SBJ/December 18 - 24, 2006/This Weeks News

Busch will end NASCAR title deal

Busch’s long-running title sponsorship of NASCAR’s No. 2 series will come to an end after the 2007 season, officials from Anheuser-Busch and NASCAR confirmed, and the price is going up.

With ESPN taking over as the sole broadcaster of Busch Series races in 2007 and NASCAR attempting to raise the profile of the series, industry sources estimate that the asking price on the deal could push $30 million a year, about three times what Busch was paying.

Tony Ponturo, A-B’s vice president of global media and sports marketing, said it was his company’s decision to withdraw from the title sponsorship as part of an overall reassessment of A-B’s NASCAR marketing.

NASCAR will work with the ESPN sales force to find a new title sponsor for 2008 and beyond.

“We’re going with ESPN to the marketplace with what we think is a property that has been undermarketed and undervalued from a broadcast standpoint,” said Steve Phelps, NASCAR’s chief marketing officer. “With the new TV agreement and the production quality, the announcers, the resources ESPN is going to put against it, this series is not going to be an afterthought.”

Phelps would not comment specifically on the value, but said any deal would include required spending on media, marketing and activation, as well as possibly a track component. The track component was missing from Busch’s deal.

Even though sales executives from NASCAR and ESPN won’t hit the marketplace until the beginning of January, potential candidates have emerged. Of the companies believed to have an interest, Subway, Wal-Mart and Samsung are expected to make strong plays for the title sponsorship, industry sources said. Others no doubt will enter and exit as the process unfolds.

Subway already has a strong NASCAR presence as a sponsor of Roush Racing and title sponsor of the April Nextel Cup race in Phoenix. Wal-Mart has been reorganizing its marketing efforts recently with new agencies. Samsung was the title sponsor for the Texas Nextel Cup race in April, but Sony currently has official status in that category, so some division might be required.

Phelps said he didn’t have a timetable on the process.

“We don’t have a definitive time line to have a new partner,” Phelps said. “It will be a fluid process. Officially, we will start the selling process in January. We’re in the process of setting up meetings and we’re doing our due diligence with ESPN to determine how we will jointly call on companies.”

Busch just completed its 25th season as title sponsor for the series, which first was known as Late Model Sportsman and later Grand National before it became simply the Busch Series three years ago. Its profile has evolved over the years from what was once a training ground for up-and-coming drivers to a series that features many of the stars from Nextel Cup.

That has led some drivers and Busch team owners to question the identity and direction of the series, something NASCAR will have to address in the sales process.

“We’re going to continue to evaluate what this series represents,” Phelps said, “but right now it represents great racing and if you look at it as its own property instead of little brother, it’s significantly strong and that’s how it needs to be marketed.”

ESPN has said that its production and overall treatment of the Busch Series will rival what it has in store for Nextel Cup broadcasts later in the year. The old TV package allowed for eight Busch races to air on network TV, but NASCAR prefers the idea of ESPN providing a consistent home. The Busch Series was aired by Fox, FX, TNT and NBC over the course of 2006.

Busch’s TV ratings (a 1.7 this year) dropped 5 percent on cable, but it’s still up 21 percent versus 2004.

Busch just completed its 25th season as
title sponsor of NASCAR’s No. 2 series.

While ESPN’s sales office brings its own contacts, it will be there to back up NASCAR’s claims that the Busch Series is going to enjoy enhanced treatment.

“That’s the key,” said Ed Erhardt, ESPN’s president of customer marketing and sales. “We’re two organizations with the goal of taking this property to new heights. There just aren’t that many opportunities out there for this kind of seasonlong, multimedia presence with the ESPN brand. This is one of the few big-time entitlements that’s available in sports.”

Busch’s departure comes at a time when A-B is reassessing its NASCAR marketing. Ponturo said the company has spent the last 12 months analyzing the relationship. A-B has renewed the Busch sponsorship about every five years, he said, and the most recent deal with NASCAR covered the past seven years.

“We don’t want to just be a renewal machine,” Ponturo said.

A-B re-evaluated Busch’s title sponsorship and the way it might compete for space with A-B’s other NASCAR investments: Budweiser is the official beer of NASCAR; Bud is the primary sponsor of Dale Earnhardt Jr.’s No. 8 car; and it owns the title on Bud Pole Qualifying and the Bud Shootout all-star race at Daytona.

According to Joyce Julius, no sponsor received as much exposure in 2006 as the Bud No. 8 car.

“Obviously NASCAR makes a lot of sense and the Bud brand has a lot invested there,” Ponturo said, adding that Busch’s withdrawal will allow the brand to spread out its marketing dollars, as opposed to investing nearly all of it into NASCAR.

“On most weekends, we get a very focused message to the consumer, but we’re starting to dilute ourselves with Bud and Busch. In this day and age of competition, the last thing you want is to dilute your own effort.”

Also, the sense among those in the industry is that the series might have outgrown a value brand as its title sponsor.

The next title sponsor “should be a high-profile brand, a recognizable brand that’s interested in differentiating themselves to the NASCAR fan,” said Steve Lauletta, president of the Radiate Sports Group, whose motorsports clients include Lowe’s and AAA. “The pricing that I’ve heard, with the media support that’s going to be driven by ESPN, makes it a pretty interesting proposition. This is a really viable opportunity to come into the sport and make a big statement in terms of their involvement with NASCAR.

“To me, this is a big, big media buy.”

Ponturo said no one from NASCAR said the series would be better off without a beer brand as the title sponsor, but he admitted that the series will enjoy greater flexibility. In the past year, NASCAR has turned more of its focus toward youth marketing.

“Depending on the next title sponsor, they’re going to be able to appeal to a younger audience as they grow the sport,” Ponturo said. “But I am fully confident that if we had wanted to continue, we could have. It would have been more expensive, I’m sure, but there’s never been any suggestion that we couldn’t.”

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