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SBJ/September 28 - October 4, 1998/No Topic Name
NBC's NASCAR race may hint at future
Published September 28, 1998
NBC's willingness to shell out about
$5 million a year to broadcast a race from the Miami-Dade Motorsports Complex in Homestead, Fla., and join the parade of networks carrying NASCAR Winston Cup racing offers a reminder of the wealth that TV rights can generate. It also raised a question: How high might those rights soar if track owners begin to package them, as the four major sports leagues do?
In NASCAR, track owners control the broadcast rights to their events. Because the schedule runs through nine months, it's unlikely any one network could commit enough dates to carry the whole package. But the major track owners International Speedway Corp., Speedway Motorsports Inc. and Penske Motorsports Inc. could each put together separate packages that would bring a block of races to a network, a concept that industry insiders have been bouncing around this year.
Penske, for example, owns five facilities, not including its 45 percent stake in Homestead. Together, those run five Winston Cup dates two at Michigan Speedway, one at California Speedway and two at Rockingham, N.C. As a storied track in a major market, Michigan can expect TV rights fees of upward of $5 million for its marquee race when its contract comes up in 2000. California, in the Los Angeles market, also is an attractive TV draw. Rockingham is not.
But Penske might be able to pull in large fees for Rockingham rights if it bundles it with Michigan and California. The sum of the races could generate more revenue than they would separately. It's the same principle that drives the NBA, which is able to sell some of its less desirable, promotional programming to NBC because the network wants to air the Bulls, Lakers and Knicks.
Speedway Motorsports and ISC also control blocks of races and might then sell their events in similar blocks to other networks.
"We've seen what rights fees for hockey and football have done recently," said Greg Penske, president of Penske Motorsports. "Is there the potential that we can package our TV rights? Potentially. But not today."
With the addition of NBC, NASCAR's Winston Cup rights run the gamut of networks that carry sports, including ABC, CBS, ESPN, TBS and TNN. That gives the sport varied exposure, but it also leaves it without the sort of weekly marketing trumpeter that the NBA has in NBC and the NHL will have in Fox.
"We've got no shortage of good carriers," said Brian France, NASCAR's vice president for marketing and communication. "There's some good and some bad in that. Our platform could improve if we streamlined it. We've watched [the rights escalation in other sports] with interest."
NBC's willingness to spend for an untested new NASCAR property also bolsters industry insiders' contentions that this year's stagnation of TV ratings is temporary.
Through 23 weeks, NASCAR's TV ratings were down only a tick, from 5.6 to 5.5. The two largest declines were races in Atlanta and Martinsville, Va., both of which slipped badly because rain forced the races to be moved from Sunday to Monday. The Atlanta race dropped from 5.5 to 2.7. The Martinsville race skidded from 4.8 to 1.8.
Such mitigating factors were among those that led one industry analyst, Dennis McAlpine of Josephthal & Co., to continue to recommend stocks of the four major track operators, in spite of the falling ratings. "Absent these factors, TV ratings for motorsports races are essentially level with last year," McAlpine wrote in a report. "Compared to ratings for other sports carried on TV and network viewing, in general, this is actually a very strong performance. Therefore, we see no reason for concern about the popularity of motorsports."
NBC says it will support its race with the sort of promotional backing that has caught NASCAR's ear, hinting that it will drop in mentions of the race during some of its more highly rated programming its enviable Thursday night lineup.
"We're going to bring the full resources of this company to bear," said Ken Schanzer, president of NBC Sports.
That's attractive to NASCAR, which is fighting to gain broad-based appeal and sees that sort of promotion as an entry to fans it would not otherwise reach.