SBJ/Aug. 18-24, 2014/Marketing and Sponsorship

Xfinity, NASCAR closer to deal

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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.

Comcast declined to comment. In a statement, NASCAR said, “We anticipate NASCAR will soon be aligned with an outstanding brand that will help take this series to new heights, but out of respect for our current partner and the process, we will not comment on speculation about any potential replacements until there actually is one.”

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.

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