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
SBJ/Aug. 4-10, 2014/Leagues and Governing BodiesPrint All
NASCAR has tapped IMG to handle global media distribution through 2024.
IMG beat out eight to 10 competing bidders for the business, including Lagardère, MP & Silva and ESPN, which has managed NASCAR’s overseas TV distribution since 2006.
Financial terms of IMG’s 10-year deal weren’t available, but sources familiar with the agreement said IMG will pay an annual rights guarantee and share sales revenue with NASCAR after it recoups its upfront investment.
NASCAR’s interest in building its international fan base is part of what attracted IMG to the deal.
Photo by:GETTY IMAGES
The decision to tap IMG to manage sales for the next 10 years represents a strategic shift at NASCAR. The sport historically has focused on the U.S. market and concentrated on building its fan base at home, but NASCAR Chief Operating Officer Brent Dewar wants to begin expanding the sport’s fan base overseas and broadening interest in the sport internationally. He believes media distribution is critical to that.
“We have a mature brand here in the United States that has an appeal because it’s about racing,” Dewar said. “We’re the No. 1 motorsport in the United States and we dream of being the No. 1 motorsports brand [in the world]. It’s a lofty ambition. The world is a big place but it gets smaller every day. In that way, the deal is immeasurable in terms of the opportunity.”
Hillary Mandel, who as IMG senior vice president will oversee NASCAR distribution, said, “We’re planting seeds, and we’re going to build a garden here. It can’t just be checking boxes and clearing markets. This is finding and building partnerships on a local level that provides NASCAR with sustaining growth in revenue and audience.”
In its pitch to NASCAR, IMG highlighted its global footprint and international distribution experience. The company has offices in more than 25 countries and distributes the NFL, MotoGP, PGA Championship, AMA Monster Energy Supercross and dozens of other properties across more than 200 markets worldwide.
Mandel said NASCAR’s interest in building its fan base abroad was part of what appealed to IMG about working with NASCAR.
“There’s an inherent challenge because NASCAR has built its reputation as being an American sport,” Mandel said. “The challenge is to take the flag off and help audiences see that this is really great motorsports, best in class and best in the world.”
NASCAR currently is distributed in more than 150 markets by more than 20 broadcast partners around the world. It says its largest TV audiences are in the United Kingdom, Australia and Canada. All of its current international rights, with the exception of Canada, will expire at the end of this season.
IMG will have 650 hours of live programming from NASCAR’s Sprint Cup, Nationwide and Camping World Truck series. It also plans to work with NASCAR to develop shoulder programming and highlights for distribution overseas. Mandel said she expects to sell live programming in some markets and condensed, tape-delayed programming in others.
“We’re going to make this work for the local markets,” she said. “That’s key.”
NASCAR began discussing its international rights with potential bidders at Sportel in 2013. It began a formal request-for-proposal process earlier this year and narrowed applicants to a handful of finalists this spring. It selected IMG earlier this summer.
IMG Sports & Entertainment President George Pyne, who was chief operating officer at NASCAR in the early 2000s, was involved in IMG’s bid. WME-IMG co-CEO Ari Emanuel, who is overseeing the company’s media and events division, consulted on the offer.
Steve Herbst, NASCAR vice president of broadcasting and production, and Sports Media Advisors spearheaded the evaluation process for NASCAR.
The IMG deal comes a year after NASCAR signed a 10-year, $8.2 billion TV rights deal with Fox and NBC for 2015 through 2024. The money NASCAR makes on the IMG deal will be added to the $820 million a year it receives in U.S. rights and shared with the rest of the industry, with 65 percent going to tracks, 25 percent to teams and 10 percent to NASCAR (see related story below).
NASCAR is considering a change to the way it splits TV-rights money among teams in its three top series.
Chairman Brian France said last month that the sport is “rethinking” how it divides TV money among teams with an eye toward increasing the amount given to Nationwide Series teams. He added, “That’ll be something that we will consider and we will look at to make sure that the appropriate values are where they need to be.”
The potential change would come as NASCAR begins a new TV-rights agreement with Fox and NBC next year. The broadcasters will begin paying NASCAR $820 million annually in 2015, a 44 percent increase from the $560 million that Fox, Turner and ESPN are paying this year.
Teams in the Nationwide Series could see a higher share.
Photo by:GETTY IMAGES
The TV money is split across all three series according to a formula NASCAR developed in the early 2000s when it sold its rights collectively for the first time. Tracks receive 65 percent, teams receive 25 percent and NASCAR receives 10 percent.
