You might buy a series of workout tapes if supermodel Cindy Crawford were hawking them. Similarly, a line of handtools endorsed by Extreme Makeover: Home Edition host Ty Pennington might lure a handyman to splurge. And Goodyear Tire (NYSE: GT ) will probably always get good mileage out of its auto-racing sponsorship.
Yet sometimes, the rationale used to connect a company and its promoter can be far-fetched. J.C. Penney (NYSE: JCP ) , for example, signed up Crawford to promote a line of bedding, rugs, and wall decor, while Abbott Labs (NYSE: ABT ) has Pennington touting its Similac baby formula. (You're not the only one confused by that pairing.) More strangely, rent-to-own industry player Aaron Rents (NYSE: RNT ) has perverted a decades-long sponsorship with NASCAR to pay for the racecar dreams of one of its executives' sons.
With the tab for the racing team now growing to $1.6 million a year -- and Aaron distancing itself from its own industry, dropping the word "Rents" from its name and changing its ticker symbol from RNT to AAN -- investors need to ask whether this is the best use of shareholder money.
For one thing, NASCAR fans and the rent-to-own industry are not exactly demographically aligned. According to industry statistics, the average rent-to-own customer is a white female between the ages of 35 and 44. She's graduated high school and earns between $24,000 and $50,000 a year. NASCAR does have a large female fan base, but it's dominated by male spectators ages 45-54 who hold white-collar jobs and earn more than $50,000 annually.
This isn't any slight against the rent-to-own industry -- just a critique of the grasping nature of Aaron Rents' justification for its related party transactions. As the demographics suggest, even the most loyal NASCAR fans won't necessarily use Aaron Rents' services. This marks the 10th year of Aaron's NASCAR sponsorship, and I'd be far less concerned if that deal didn't seem primarily designed to promote the efforts of an executive's family members.
The company simply shouldn't make shareholders pay for these sorts of flights (or drives) of fancy.