Case Interview Question #00482: Your client Yates Racing is an American stock car racing team that competed in the NASCAR (National Association for Stock Car Auto Racing) until the 2009 season when it merged with Richard Petty Motorsports. The Yates family owned the team (previously known as Robert Yates Racing) since purchasing it in October 1988.
Yates Racing is the owner of UPS #88, a race car on the NASCAR tour. It races in the Sprint Nextel Cup Series, a points-based championship where points are given according to driver’s finishing placement and laps led and the season winner has accumulated the most points over the course of the racing season. There are 36 races in total, running from February to November. Dale Jarrett, a well-known celebrity driver, races for the team. Dale helped win the Nextel Cup three years ago, and so far this year is eighth in a field of 43 drivers.
A close friend who is the VP of marketing at Home Depot (NYSE: HD) recently contacted the Yates family. She inquired about sponsoring a second racing team with the client. She recognizes that NASCAR is the fastest growing segment among males ages 18-45. She also has talked to a successful driver from a regional drag racing circuit to try out as the driver of the second racing team. The Yates family has hired you to advise them. How would you evaluate the potential of this opportunity?