The money NASCAR teams receive is then split by series. Sources said approximately 93 percent of the total revenue goes to Sprint Cup Series teams; 5 percent goes to Nationwide Series teams; and 2 percent or less goes to Camping World Truck Series teams.
NASCAR is looking at reducing the percentage of TV money that goes to the Sprint Cup teams and increasing the amount that goes to the Nationwide Series. The idea would be to make the percentage reflect viewership and ratings for the two series, according to sources familiar with NASCAR’s plans. The Sprint Cup Series last year averaged a 3.6 Nielsen rating and 5.8 million viewers a race, while the Nationwide Series averaged a 1.2 rating and 1.7 million viewers.
NASCAR declined to comment on France’s remarks and the potential for a change in the way TV money is split among teams.
Sprint Cup teams rely on TV money for about 20 percent of their total annual revenue, so a decrease in their percentage of TV money would have a limited effect on their bottom line. But a change in the split would come at a time when TV money is being discussed throughout the sport.
Sprint Cup teams recently pulled together to create the Race Team Alliance, a business association designed to help teams reduce costs and increase revenue. The group has said it doesn’t plan to lobby NASCAR to change the way it divides TV revenue, but several owners in the past have called for increases in the amount of TV money teams receive, and the organization and NASCAR have had to field several questions about TV revenue in recent weeks.
Under the current formula, Sprint Cup teams are receiving approximately $140 million. That total next year would rise to $190 million for teams if the current 93 percent formula remained in place. But if NASCAR reduced the total money it allocates to the Sprint Cup Series by, say, 3 percent, Sprint Cup teams would share $184 million.
Many of those Sprint Cup teams like Richard Childress Racing, Roush Fenway Racing and Joe Gibbs Racing own Nationwide Series teams, so the losses they incur would be offset by increases in the amount of TV money awarded to Nationwide Series teams. But several Sprint Cup teams wouldn’t be as lucky. Teams such as Hendrick Motorsports, Ganassi Racing and Stewart-Haas Racing currently don’t field Nationwide Series teams. As a result, they wouldn’t be able to recoup any reduction in Sprint Cup-related TV money.
Race Team Alliance President Rob Kauffman downplayed any potential change in the TV split among teams and noted that increasing the amount of money that goes to Nationwide Series teams had the potential to help the sport.
“It’s up to NASCAR to decide how they want to allocate the money,” Kauffman said. “It doesn’t strike me as a very profound change.”
NHL Commissioner Gary Bettman
Photo by:GETTY IMAGES
Bettman’s total compensation in 2011-12, the NHL’s last full season before the lockout, was $8.3 million. Bettman’s base salary for the 2012-13 lockout season was $8,779,042. Payment defined as other compensation was $75,568.
Bettman’s salary has more than doubled over a period that has seen the league’s total revenue increase from $2.1 billion in 2003-04 to $3.6 billion for the 2013-14 season. In the lockout-canceled season of 2004-05, Bettman made $3.7 million.
The 2012-13 season linked with this latest tax filing was shortened to 48 regular-season games. The league posted $2.4 billion in revenue for that season, a year in which the league did not have an NHL Winter Classic or an All-Star Game, key revenue generators for the league.
The annual tax filing covers the NHL’s central business operations and does not include the team-level business that plays a part in setting the league’s total revenue for a season. Additionally, the filing does not include the revenue and expenses of NHL Enterprises or the NHL Network, which are not tax-exempt groups and therefore do not have the same IRS filing requirements.
The NHL declined to comment on the filing, which reported compensation for nine of the league’s top officers, including Bettman. NHL Deputy Commissioner Bill Daly made $2.98 million in 2012-13, according to the report. That’s down $280,000 from the prior year, with Daly having received a $400,000 increase in 2011-12. Chief Operating Officer John Collins saw a $500,000 decrease, to $2.33 million. Collins received $1.75 million in bonus and incentive compensation in 2011-12 that was tied to the league’s business growth.
NHL EXECUTIVE COMPENSATION
Executive Title Compensation Gary Bettman Commissioner $8,854,610 Bill Daly Deputy commissioner $2,988,394 John Collins Chief operating officer $2,334,190 Colin Campbell Senior EVP, hockey operations $1,602,203 Craig Harnett Chief financial officer $1,178,375 David Zimmerman EVP, chief legal officer $855,518 Joseph DeSousa EVP, finance $697,796 David Proper EVP, media strategies and distribution* $694,978 Michael Murphy SVP, hockey operations $659,008
* Proper was named EVP, business affairs in September 2013
Note: For the 12-month period ending June 30, 2013
Source: NHL tax filing
On the whole, the league posted a loss for its business of $71.9 million for the lockout-shortened season versus a loss of $3.6 million the previous season. Expenses rose from $106 million to $113 million, while revenue decreased from $102.5 million to $41.2 million.
