SBJ/September 1 - 7, 2003/This Weeks Issue

Action sports universe poised for upheaval

The action sports landscape could soon undergo a dramatic shift, as both the Gravity Games and the Vans Triple Crown series are straining to define their future while their television partner, NBC, is trying to lay the foundation for its own property, which could launch as early as next year.

The Gravity Games is in serious flux, as Primedia recently informed equal partner Octagon that it wants out of its ownership stake in the money-losing event, according to both companies. Its new role will be determined over the next 60 days, but Primedia Television CEO Jim Ritts said it could retain a smaller equity stake.

Meanwhile, Vans continues its yearlong effort to sell its Triple Crown series after several near-deals with Park City, Utah-based Evolve Entertainment fell through. Industry sources have said Casey Wasserman, owner of action sports management group The Familie and the AFL Los Angeles Avengers, has emerged as the leading bidder for the series, which features 18 events in 2003. But Wasserman said only, "I don't confirm deals before they're done."

Wasserman's goal of developing a significant action sports portfolio is well known, and he is close to purchasing Phoenix-based Action Sports Management, according to Steve Astephen, CEO of The Familie (see "Purchase of action sports firm near ").

Vans has been seeking a buyer for its Triple Crown series of events.
Vans director of strategic alliances Mark Livingston refused to comment on negotiations for the property. Mitchell Edwards, CEO of Evolve Entertainment, said he feels his company is still in the running.

NBC is a player in all of this, as both Vans and the Gravity Games buy time on the network for their broadcasts, and NBC produces the Gravity Games and six of 10 Triple Crown broadcasts. While NBC's deal with the Gravity Games ends with this month's event in Cleveland, sources said NBC has looked into acquiring a stake in the property. The Vans/NBC deal goes through 2004.

NBC adds to the intrigue with its own proposed venture. For several months the network has been making presentations to event managers and venue operators such as Comcast-Spectacor and Anschutz Entertainment Group, gauging interest in a multi-event series that would be owned and televised by NBC but managed at the venue level by the various operators. In essence, NBC would be a licenser, and the plan conforms to the network's goal of owning more of its own properties.

Some who have seen the proposal are impressed with the idea — and with the network's secrecy. "They made the presentation and didn't leave a single scrap of paper behind," said one action sports marketer.

Primedia’s desire to exit has Gravity Games partnership up in the air.
Jon Miller, NBC senior vice president of programming, declined to comment on a new venture. He did say the network is interested in being a part of the Vans Triple Crown beyond the current contract, and didn't rule out extending the Gravity Games deal, either. Despite giving both properties discounted rates on their time-buys, the network grosses low-seven-figure sums on the deals and is the only participant in both ventures to currently show a profit.

But with the two top action properties — after ESPN's X Games — unable to secure enough sponsorship dollars to turn a profit, some marketers wonder how NBC can expect its own event — plus its partners' events — to succeed.

In its presentations, marketers said, NBC has said the action sports business will grow enough to support all of the events, especially in a scenario where networks and event producers are sharing costs and playing to individual strengths.

NBC's bullishness on the sports segment stems in part from the good marks it received in its broadcasts of the 2002 Salt Lake Olympics, which it energized by showcasing snowboarding and other action sports. In addition, the International Olympic Committee recently approved the addition of BMX events to the Olympic Games starting in 2008.

Primedia inherited the Gravity Games in its acquisition of media company Emap USA two years ago, finding itself in the unfamiliar role of event owner and manager.

The company's decision to drop its investment in the games reflects its tough financial position, as it has lost $2.25 billion in the last three fiscal years. Sources familiar with the Gravity Games said the property's bottom-line losses are not large, only in the very low seven figures per year on revenue of roughly $10 million a year.

Large media companies willingly endure such losses for a relatively new property with long-term legs. So why the exit move?

"We do have a strong belief in the future growth of action sports," said Primedia's Ritts. "Primedia Television, though, is not in the business of staging events, although staging and packaging sports events is a core business of Octagon. We have put a considerable portion of management time and energy against this, and it's just not the business we're in."

Ritts would not discuss how Primedia would be disposing of its stake.

The biggest challenge for its partner, Octagon, might be building up the games in the eyes of sponsors. The property has had myriad sales teams in its five years as it was shuttled from company to company. At an action sports conference earlier this year, some sponsors spoke highly of the games' efficacy in spreading their message, but a Dodge representative said Gravity had "not been there for us" in integrating Dodge's message on-site and in the broadcasts."I don't know that it's ever been mismanaged, I'm just not sure it's been managed as a property," said Octagon CEO Rick Dudley in an interview last week. "At Octagon, we have proven two things: We can put on a great event that the athletes really enjoy participating in and that the fans enjoy attending and watching, and that NBC showcases it like no one else."

Dudley said Octagon, as owner and producer, will be looking to streamline the Gravity operation to improve the bottom line.

Staff writer Liz Mullen contributed to this story.

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