher-net-worth people. “It’s an audience we like to get in front of,” she notes. “Also, it’s a nice demographic from the standpoint of younger professionals such as millennials—as well as baby boomers. We like to get exposure to ambitious, highly driven millennials who are on their way to becoming successful people in our community.”
Newell says RiverPoint’s financial contribution to the team is less than $5,000 a year for its one-year-at-a-time sponsorship. She adds that while she’s excited about the sponsorship, it’s hard to quantify how exactly her firm—which has roughly $2.1 billion in AUM—has benefited from the exposure.
“It’s rare when you participate in something like this that you can say ‘this involvement led to this exact client,’” she explains. “But the way we approach this isn’t ‘we’re going to get a client from this.’ We look at it as this feels good for us as a firm to be supporting something like this. It speaks to our culture of competition and our culture of supporting females in a male-dominated business, and giving back to the community is important to us as a firm.”
Small-Scale Success
Rob Siegmann’s initial foray into sponsoring an event was, in his words, a big disappointment.
Siegmann, a principal and chief operating officer at Total Wealth Planning in Cincinnati, a firm with about $360 million in AUM, says his company has a great partnership relationship with a community foundation located in one of Cincinnati’s affluent suburbs, which helps the firm meet its clients’ philanthropic needs by setting up vehicles such as scholarship funds and donor-advised funds.
The foundation helps donors and groups organize community events, including an annual 5K run. Total Wealth Planning this year paid $5,000 to be a headline sponsor of that run, but that fact seemed to be lost on the event’s organizers (who weren’t the foundation staff). “We hoped to get some publicity and name recognition for our $5,000 investment, and we haven’t seen anything,” Siegmann says. “They sent around social media and e-mail blasts about the event, but there was no mention at all that we were a headline sponsor.”
Siegmann realizes there’s always the unmeasurable impressions and name recognition that might pan out down the road, but that doesn’t ease his consternation about wasted money and wasted opportunity. “If I wasn’t the one writing the check, I wouldn’t have any idea that we were involved,” he says.
“Before you sponsor some event, make sure there’s a good, dedicated management team behind the event who knows what they’re doing and knows how to get good use of value for your sponsorship,” Siegmann advises.
On a happier note, his firm in May found more success sponsoring a low-key, yet important event—a shredding day held on a Friday at his company’s parking lot.
“We organized the event and paid for the shred truck and a guy serving shredded barbecue,” Siegmann says, adding that Total Wealth Planning reached out to the community newspaper and via newsletters and got good publicity for it.
“This is our first year and had just under a hundred people come and recycle more than 10,000 pounds,” he says. “Maybe 10% to 15% of the people who came were clients. All in, it was about $1,500 [to sponsor]. When talking about getting bang for the buck, this was something we could control that was providing a valuable service for the community and it got us more publicity than a $5,000 check that we wrote.”