SBJ/May 2-8, 2011/Leagues and Governing Bodies

NASCAR realigns execs, eyes future

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.

Phelps
Just as Brooks shed some responsibilities in the restructuring, NASCAR Chief Marketing Officer Steve Phelps added some. Phelps will manage O’Connell’s expanded intellectual property group and oversee a focused digital division led by Marc Jenkins.

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
O'Connell
of the communications division, which he now manages.

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.”

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