SBJ/May 9 - 15, 2005/SBJ In Depth

Putting the pieces together

NBC started serious brainstorming on its own action sports tour three years ago. But it was 18 months of road shows and reassessments before the brain trust found itself in front of network brass, hoping to win final approval of the plan for a five-city tour and a commitment of NBC Universal resources.

The meeting took place in December 2003 at 30 Rockefeller Plaza with NBC Universal President Randy Falco and Executive Vice President Brandon Burgess.

“We were really nervous, because they could have said no,” said Kevin Monaghan, vice president of business development for NBC Sports. Representing the tour were Monaghan, senior vice president Jon Miller, president Ken Schanzer and newly hired tour general manager Wade Martin.

“We’d trudged up from the 15th floor to the 52nd, where the president’s council has its meetings, and I have always felt funny about that meeting. What if they said no?” Monaghan said. “But Randy looks at us and said, ‘Why wouldn’t we want to do this?’ Basically white smoke appeared from the 52nd floor that day.”

Falco and Burgess agreed that the tour was smart demographically — targeting a younger audience than stick-and-ball sports — and meshed with NBC’s philosophy of owning sports and entertainment properties where it can.

The Dew Action Sports Tour will debut June 9-12 with live television on NBC and original programming on USA Network, Telemundo and other company properties, lots of promotion from joint venture partner Clear Channel, top athletes, famous bands and high hopes for becoming the first action sports tour with a permanent place in the sports landscape.

The tour is hoping for daily crowds up to 50,000, but these folks won’t know of all the decisions made on the road to Louisville, Ky. (and four subsequent cities this summer). Several involved airy concepts like “vision,” but many were literally ground-level. Like whom to partner with to actually mount and co-promote the events.

After numerous reconsiderations, NBC realized Clear Channel Motorsports was the ideal partner. It already mounted 700 events a year, had extensive promotional media holdings, such as in radio and outdoor advertising, and it knew about a lot of things that could bedevil a new action sports property owned by a New York media company — like dirt used for some of the competitions. “One of the most expensive things is dirt,” Monaghan said. “Clean dirt, dirty dirt. With their events, they know dirt.”

NBC and Clear Channel signed their joint venture deal in early 2004. Dirt came up again in the fall, when Miami and Orlando were vying to be the tour-finale Florida venue. Miami is home to many Universal properties, including marquee venues and Telemundo, which offered promotional advantages following the NBC-Universal merger late in 2003.

But Orlando’s mayor and county chairman had impressed NBC and Clear Channel by pledging full regional support, and they backed it up in small but significant ways. A local developer, Walbro Building Corp., offered to donate 80,000 cubic feet of dirt.

“That was one of the things we thought of creatively that someone didn’t need to stroke a check for, and it had a real tangible value for NBC in being a line-item-mitigating mechanism,” said John Saboor, executive director of the Central Florida Sports Commission.

The dirt details represent the myriad little matters that have consumed NBC, Clear Channel and their partners in the last three years, and especially in the last 18 months, since the venture named Martin its general manager. “These are people that are working from 7 a.m. to 11 p.m. every day,” said Charlie Mancuso, president of Clear Channel Motorsports. “There’s an incredible passion.”

An idea is born

Many of the matters have been more in the nature of vision, however.

NBC executives say the seed of the Dew Tour was planted in 1998, when the network decided not to continue its NFL deal and began “casting about,” as Schanzer put it, for new events to televise. Figure skating was considered, as a link to female audiences, and tennis, too, for having recognizable stars and ready circuits and events.

“I said, ‘That’s interesting … but my kids are fascinated by skateboarding,’” Schanzer said. “’Why wouldn’t we look at trying to go to a different demographic that nobody can reach? It might be crazy, but why not look into extreme sports?’”

ESPN’s X Games were already 3 years old, so NBC didn’t invent the concept, but for a traditional network coming off an NFL relationship, it was a novel move. NBC took a relatively safe route, taking a time buy from the Gravity Games in two deals that carried it through 2003. NBC is the only party that made consistent money — if the others profited at all — during the period, as Gravity’s ownership migrated from Petersen Cos. to EMAP to Primedia and Octagon, and management teams changed almost yearly.

