SBJ/Aug. 18-24, 2014/Marketing and SponsorshipPrint All
Editor’s note: This story is revised from the print edition.
Comcast’s Xfinity is in contract negotiations with NASCAR to become title sponsor of the sport’s secondary series.
The company’s broadband, TV and phone division is considering a five- to six-year deal valued at more than $100 million, according to a source familiar with the negotiations. The potential agreement would see Xfinity pay approximately $9 million in rights fees and $9 million in media and activation in its first year as title sponsor. Its annual spend would increase in subsequent years.
Though discussions have moved into the contract phase and NASCAR executives have begun telling officials in the sport that a sponsorship is done, the deal still faces some obstacles.
Fox Sports and Comcast-owned NBC Sports are slated to split television rights to the series from 2015 to 2024. Sources said that Fox, which declined to comment, wants assurances that Comcast will spend equally on advertising across both of the series’ rights holders, Fox and NBC, and not favor its own company, NBC.
NASCAR and Comcast are addressing other category issues as well.
Provided those issues are resolved, the deal should close and be announced in the coming weeks.
NASCAR’s Chief Sales Officer Jim O’Connell has been leading negotiations for the sanctioning body. Matt Lederer, Comcast senior director of sports brand strategy, is playing a central role for Xfinity, and Peter Intermaggio, Comcast senior vice president of marketing communications, has been involved.
The deal would represent a major accomplishment for NASCAR and fulfill one of its top business goals for the year by delivering a sponsor to replace outgoing secondary-series sponsor Nationwide Insurance, which decided last year that it wouldn’t renew its sponsorship of the Nationwide Series following the 2014 season.
The sanctioning body began its search for a replacement early this year and was asking $12 million to $15 million annually in rights fees, with media and activation commitments taking the total value of the deal to more than $25 million.
A deal of that size would have represented an increase from the approximately $10 million in rights fees that Nationwide spent for its title sponsorship of the series, but NASCAR was unable to find a replacement partner willing to pay more for a series that has seen average TV viewership per race fall from 2.09 million in 2008, Nationwide’s first year of the sponsorship, to 1.75 million this year. The number of Sprint Cup drivers who participate in the series also has dropped in recent years because full-time Cup drivers no longer can compete for a Nationwide Series championship.
Xfinity emerged as a leading candidate for the sponsorship earlier this summer, and sources said the company in July approved a total spend of approximately $18 million in 2015.
The deal was driven at Comcast by Lederer, sources said. He previously worked at Nextel when the wireless company signed its deal in 2003 to become title sponsor of NASCAR’s premier series and was familiar with the benefits of a NASCAR title sponsorship.
Comcast pursued the deal after identifying it as an opportunity to promote Xfinity while also saving money for Comcast-owned NBC, which committed to spending as much as $10 million a year on NASCAR promotion as part of its 10-year, $4.4 billion TV rights deal for the sport. Under terms of most media rights agreements, TV partners commit to spend a certain amount of marketing dollars to promote the sport on an annual basis. Sources familiar with Comcast’s negotiations said that the company could count title sponsorship of an Xfinity-backed series and subsequent promotion of that series toward its NBC marketing commitment.
Comcast renamed its cable, broadband and phone service Xfinity in 2010. The change followed Comcast’s acquisition of NBC and allowed the company to rebrand its consumer services after years of criticism from customers for everything from the price of cable packages to the quality of service.
Xfinity’s NASCAR deal would be the first national sports sponsorship Comcast has signed for its cable, broadband and phone division. It also would be its first deal in NASCAR. Three years ago Xfinity began signing sponsorships of teams in markets where Comcast services are available. It currently has more than a dozen sports sponsorships, including deals with the Atlanta Braves, Jacksonville Jaguars and Pittsburgh Steelers.
Comcast’s Xfinity operates in 40 states, is the nation’s largest distributor and the main cable operator in major U.S. cities with NASCAR tracks nearby: Atlanta, Miami, Chicago and Detroit. Comcast is awaiting FCC approval of a $45 billion merger with Time Warner Cable that would expand its national footprint into NASCAR areas such as Texas and the Carolinas.
In addition to Comcast, NASCAR met with a number of companies in the auto aftermarket category, including Advance Auto Parts and AutoZone.
O’Connell, who spearheaded the sales effort, previously sold the Nationwide deal in 2007 and Camping World’s title sponsorship of the truck series in 2008. He also negotiated Sprint’s recent renewal for the top series through 2016 and Camping World’s renewal for the truck series through 2022.
GMR Marketing serves as Xfinity’s sponsorship consulting and activation agency.
Once blamed for making American kids fat, chocolate milk has revamped its image as a health product through a careful marketing strategy across endurance sports.
The Milk Processor Education Program, which markets the U.S. milk industry, has promoted chocolate milk as a post-workout drink for athletes because it is high in carbohydrates and protein. Milkpep, as it is called, brought its messaging to athletes by signing deals with the Ironman triathlon series, the Rock ’n’ Roll Marathon Series, Lifetime Fitness triathlons, Iron Girl triathlons and a handful of professional and amateur athletes.
