League to bring U.S. back to velodrome AutoTrader.com renews with NBA Breaking Ground: NHRA looks to Paciolan Nike’s Converse sues 31 companies PowerBar narrows sponsorship focus From the Field of Information Management Roc Nation in acquisition mode End the one-size-fits-all approach How brands can reach the two Brazils Pete D’Alessandro
Despite the threat of work stoppages in the NFL and NBA this fall, TV network executives are expecting a strong upfront selling season this spring — including in the NFL marketplace.
NFL partners, including Fox and ESPN, say they already have started talks with potential advertisers and expect the league’s telecasts to be well sold by early June and could match last year’s record pace.
“It’s business as usual from our perspective,” said Ed Erhardt, ESPN’s president of consumer sales and marketing. “We can’t control what will happen with labor. Advertisers have told us that they are planning to buy the NFL and NBA. We’ve already had conversations about what that should look like.”
The upfront selling season — when advertisers buy annual TV schedules — typically starts in the middle of May. Most business is written in early June and sets the tone for the rest of the year.
The NFL ad sales market, in particular, is an important one for TV networks. NFL games were the highest-rated programming on television last year, with NBC’s “Sunday Night Football” finishing as the top prime-time broadcast show during the last NFL season and ESPN’s “Monday Night Football” finishing as the top cable show. For the past two years, the NFL market has moved before the rest of the overall TV market, essentially setting the pace.
“There’s a lot of money in the NFL market during the upfront buying process,” said Jon Diament, executive vice president of Turner Sports Ad Sales, whose networks do not have NFL games to sell.
One reason network executives are convinced the upfront market will be strong is because inventory in last year’s scatter market was so tight. Advertisers that bypassed the upfront for last year’s scatter market wound up paying 30 percent to 40 percent more for spots in the scatter market, network executives said.
Ad sales are cyclical. When the scatter market is tight, the following upfront generally will be strong. Conversely, when advertisers find deals in the scatter market — as they did during the recession — the upfront market generally will be weak.
“We’re looking at business as usual,” said Neil Mulcahy, Fox Sports executive vice president of advertising sales. “We’re optimistic that things move ahead, and we have to keep moving forward.”
The NFL and NBA labor situations are causing some confusion in the marketplace, but several network sales executives said they are having no problems finding early interest in the games.
Network sales executives say they expected the NFL upfront marketplace essentially to be set by the beginning of June, meaning that there would be only limited inventory in all NFL windows, including Sunday afternoons. They say advertisers still are putting money down on the NFL because they don’t want to lose access to the programming, and are optimistic that there will be games.
Problems will occur if the NFL misses games. Because NFL ratings are so much higher than the rest of TV, it’s impossible to offer make-goods on games that are not played. Sources say the networks are prepared to refund money to advertisers for lost games, sources said.
Some advertisers have talked about hedging their bets by buying time in other fall sports, like college football, MLB’s postseason and NASCAR.
“Nobody is buying in place of the NFL. They are buying to hedge their bet on the NFL,” Erhardt said. “There’s nothing that would lead me to believe that sports would have anything but a very strong upfront.”
Network executives expect the auto category to continue to set the pace for the market. The insurance and telecommunication categories also are expected to stay strong.
As he shopped the pay-per-view rights to Manny Pacquiao’s upcoming fight against Shane Mosley, the president of boxing promotions company Top Rank sent a set of basic financial terms to the three networks that play prominently in boxing: HBO, Showtime and ESPN.
He also asked the question that would frame Top Rank’s choice: What, from your vast spread of media holdings, would each of you provide to raise the profile of these fighters and this fight?
He wanted to know what HBO would deliver from Time Warner, and particularly from the Turner networks; what Showtime could find from across the realm of CBS; what ESPN could bring from Disney and ABC. Promotion of pay-per-view long has been driven by exposure offered by cable outlets and satellite providers, and by the premium channels that, while appreciated for their checkbooks and their air time, reach no more than a quarter of U.S. TV homes.
Todd DuBoef and his boss, Top Rank Chairman Bob Arum, wanted more.
“The currency was the audience, not the dollars,” said DuBoef, the president of Top Rank. “How do I make my product more available?”