Skateboarder Bucky Lasek is among the athletes who have signed up to compete on the tour.
NBC believed it could stabilize this. According to Monaghan, one year before the Gravity Games deal expired, in August 2002, NBC met with the property and expressed its interest in continuing, but with an equity stake in the games and marketing rights to the production. Gravity Games partners said they would consider the idea, but Monaghan said he heard nothing from them for four months, during which time the property made another management change.

Monaghan won’t disclose what was in the eventual offer, but within a couple of months, NBC was brainstorming its own “Project Action Sports” and planning a road show in which it would make nearly three dozen presentations to ad agencies, facilities groups, action athletes and agents, and marketing agencies.

“Octagon insisted that before we went ahead, that they had done a lot of work on a ‘Gravity Next’ concept, and we promised we’d look at it,” Monaghan said. “But at this point our model had flipped. We didn’t think we needed a [property] partner.”

At the final Gravity Games for NBC, in September 2003, the network informed Octagon CEO Rick Dudley and Martin, then executive director of the games, that it was creating its own property. Four months later, in January 2004, Gravity was sold to Comcast’s Outdoor Life Network.

Today, Dudley said that Octagon made several sincere proposals along the way. He said, “NBC went to action sports school on the back of the Gravity Games, and they decided to apply that knowledge in another direction, and we wish them well.”

See also:
Key moments in the history of the Dew Action Sports Tour

 

Key action sports properties

 

Other action sports properties

 

Turnkey Sports Poll
From startup through this year, the Dew Tour will be a $40 million investment, sources say, a measure of the commitment of its owners and sponsors. The Summer Gravity Games will have a significant presence on Outdoor Life Network, but it won’t have the television profile or sponsorship backing of the Dew Tour.

If the Dew Tour grew and learned from Gravity, it also learned from ESPN’s profitable X Games — and was devised to complement that property. ESPN’s recent trends have been to streamline some in-venue aspects of the domestic Summer and Winter X Games while pumping up the on-air presence and expanding the property outside the United States.

The Dew Tour’s approach is to create a domestic (for now) tour that generates the momentum and excitement of a sports season, with standings and earnings carrying over from event to event. The NBC people liken the X Games to a major golf tournament, and the Dew Tour to the PGA Tour. This also made the sponsorship buy make sense to Mountain Dew, as well, for it’s a longtime X Games partner.

The Dew Tour has also borrowed the X Games’ multiplatform design, especially since the NBC-Universal merger. Dew assets will get on networks like the Spanish-language Telemundo and mun2, in DVDs from Universal Home Entertainment, and on wireless and broadband platforms.

Finding a partner

NBC went through numerous philosophical changes about the tour in the two years between August 2002, when it believed it got a cold reception from the Gravity Games on an equity stake, and October 2004. That was when it announced its five event title sponsors, completing a process that included partnering with Clear Channel, hiring a staff and the agency Velocity to sell the tour, inking Mountain Dew as title sponsor (and acquiring its Free Flow Tour as a grassroots feeder system), and narrowing 15 competitive proposals from host cities to five.

The team working out the details of the tour has handled everything from pitching sponsorships to lining up the right dirt for competitions.
The first official announcement in this period came after almost a year of “road-show” and in-house meetings — the hiring of Martin as GM. Martin came straight from the Gravity Games via Octagon, and he took the NBC job two weeks before the network’s top bean counters approved the overall plan. He said the financial people could have sent tour planners back to the drawing board, but he had no misgivings about taking the job. “It would have been less fun if it was all dialed-in and ready,” he said. “Plus it was so right for what the industry needed.”