The brand’s secret sauce, however, has been to promote endurance sports — specifically Ironman triathlons — to general U.S. audiences through earned media and strategic media buys.
“We are not bringing the masses to Ironman triathlons, we are taking Ironman to the masses,” said Miranda Abney, marketing director for Milkpep. “If [chocolate milk] is good enough for an Ironman triathlete then it must be good enough for all athletes.”
Milkpep’s endurance platform stems from a series of physiological studies in 2006 that concluded that chocolate milk’s carbohydrate-to-protein ratio was ideal for post-workout recovery.
The opportunity came at an important time for chocolate milk, which had been removed from many schools because of concerns over childhood obesity.
“We were catching some heat with the school nutrition thing,” Abney said. “There was a huge drop-off in sales.”
Milkpep pushed its message for several years through print ads and in-store promotions. In the lead-up to the 2012 Olympics, Milkpep ramped up the message through short-term deals with athletes such as Carmelo Anthony and Dara Torres, as well as with USA Basketball and USA Swimming.
It also signed deals with the Ironman triathlon series and Rock ’n’ Roll Marathon Series, which included at-race branding and product sampling at the finish line.
The company hired PR and marketing firm Weber Shandwick to oversee its endurance partnerships. Hugh Williams, a senior vice president at the firm, said he drew on his experience working with Unilever’s Ironman partnership in 2003 to create a strategy.
“Ironman is a niche sport, but there are ways to borrow the credibility of their brand,” Williams said. “People know it is a serious challenge.”
Weber Shandwick’s promotion revolved around retired Pittsburgh Steelers wide receiver Hines Ward, who agreed to train for and then compete in last year’s Ironman world championship race in Kailua-Kona, Hawaii. They dubbed the promotion “Become One” and filmed 13 Web segments around Ward’s training for the race.
In each segment, Ward discussed his training as well as the recovery benefits of chocolate milk. During the shooting he slimmed down from 240 pounds to 180 pounds and discussed the challenges of eating right and training.
Milkpep promoted Ward’s Ironman training with an ambitious print media campaign, as well as television buys across tennis, NHL hockey and Tour de France broadcasts.
“We were under a million spent in TV,” Abney said. “We tried to be efficient.”
Olympian Apolo Ohno, training for Ironman, stars in this year’s promotion.
Photo by:NILS NILSEN
“It opened the doors for new athletes and new eyeballs,” said Carola Ross, World Triathlon Corp. chief sales officer.
For 2014, Weber Shandwick chose retired Olympic
Milkpep worked with its network of local distributors to make its product available at the finish lines for all of its endurance properties, which total more than 100 events.
The endurance deals range from the low-five to mid-six-figure range, and Abney said the company spends at least double that amount activating around the events. But the company is seeing results. Chocolate milk sales were up 3 percent at the end of 2013.
“For us it’s all about endurance now,” Abney said. “You don’t often get an opportunity to reintroduce a product in a new way.”
Fred Dreier is a writer in Colorado.
George Pyne is leaving IMG to start his own sports and entertainment business.
The senior IMG executive has hired Allen & Co. to assist in raising $500 million to fund a limited liability company that will acquire sports, entertainment, media and lifestyle businesses. The investment bank is in the early phases of fundraising, and it’s unclear when Pyne’s new venture will launch.
George Pyne has been at IMG since 2006.
“I have no plans to compete with IMG,” Pyne said. “I love the company, and I really like [co-CEOs] Ari [Emanuel] and Patrick [Whitesell]. I look forward to working with them for years to come.”
In a joint statement, Emanuel and Whitesell said, “George has been a true partner to us these past few months and we’re grateful for all he has contributed to the company and our industry as a whole. We look forward to working with him in this next chapter.”
Pyne signed an agreement in May to stay with IMG through the end of the year, but he began discussions this summer with Emanuel and Whitesell about leaving earlier than he planned. He moved forward with efforts to raise money this month to start his own company.
Pyne has been interested in becoming the head of a company for several years. He hoped to become CEO of IMG in 2011 after the company’s late chairman and CEO, Ted Forstmann, was diagnosed with brain cancer. The CEO position instead went to Mike Dolan.
After the company was sold to WME last year, Pyne remained interested in a CEO role with IMG, but Emanuel and Whitesell took responsibility for leading the combined companies and didn’t fill the vacant CEO position at IMG after Dolan left the company in May to become CEO of Bacardi Limited.
The fund Pyne is raising will allow him to build and lead his own business.
“After working in the business for 20-plus years, this is the next logical step,” Pyne said. “I had a great run at NASCAR. I had a great run at IMG. I want to acquire, own and operate businesses, recruit and lead talented people and develop a culture and business that reflects my values and what I’ve done over time. This is a great opportunity for me.”
Pyne’s departure comes six months after WME closed its $2.4 billion acquisition of IMG. The company, which funded the acquisition with $2 billion of debt, outlined an aggressive cost-cutting plan for IMG that called for eliminating $151 million in costs in the first 18 months of ownership.
