SBJ/December 19-25, 2011/Leagues and Governing Bodies

NASCAR to buy its digital rights back from Turner

NASCAR is close to reaching an agreement to buy its digital rights back from Turner Sports, a move that could see the sanctioning body manage its own digital business as soon as 2013.

Specific terms of the pending agreement were not available, and sources said the deal is not expected to be official until next year. It’s not clear how much NASCAR will pay to reclaim its rights, but sources said it would be in the mid-eight figures.

NASCAR and Turner Sports declined to comment.

NASCAR is the latest of Turner’s digital partners to change its business arrangement with the Atlanta-based company. Sports Illustrated last month announced that it would reclaim oversight of its SI Digital business from Turner, bringing an end to a two-year relationship. Recent talk in industry circles has centered on whether these moves represent a setback to Turner’s digital ambitions.

The move puts NASCAR in a stronger position to sell its media rights, which are expected to go on the market next year. NASCAR’s current eight-year, $4.48 billion media deal with Fox, ESPN and Turner ends in 2014. The company is preparing to put those rights up for sale, and its executives know that any network that bids on TV rights will also want digital rights to stream races online.

Though NASCAR is moving now to reclaim its rights, Turner will continue to run NASCAR.com for at least a year. That will give NASCAR time to build up an infrastructure that can support and manage its digital assets independently. The group will hire staff to oversee the site and likely base the group in Charlotte. The sport’s production arm, NASCAR Media Group, has four floors of studio and production space in a $43 million facility completed as part of its new building in 2010.

Turner plans to be involved with NASCAR even after selling back the digital rights. The deal now being discussed would see Turner continue to handle some business operations, including ad sales, for NASCAR’s digital properties beyond 2014, which is when Turner’s original deal is scheduled to end. The new deal would have a similar structure to Turner’s deal with Yahoo! Sports that was signed in 2008 and allows Turner to sell ads around Yahoo!’s NBA, golf and NASCAR pages.

NASCAR has been looking to reclaim its digital rights for some time. The sanctioning body sold its interactive rights to Turner in 2000. In 2008, it extended that partnership through 2014. But in recent years, NASCAR officials began to regret taking a big paycheck from Turner rather than controlling the sport’s digital future.

Turner manages digital operations for the NBA, the PGA Tour and the NCAA men’s basketball tournament, but NASCAR officials felt they ceded more control to Turner than those properties. That created frustration in recent years, when NASCAR officials realized that the deal — signed years before social media became popular — gave NASCAR no control over Facebook, Twitter or YouTube.

During the last few years, senior NASCAR officials, who declined to speak on the record, complained that the deal was so restrictive that even simple digital initiatives were difficult to undertake. For example, if NASCAR wanted a Facebook page or Twitter handle, it had to get Turner to create or approve them. The sport and its tracks also couldn’t create mobile applications without Turner’s approval.

NASCAR gave up rights that were so all encompassing that Turner had exclusive rights to any video shot at a track during race weekends. When magazines, cable channels and newspapers shot non-race footage at a racetrack, sources said, Turner would seek licensing fees from the outlets before letting them post the videos on their websites.

Even a rights holder like ESPN ran into issues because of the Turner-NASCAR digital deal. ESPN had to negotiate with a competitor, Turner, to get the right to simulcast live races on its WatchESPN application and site rather than negotiate and secure those rights from the actual rights holder, NASCAR. This fall ESPN and Turner fashioned an agreement that allowed ESPN to simulcast Sprint Cup races and Turner to show in-car footage on NASCAR.com during the same broadcasts.

Until that deal was struck, NASCAR officials thought its lack of live online races — standard with some other properties — helped contribute to its drop-off in young, male fans. They also blamed the Turner deal for NASCAR’s social media shortcomings. On Facebook, it has 2.4 million fans while a sports league like the NBA has 10.8 million.

By bringing the digital rights in-house, NASCAR believes that it can better market the sport. NASCAR last summer reorganized its operations to put its digital media division under its marketing department and tabbed Marc Jenkins to lead the company’s digital initiatives. Doing so paved the way to a deal with Turner by making the sport’s digital assets a marketing expense rather than a purely revenue-generating media asset.
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