Martin had been a tennis captain at Michigan State and entered sports marketing to do tennis. Even though he’d veered into action sports, he didn’t have the stereotypical look and attitude of an action maven. Monaghan recalls the meeting where boyish, clean-cut Martin met NBC Sports Chairman Dick Ebersol: “Dick started laughing at him. Wade’s laughing back and trying to play along, and Dick said, ‘He doesn’t look at all like I figured. I figured Biker Sherlock,’” the dyed-in-the-cotton street luger whose father, Mike Sherlock, had been an NBC sales executive.

But Martin had the smarts and focus to get things done while maintaining credibility with the counterculture of action athletes. When Martin was with the Gravity Games in 1999, the first year that property was on NBC, he and Monaghan had dinner with Dennis McCoy, a top BMXer. Monaghan recalls how green he and NBC were about action sports. At one point in the dinner he suggested a Ryder Cup-style event where U.S. athletes wore red, white and blue uniforms. “McCoy said, ‘We don’t wear uniforms.’” Finally, Monaghan said, “[McCoy] turned to me and said, ‘I don’t want you involved in our sports.’ Then he says, ‘I gotta go. We’re going on a street ride — a true street ride.’ I turned to Wade and said, ‘That went really well.’”

But five years later, McCoy is on board, thanks in part to Martin. “I’m in my 20th year competing and I worked with Wade in a number of capacities,” said McCoy. “I don’t have any concerns that [the Dew Tour] won’t be a first-rate event.”

If Martin is palatable to athletes, so, increasingly, are television and fame. The Dew Tour will have regular air times on weekend days and late nights. “A lot of my friends couldn’t catch me on TV before, because they just weren’t clued in to where it all would air. But this year, around five events, I think it will be easier for them to tune in,” McCoy said.

The decision to hire Martin might be the quickest one NBC made. The decision on whom to partner with to produce the tour was probably the most circuitous. NBC knew it couldn’t run the tour by itself; its first plan was to find a different management partner in each of five cities to run the event. But during the 2003 road show, potential partners kept telling the network that they wanted an equity stake in their event — much as NBC had told the Gravity Games the year before.

NBC went back to the potential partners with this kind of deal, and it was getting close to deals with a small handful late in 2003. NBC executives won’t say who the parties were, but reports at the time had the network talking with Comcast, Anschutz Entertainment Group, Kroenke Sports Enterprises and others.

One group that hadn’t lit a fire with the network was Clear Channel. NBC had discussed the tour with the company’s SFX division, with whom it was ending a so-so relationship on the American Century Celebrity Golf Championship, but “it just didn’t resonate, and in fairness it shouldn’t have,” Monaghan said. “They suggested the motorsports division, but it didn’t seem like a logical fit.”

Shortly thereafter, Mancuso was in New York discussing motorsports programming with NBC, and Monaghan casually mentioned the tour as a long meeting was breaking up. “You could have heard a pin drop,” Monaghan said. “They got it.”

Remembers Mancuso: “Monaghan mentioned this action sports tour and that he had originally brought it up to someone in the Clear Channel family who said there was no interest. I said, ‘B.S., tell me about it.’ I was surprised I hadn’t heard about it, but it was my opinion then as now that we were in the action business already with supercross, and had been in the business of doing a whole series of freestyle moto events.”

In a formal meeting exactly a month later, Jan. 4, 2004, Clear Channel Motorsports made it clear that it wanted to be involved. “They were well along with several other groups, so there was no time to be coy — we just blurted it out,” Mancuso said. Martin, too, remembers that after NBC made its initial pitch, it was Clear Channel pitching from then on. “We had expertise in areas that they didn’t have — live event production and marketing, selling tickets, and that seemed to be their greatest need. I let them know that right away,” Mancuso said.

NBC liked this. Said Martin: “There had been some obstacles in the original independent-owner model, because we were counting on a lot of people [each separate local partner] to do it right. The whole sponsorship model would have been different, too –- with some categories available or not available here, some there. The opportunity to bring it all under one tent was too good.”