In addition to Pyne, WME-IMG Chief Financial Officer Peter Klein and David Abrutyn, IMG senior vice president of consulting, have left the company.
The company has offset those departures by hiring former Microsoft and General Motors CFO Chris Liddell and former Turner sales executive Greg D’Alba as head of global sales. But it doesn’t plan to fill Pyne’s position.
Pyne has been with IMG since 2006 when Forstmann recruited him to lead the company’s sports and entertainment businesses. Those business units, which include consulting, IMG Academy, licensing and client representation, earned $119 million last year.
Forstmann and Pyne built IMG’s college business by acquiring Host Communications, Collegiate Licensing Co. and ISP. The acquisitions helped consolidate the college business and created a new division at IMG that earned $66 million last year.
Endurance obstacle racing series Tough Mudder has signed a 16-month deal with Radisson Hotels, giving North American rights to the hotel chain through 2015.
A source familiar with the deal pegged it in the mid-to-high six figures.
The deal represents another step forward for Tough Mudder, which added supplement company Met-Rx, technology firm Garmin and Monster Energy to its self-titled “official badass” partnership category this year. The category also includes Wheaties, beer maker Dos Equis, the U.S. Army and Bic razors.
More than 700,000 participants tackled the Tough Mudder challenge last year.
Photo by:GETTY IMAGES
“It’s another well-known national brand that has seen value in our property and fan base,” said Dan Weinberg, vice president of partnerships at Tough Mudder. “We believe Radisson will add to the overall experience.”
Final inventory and activation details are still being ironed out, Weinberg said. He predicts Tough Mudder will steer its participants toward nearby Radisson hotels for pre-event breakfast meetings and post-event parties, and that Radisson will offer group rates to Tough Mudder participants.
Weinberg said Radisson will receive branding space in each event’s finish-line festival and advertising rights for the series’ marquee obstacle, “Everest,” a wooden quarterpipe structure that participants must climb.
“Everest gets a lot of digital impressions and Facebook shares,” Weinberg said.
Tough Mudder attracted more than 700,000 participants in 2013, and in 2014 the series is scheduled to hold 38 events in North America. The company has grown consistently since its founding in 2010.
The growth has placed Tough Mudder among the few endurance properties that garner attention from mainstream sponsors. Weinberg said the company is hoping to sign deals in the automobile, consumer electronics and insurance categories.
“We have ambitious plans,” he said.
Stephanie Lopato, brand manager for Radisson Americas, said the partnership represents a new marketing direction for the company. The Minneapolis-based company has no sports deals other than a local deal with the Minnesota Vikings, she said.
Lopato said Radisson hopes to use Tough Mudder to attract young, active customers. The company intends to promote its partnership on the hotel website, across social media and through in-hotel messaging.
“Heads in beds is a focus, but it is not the primary focus,” Lopato said. “We want to get Radisson in front of consumers who haven’t thought of us or stayed with us recently.”
Fred Dreier is a writer in Colorado.
Upper Deck will roll out a new array of Rory McIlroy collectibles in the next month from his wins at the PGA Championship and British Open.
McIlroy has an exclusive arrangement with Upper Deck for autographed memorabilia and trading cards.
The company is working to aggregate pin flags, photographs and clothing items that McIlroy will sign and Upper Deck will sell on its online store at UpperDeckStore.com.
Signed items from McIlroy’s PGA and British Open wins are on the way.
“If you look at our pieces, we’re not doing the standard 8-by-10 photo,” said Jason Masherah, Upper Deck’s president. “We’re looking for items that are much more unique to Rory and his championships.”
Gabriel Garcia, brand manager for Upper Deck’s Authenticated division, takes the lead on acquiring pin flags from the event and clothing items from Nike, which is McIlroy’s apparel sponsor. Photographs often are bought from Getty Images.
Once all of the items are in hand in the next few weeks, Upper Deck will work with McIlroy’s management team, led by Sean O’Flaherty, to schedule a private signing, typically near the home of the athlete. These signings often are in a secure hotel conference room.
McIlroy is one of a small stable of athletes who have exclusive deals with Upper Deck, including Tiger Woods, Michael Jordan, LeBron James and Wayne Gretzky.
“It’s definitely a smaller part of our business compared to trading cards, but it’s growing,” Masherah said of the collectibles division.
Items signed by McIlroy, a four-time major champion, range from $500 for a pin flag from his 2011 U.S. Open win to $20,000 for the actual shirt and pants worn in the final round of his 2012 PGA Championship win.
Despite McIlroy’s torrid summer, in which he won the British Open, the PGA Championship and the WGC Bridgestone, prices for similar items won’t go up. Masherah said inflating prices based on performance is not Upper Deck’s practice.
“We do our best to set the value and protect the value,” Masherah said. “We look at this as an opportunity to expand the portfolio for Rory.”
Masherah said Upper Deck is in talks with a handful of athletes to grow the list of exclusive athlete deals.