“You layer in things and then you see: This is what we have; this is what we could have.”
DuBoef said he heard nothing of note from ESPN and little from HBO that he hadn’t heard before. But from Showtime, often seen as the underdog tugging at HBO’s hem, came word that CBS was willing to talk. The deal that emerged is unlike anything boxing has seen.
Will CBS’s experiment change boxing on TV?
“It’s all that CBS can bring to bear, including 115 million homes — I gotta give it a chance,” DuBoef said of his decision. “How could we not do it?”
“Top Rank was used to doing it the way they did it at HBO,” said Ken Hershman, executive vice president and general manager of Showtime Sports. “My pitch to them was you’re taking more of a risk trying to go through that same infrastructure time after time. It’s not growing the buys. They’re up and down and up and down. I felt like business as usual was more of a risk to them than coming our way and exploring this new opportunity.”
Thirty years ago, Seth Abraham changed the landscape of boxing as head of sports at fledgling HBO. Charged with landing high-profile sports programming to attract subscribers, Abraham offered fight promoters the allure of Saturday night prime time, backed by rights fees far larger than those offered by the traditional networks.
All the glitzy fighters were gone from CBS, ABC and NBC by the 1990s, residing instead on HBO and Showtime. Before long, all their biggest fights would air live exclusively on pay-per-view. The premium channels expanded their subscriber base and the fighters and promoters fattened their wallets. But the profile of the sport dwindled, a fact that all the stakeholders bemoaned but none effectively addressed.
And then, late last year, along came Top Rank with a proposal and in came CBS.
“I think this is the most important fight, out of the ring, in 20 years,” said Abraham, who served as president of HBO Sports until 2000, then worked as chief operating officer and president of Madison Square Garden through 2003. “There could be enormous consequences.
“If the pay-per-view rate is meteorically higher, you have to assume it had a lot to do with the promotion on CBS. So if CBS really impacts the buy rate for Top Rank, if the delayed broadcast on Showtime is a big success, I think what you’re going to see is that NBC/Versus will pay more attention, ABC/ESPN will pay more attention, and Fox and FX and their regional networks will pay more attention. If CBS and Showtime are successful for Top Rank, then I see a completely different boxing landscape that HBO will be facing.
“It’ll be a real slugfest for every important fight.”
When describing the potential audience for a fight, Abraham parcels it into three: The rabid, the adamantly disinterested and the broader sports fans, who drop in and out of boxing depending on whether they view a fight as a major event.
“You have the ones you’re always going to get, the ones you’re never going to get, and then the group in the middle, which is the group that really matters,” Abraham said. “The sports fan will watch Ali, will watch Tyson, will watch Manny Pacquiao. For most fighters, they don’t care and they won’t watch. But they watch big events. So how do you best use the resources of Time Warner, or in this case CBS, to convey that this is a big event?”
HBO’s creation of a “24/7” franchise that takes viewers behind the scenes with fighters and their camps in the weeks leading up to a big PPV was a game-changer for the network. It frequently credits those shows with creating or reviving fight fans and resuscitating sales of the fights, the larger of which now generate upward of 1 million buys and eclipse $50 million in revenue.
HBO’s shows are, for the most part, available in fewer than 30 million homes. One school of thought says taking the Showtime “360” show to CBS, which is available in 115 million homes, should increase buy rates. Skeptics point out that the impact of that exposure could be deadened by the stiff $55 to $65 PPV price.
There is no debate over the unprecedented quantity of promotion that CBS has delivered. The Final Four is a sporting showcase. Even though Saturday traditionally is the least-watched night of the week, it’s still a network prime-time slot for a “Fight Camp 360” dedicated entirely to the fight.
“That’s really a lot of prime real estate, beachfront real estate,” said Kelly Kahl, senior executive vice president of CBS Primetime, who has programmed the network’s nightly lineup since 2001. “Now we have to translate this enormous reach into buys. Step one is letting them know the fight is there. Step two is getting them to click the button. Time will tell, but we’re certainly hopeful.
“I think everyone is looking to see whether we can move the needle.”