As part of the tax filing, the NHL also listed its five highest-paid contractors. The top two were for legal services, totaling more than $16.8 million: Skadden, Arps, Slate, Meagher & Flom at $8.9 million, and Proskauer at $7.9 million.
Among other U.S. league commissioners, Bettman’s salary stands below the compensation of NFL Commissioner Roger Goodell, who was paid $44.2 million in 2012, according to that league’s most recent tax return. MLB Commissioner Bud Selig, whose salary is no longer publicly available through tax filings, is believed to make more than $20 million annually.
The salary of NBA Commissioner Adam Silver has never been made public, just as the salary for his predecessor, David Stern, was not disclosed.
Editor's note: This story is updated from the print edition.
The PGA of America anticipates a jump of at least 20 percent in PGA Championship merchandise sales over its best year, thanks largely to a new model with its vendors.
The merchandise pavilion, which opened this past week at 38,000 square feet, will be the largest for a PGA Championship, and the interior of the giant tent is undergoing a transformation as well, with more on-site branding and marketing than before. The event tees off Thursday at Valhalla in Louisville, Ky., and merchandise sales will extend through the tournament’s conclusion on Sunday.
The PGA’s main shopping hub in the past has been fairly neutral in its décor and fixtures, with no real opportunity for big-brand vendors, such as Ralph Lauren, Nike and the Greg Norman Collection, to dress up their space.
But the PGA of America has changed its approach under Michael Quirk, the senior director of merchandise who came over from the U.S. Golf Association in January 2013.
The PGA of America transformed the merchandise pavilion at the PGA Championship.
Photo by:PGA OF AMERICA
Golf spectators are “much more brand conscious and more brand driven than ever,” Quirk said. “Ten years ago, the male shopper came in looking for a shirt. The biggest decision they had to make was striped or solid. Now, there’s much more of a sense of fashion, brand and the performance fabric.”
With dozens of brands in headwear, apparel and accessories, shoppers tend to get overwhelmed easily, Quirk said, so the PGA is putting more time and expense into creating a better shopping experience.
Quirk’s first move is to expand the space. PGA merchandise tents in the past have been around 30,000 square feet. The tent at Valhalla will be 38,000 square feet.
Each of the 12 apparel and headwear vendors had the opportunity to brand and decorate their footprint. In the Nike shopping space, for example, white walls will be replaced by a barrage of swoosh marks, life-size posters of Tiger Woods and Rory McIlroy, and designated carpet colors that set off Nike’s shop-within-a-shop. The series of Woods and McIlroy posters feature their scripted apparel for the four days of competition, and the corresponding shirts will be for sale in that same space.
“Nike’s new twist really enables us to promote the swoosh and showcase the brand,” said Rick Gielow, Nike Golf’s director of sales business. “Nike is more visible than it’s ever been on the PGA Tour, and the more visible we can make the swoosh, the more authenticity it brings in the golf space.”
The PGA said that vendors will be spending anywhere from $50,000 to well into the six figures to brand their space. Each vendor signed a three-year contract with the PGA, which guarantees the brand three PGA Championships and a Ryder Cup on U.S. soil.
The PGA did not charge the vendors to brand their spaces.
The PGA agreed to ship and store all of the branded fixtures in the pavilion in exchange for a higher royalty. The PGA typically takes 10 percent on logo merchandise, but the rate is 15 percent for on-site sales, which offsets the increase in expenses.
The primary boost in revenue, however, will come from an anticipated uptick in sales. The best year previously was 2005, when the PGA was held at Baltusrol in New Jersey.
“We truly believe the average transaction will go through the roof,” said Quirk, who expects 240,000 to 250,000 spectators at Valhalla through the week.
Quirk said the PGA will do more marketing for the pavilion, including a text-to-win number that will respond with discounts for merchandise.
He also expects the pavilion to be a center of activity with brands bringing in some of their athlete ambassadors for autograph signings. Nike already has plans to bring former NFL kicker Ryan Longwell, and Adidas has plans to feature former University of Louisville basketball player Peyton Siva.