Making the pitch

NBC and Clear Channel announced their partnership in late March 2004. Three weeks earlier the hard-core sponsorship pitch had begun. Four of the five founding partners (Panasonic, Right Guard, Vans, Toyota and PlayStation) and title sponsor Mountain Dew were pitched in the first two weeks of a process that lasted well past Labor Day.

The tour’s first meeting with Mountain Dew at the Pepsi-Cola offices wasn’t a formal pitch, but it involved top people from each side. Monaghan recalls that the key moment seemed to be when Miller, the NBC senior vice president, cast Dew’s potential relationship in terms of Nextel’s NASCAR deal, knowing that the brand and John Galloway, Pepsi’s vice president for sports and media, were heavily into NASCAR.

“I gave Jon and Wade a poker face, and as soon as they left, I went and said ‘We’ve gotta have this property,’” Galloway recalled.

This was tricky, because Dew had already renewed with the X Games for three years. Galloway has spoken publicly about the hard sell he had to make internally to get unbudgeted money freed up. It’s safe to say NBC was pitching Coca-Cola

Athletes will gun for a piece of the $2.5 million seasonlong purse and $1 million bonus pool.
at the time — although its executives won’t comment on this — and this had to loom large for Dew. It had revived its brand — and in some ways, action sports — through its action sponsorships over the previous decade, and if a competitor titled the NBC tour, it would be a direct assault.

There was a quiet period after the initial meeting, while Galloway pitched the idea internally. During this time, the tour continued meeting with companies, making 60 pitches in six weeks.

“The sales process in general was just an unbelievable series of roller-coaster rides,” Martin said. “We’d come out of one meeting thinking this is going to work, and after the next it was, ‘Oh, goodness, where are we going to find all the partners?’”

Martin said the lowest point came late in the sales process in Los Angeles, during a 10-week stretch when he and others traveled every weekday. “All the meetings that day went poorly, at a time when we needed to get going with the running of the tour, bringing on staff, finding sites. Ultimately we got the call from John [Galloway] that they wanted to start formal discussions, and that happened at one of those low moments.

Martin
"The sales process in general was just an unbelievable series of roller-coaster rides. We’d come out of one meeting thinking this is going to work, and after the next it was, ‘Oh, goodness, where are we going to find all the partners?’"
Wade Martin,
Dew Tour
“Now the low moments don’t seem like they should have been so low.”

After Dew announced its four-year-plus-option title sponsorship on July 12 — at a reported $3.6 million per year — things moved relatively quickly. The tour received 15 proposals from potential host cities on Sept. 15 and announced Louisville, Denver, Portland, San Jose and Orlando six weeks later. Shortly before that, it had announced its five founding partners, ending a seven-month process. Sources put those deals at roughly half of Dew’s annual fee.

All along, it had been meeting with athletes. A year before, in a planning meeting, Ebersol had asked his colleagues, “Who’s the David Stern of action sports?” There is none, as the athletes belong to no single unifying organization, nor is there a single powerful property for them to unify with or against. Monaghan recalls Ebersol saying, “Get the top athletes.”

Many meetings with athletes and agents ensued, to win over the finickiest of all the tour’s constituencies. One result of the meetings is a prize structure that goes up to 30 deep in some events and puts less distance between first place and others — closer to the PGA Tour pay model that the NBC people touted early in the process. There’s also a $1 million year-end bonus pool beyond the $2.5 million seasonlong purse. McCoy praised these formats as likely to keep athletes trying hard despite an early bad performance.

In a sense, the Dew Tour has seven years of planning behind it and just one month of final preparations before the Louisville debut. So it’s appropriate to ask its executives to scan the horizon. What makes them nervous still?

“The only thing that makes me nervous is will we be able to sell enough tickets, and will the public accept this as a major tour or league, and will it have longevity?” said Mancuso. “We didn’t get into this for the next five years, but for the next 15 or 20.”

If he thinks like an event producer and promoter, Schanzer thinks like a programmer. “I worry about whether we have the patience to let it grow,” he said. “When you launch anything, it’s a newborn, and sometimes takes time to take hold.”

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