‘The death knell for boxing’
When CBS Sports lost the NFL in 1994, Rick Gentile was executive producer. He thought boxing’s popularity among men would make it a natural replacement for pro football. Gentile met with Abraham, asking whether HBO might want to combine with CBS on fights. HBO would get broader exposure for some of its boxers and CBS would get programming to fill its void. Abraham told Gentile he was interested.
“I went back to CBS excited, and our sales executives shot me down in about a minute,” said Gentile, who now serves as director of the Seton Hall University Sports Poll. “I saw that, and I saw what HBO was paying for fights, and I knew it was over. … It was the death knell for boxing on the networks.”
It was the departure of sponsor Budweiser in the mid-’90s that eventually booted boxing from the air at CBS. Reminded of the brand’s exit, the man who long ran sports marketing for Anheuser-Busch, Tony Ponturo, flashed back to the way Bud got into boxing. It was as a favor to R.J. Reynolds, which had signed a one-fight deal with Don King but feared it might run afoul of federal tobacco ad regulations. A-B agreed to take its place.
“I woke up one morning and we had a full-page spread in SI of the fight, with the Bud logo as big as a house,” Ponturo said. “If you can get an advertiser in and they have a good experience, you can get them hooked.”
Gentile saw Arum recently and reminded him that, regardless of the interest he might build in Pacquiao, the networks would not move back into boxing unless they could attract sponsors. “I got sponsors,” Arum told him.
“I think Bob is right in every way when he says this could be the kick-start,” Gentile said. “Having said that, I can see the corollary. Nothing could happen. We’ll see.”
Also in this issue: Hewlett-Packard signs Pacquiao for new table campaign.
At least four senior staffers have left EA Sports’ Tiburon development studio in Orlando, production site for “NFL Madden” and several other prominent video game titles, to join Row Sham Bow, an online gaming startup founded by former company executive Philip Holt.
Holt, who was Tiburon’s general manager until January, is building a non-sports gaming outfit “focused on direct-to-consumer platforms” such as Facebook and other social networks. Joining him in recent weeks from EA Sports have been Ian Cummings, “Madden” creative director and one of the more prominent public faces of the franchise; EA Sports chief technical officer Richard Wifall; software engineer Christopher Staymates; and chief software architect Nick Gonzalez. Row Sham Bow ultimately plans to expand to 60 employees.
“Our focus is on an entirely different demographic and set of platforms than those that constitute EA Sports’ primary business,” Holt said.
EA Sports executives branded the personnel shifts part of normal industry attrition, and several key “Madden” developers at Tiburon remain in place, including longtime executive producer Phil Frazier.
“The [gaming] community was shocked” by the executive departures, said Cris Benson, operator of The Fantasy Football Informer, a football fan blog focused on gaming. “However, most ‘Madden’ fans felt that the departure of Cummings could open the door to a new creative perspective.”
NFL executives said they have been notified of the personnel moves.
“We are aware of the changes,” said league spokesman Greg Aiello. “EA has been and will continue to be a great partner of the NFL,” he said, adding that the league has had no contact with Holt’s new company.
The moves come as part of an unusually frenetic period of activity for the “Madden” game, still nearly four months away from retail release. EA Sports last month shifted its traditional “Madden” release date of the second Tuesday of August to Aug. 30, a move the company positioned as an attempt to more closely align with the scheduled Sept. 8 start of the 2011 NFL season, should it begin on time.
EA Sports for months has steadfastly insisted that it will plow ahead with full development and marketing activities for “Madden” despite the NFL labor dispute. If there is no new labor deal by the time of the game’s release, however, industry analysts have predicted sales of “Madden,” which traditionally have surpassed 5 million, could drop by at least half.
Cleveland Browns running back Peyton Hillis last week won a spirited online fan vote to be this year’s “Madden” cover athlete. The monthlong promotion, representing a marked expansion from a more limited fan voting initiative last year, drew nearly 13 million votes.
Editor's note: This story is revised from the print edition.
NASCAR Chief Executive Brian France believes that sometimes the best way to get the most out of top executives is by lightening their load. That maxim guided him last week as he implemented the largest restructuring undertaken during his eight-year tenure leading the organization.
