NASCAR Sets Terms for Series

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(from Sports Business Journal, November 18, 2013)  NASCAR is looking for a new sponsor for its secondary series to replace Nationwide Insurance which had been the sponsor since 2008. NASCAR’s asking price is somewhere between $12-$15 million a year for the title of its secondary series, a 20 percent increase above the $10 million in rights fees Nationwide now pays. After the 2014 season Nationwide plans to drop its sponsorship title.

The rights fees are not the only things on the offer table that NASCAR is presenting to perspective sponsors. NASCAR executives are informing potential buyers they want a 10-year deal that includes a media commitment and an activation commitment of more than $10 million, bringing the overall annual total to more than $30 million a year.  According to Repucom, the series delivers $130 million in annual media exposure.

In addition, NASCAR gives buyers of the deal an opportunity to work with two new broadcasters, Fox Sports and NBC.   ESPN had the rights to NASCAR earlier this year, but the rights were were recently taken over by these two new network sponsors. The new sponsor of the series would bear much of the cost of rebranding the series as well as working with the two new network sponsors.

NASCAR is planning to attract some of the brands that looked at the title sponsorship that was available in 2007 before Nationwide Insurance closed a deal. These potential sponsors, all of which all have analyzed this opportunity, include Dunkin’ Donuts, AutoZone, KFC and Subway. Other than those listed, NASCAR is targeting brands in technology, consumer packaged goods and retail categories. However, Subway is likely to be the most promising since it was close to a deal in 2007, but changed its mind after negotiations began.

The downfall of NASCAR’s proposal is the recent decline in viewership in the Nationwide Series this year. Through 31 events, it was averaging 1.7 million viewers per event, a 14 percent decrease from 2012. These declines can be attributed to the departure of big names, including Danica Patrick and Ricky Stenhouse Jr., who recently switched to the Sprint Cup Series full time.   Also, NASCAR changed competition rules for the series. Sprint Cup Series drivers can no longer win the secondary series championship, and fewer Cup drivers are racing in the series as a result.  Thus, drivers are less recognizable to casual NASCAR fans in the Nationwide Series, which in turn decreases the number of viewers of the events.

NASCAR shouldn’t have a problem finding a new sponsor for its secondary series even with the decline in viewership this year.  It is a well recognizable sporting event that still attracts millions of viewers each race. This alone will attract a potential sponsor. However, the increase in price may present a challenge for NASCAR when giving their sales pitch.