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National Guard to end sponsorship of Dale Jr., IndyCar’s Rahal (UPDATED)

Aug 6, 2014, 9:45 PM EDT

UPDATE (9:45 p.m. ET): Hendrick Motorsports and Rahal Letterman Lanigan Racing co-owner Bobby Rahal have issued responses to today’s news that the National Guard will not continue to sponsor their respective NASCAR and IndyCar teams.

In their short statement, HMS said that the team has a contract in place to “continue the National Guard program at its current level in 2015.”

“We have not been approached by the Guard about potential changes and plan to honor our current agreement,” the release ends.

As for Rahal’s statement, here it is in its entirety:

“We were informed this afternoon that the National Guard will end all sponsorship of motorsports, including both IndyCar and NASCAR at the conclusion of the 2014 seasons. This is obviously very disappointing news to Rahal Letterman Lanigan Racing given the significant incremental brand exposure we have worked to produce for the National Guard in our first season together, including various off-track marketing and advertising programs focused on supporting the mission set forth.

“We will continue to work hard to uphold the honor and integrity of the National Guard throughout the remainder of the season. Rahal Letterman Lanigan Racing would like to thank the National Guard for allowing us the privilege of representing some of the finest men and women, those ‘citizen soldiers’ that protect our freedoms and safety each and every day… as we Focus Forward!”

The National Guard has been one of the most prominent sponsors of American motorsports in recent years. But as part of a planned redesign of its sports sponsorship program, it will sever ties with both NASCAR and IndyCar.

That means the end of their sponsorships with HMS driver and NASCAR superstar Dale Earnhardt Jr., and second-generation IndyCar pilot Graham Rahal.

Both contracts are set to expire at the end of this season according to the Army National Guard’s acting director, Maj. Gen. Judd H. Lyons.

“Significantly constrained resources and the likelihood of further reductions in the future call for more innovative and cost-effective ways of doing business,” Lyons said in a statement released today.

Lyons added: “We believe industry and open competition can help us identify effective and efficient solutions to help us meet our marketing and recruiting objectives within budget constraints.”

This year alone, the Guard spent $32 million on its NASCAR sponsorship with Earnhardt and Hendrick Motorsports, plus another $12 million for its IndyCar sponsorship with Rahal and Rahal Letterman Lanigan Racing.

Earnhardt has enjoyed the Guard’s backing since joining Hendrick Motorsports in 2008, while Rahal and RLL took over the Guard’s IndyCar program this season after it had been with now-defunct Panther Racing from 2009-2013.

However, the Guard’s NASCAR program came under fire in May when USA Today released a report stating that the Guard had spent more than $26 million on that particular sponsorship but failed to sign up a single recruit.

The USA Today report also revealed that out of almost 25,000 recruit prospects that the Guard received through the program in 2012, only 20 of them met the Guard’s entry qualifications – and none of those 20 decided to join.

Despite those numbers, Lt. Col. Christian Johnson, the Guard’s marketing head, maintained in today’s announcement that the Guard racing programs played “an important role” in building brand awareness that “helped us achieve extraordinary recruiting and end-strength objectives over the past decade.”

This year, Hendrick Motorsports has appeared to be working hard to prepare for a post-Guard life. The team has recently brought brands like Nationwide Insurance and DC Comics into the fold, with Nationwide in particular coming on as a primary sponsor for Earnhardt over the next three seasons.

Since 2012, the Guard has drawn down its sports sponsorships to just those in NASCAR and IndyCar while eliminating programs in motorcycle racing and professional fishing.

Today’s announcement from the Guard noted that its marketing budget in the 2015 fiscal year is expected to be about half of what it was in the 2012 fiscal year.

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