Paul Brooks, president of NASCAR Media Group, shed several responsibilities last week as NASCAR looked to streamline its business operations and prepare itself for its upcoming broadcast rights negotiations. Brooks will continue to oversee the NASCAR Media Group, but he will relinquish responsibility for NASCAR’s licensing and auto aftermarket divisions. Those groups will now report to NASCAR Chief Sales Officer Jim O’Connell, who will oversee the organization’s first consolidated intellectual property group.
“With some big, big opportunities like digital and so on, we just felt that this was the time to look at everything even more carefully, and we came up with something that I know puts the best people in the best positions to make a high impact for our fans and our stakeholders,” France said.
The additions further Phelps’ role at the organization. The former NFL executive was hired in 2005 as vice president of corporate marketing. He was promoted to chief marketer a year later and charged with overseeing corporate marketing, industry marketing, brand and consumer marketing, sales, business development and The NASCAR Foundation. Last year, he added to those responsibilities by leading an overhaul
By bolstering Phelps’ and O’Connell’s responsibilities, France freed Brooks up to focus on NASCAR’s upcoming broadcast rights negotiations. He will work closely with NASCAR’s newly named vice president of broadcasting, Steve Herbst.
Herbst comes to the organization from CBS College Sports, where he was the network’s general manager, and the NBA, where he had a 19-year career and rose to senior vice president of broadcast and general manager of NBA TV. He will be responsible for managing broadcast relationships with rights holders Fox, ESPN and Turner, and will work closely with Brooks on developing NASCAR’s television rights negotiating process.
NASCAR’s current rights agreements end in 2014. It negotiated its current deals — which total $4.48 billion over eight years — in 2005, two years before Fox, ESPN and Turner took over those rights in 2007.
The negotiations will be complicated by NASCAR’s ratings declines over the past five years. In 2006, after NASCAR finalized its current media deal, it was averaging 7.855 million viewers per race on Fox, FX, TNT and NBC. During last season, the fourth of its eight-year deal with Fox, ESPN and Turner, NASCAR races averaged 5.992 million viewers over 34 races across all the networks.
That means that NASCAR has lost nearly 2 million viewers per race in the past four years, or 23.7 percent of its viewing audience. While Sprint Cup ratings have rebounded somewhat in 2011, they haven’t risen enough to return to the levels of a few years ago. Through eight races on Fox, NASCAR has earned a 5.5 Nielsen rating and 9.6 million viewers, giving it a 3.7 percent increase from 2010 and a 5.9 percent viewership increase.
“We’re pretty pleased [because] just about any metrics you use we’re up,” France said. “We’re not resting, [that’s why] these changes were made. It’s competitive out there.”
France said NASCAR doesn’t plan to launch a network of its own despite recently building a production facility in Charlotte and hiring Herbst, who has experience launching a network.
“We’ve got a unique situation in that we’ve got a relationship with the Speed Channel, which is in 74 million homes, so we’re going to build on that relationship before we consider trying to go a long way around,” France said. “We’re going to make sure that relationship serves the purpose of us having our own network.”
In addition to overseeing the broadcast group at a critical time, Brooks will take on responsibility for building and managing a new “innovation group” that will be tasked with developing new technologies for everything from cars to racetracks to media platforms. He will continue to sit on the board of the NASCAR licensing trust.
“Paul might have had too much responsibility for any one person,” France said. “He’s going to be instrumental in getting Steve Herbst up to speed. Paul’s going to have to sell technology and innovation through the entire industry.”
Last week’s restructuring is the latest in a series of recent shake-ups NASCAR has undertaken as it has tried to position itself more effectively for the future. It evaluated and overhauled its communication group last year in order to create its new integrated marketing and communications division, which is designed to bolster its communication internally and externally with tracks, teams and media outlets. It also has been more proactive in meeting with agencies operating in the sport.
By consolidating the sponsorship, licensing, auto aftermarket and new business development duties under O’Connell, France hopes NASCAR can begin to drive more revenue by delivering more value to existing and new partners. O’Connell has the authority to hire multiple high-level sales executives to assist NASCAR as it looks to shore up its official partnership portfolio and bolster its intellectual property revenue. Its top sales executive, Ted Van Zelst, left the organization last week.
NASCAR’s sponsorship approach has changed considerably under O’Connell over the last several years as it has tried to consolidate categories and sign larger deals with fewer partners. By bringing sponsorship and licensing under one roof, NASCAR hopes to eliminate confusion that used to exist in the marketplace. For example, before its recent renewal with Mars, NASCAR’s licensing group had a licensed chocolate out of Charlotte, which allowed another chocolatier to be affiliated with NASCAR. But its most recent agreement with Mars made the confectioner the official licensed chocolate and official chocolate of NASCAR.
“We’re going to make sure we have consistent objectives and messaging to the marketplace,” O’Connell said. “It allows us to more fully integrate all our assets for partners and create more value and a bigger return for partners. By having consistent messaging and decisions it allows you to do it.”
France began to review NASCAR’s structure in March. He worked closely with Eric Nyquist, vice president of strategic development, and Paula Miller, vice president of human resources, to map out the changes. They consulted members of NASCAR’s leadership team and let management know of the changes last Thursday.
“This is a good step,” France said. “It’s actually a leap for us in terms of what this new management team in their realigned positions will be able to accomplish for us.”
As the NFL appeals to keep the lockout in place, the league is sure to target federal Judge Susan Richard Nelson’s decisions not to hold evidence hearings on whether the players are suffering irreparable harm and whether the players union’s decertification, or disclaimer, is valid, legal experts said.
While most believe the bar is high for the league to get the 8th U.S. Circuit Court of Appeals to overturn Nelson, who ruled to end the lockout, experts of various affiliations said the judge appeared to rely heavily on statements from the players’ side without fully exploring the factual record. While this may not be enough, the NFL is nevertheless likely to contend Nelson failed to consider all the facts in applying the law.
“On disclaimer, Judge Nelson relied on well-developed legal precedent, but the NFL is likely to argue that it was denied the opportunity to develop the factual record applicable to that legal precedent,” said player lawyer David Cornwell, a finalist for the NFLPA executive director position in 2009, who still thinks the NFL has a difficult task to overturn her ruling.
The standard for a valid disclaimer is that it must be unequivocal and adhered to, he said. Only by disclaiming could the players then sue under antitrust law.
“Judge Nelson concluded that the disclaimer was valid, but the NFL may argue that Judge Nelson erred when she did not give the NFL an opportunity to provide facts to show that the disclaimer may not be adhered to,” Cornwell said. That could be viewed as both as an abuse of discretion and as an error as a matter of law, he said.
Similarly on irreparable damages, a necessary requirement to grant an injunction, Nelson relied heavily on affidavits from player agents and former NFLPA player representatives that a lockout in April was a heavy burden. She did not take up league lawyer David Boies’ request during oral arguments that the issue deserved its own hearing.
She seemed to anticipate this argument in her rejection of a stay, writing, “This Court came to that conclusion based on the extensive affidavit evidence submitted by the Brady Plaintiffs [on irreparable damages]. The NFL offered little, if any, evidence to directly rebut the Players’ affidavits, either in response to the motion for a preliminary injunction, or here.”
Some legal experts were troubled by her decision on disclaimer, when she ruled the intent of the union is unimportant as long as it effectively disbands. The league argues the disclaimer is a tactic, but Nelson brushed aside that concern.
For John Goldman, a labor lawyer with Herrick Feinstein, Nelson’s ruling imperils sports labor.
“You are trashing the law on collective bargaining as we know it,” he said. “That just defeats the purpose of having unions and collective bargaining if the union can simply say we don’t want to do this.”
But Steve Bradbury, who argued for practice squad players in the 1996 Supreme Court case Brown v. NFL, said once Nelson accepted the disclaimer, the players had won. If there is no union, there can be no collective bargaining, he said, and so no lockout.
But the point the 8th Circuit may look at is how effectively Nelson factually examined the disclaimer, the experts said. For example, in its appeal last week to the 8th Circuit, the NFL included exhibit after exhibit of player quotes indicating that the decertification was only a tactic and that they still wanted to bargain. Whether that is relevant, the league will contend that Nelson failed to establish the facts before citing the law, the legal experts predict.