The Dew Tour is in grave jeopardy following NBC’s decision to shut down its action sports division in December.
Earlier this month, NBC Sports Ventures informed staff at Alli Sports’ offices in Burr Ridge, Ill., and Encinitas, Calif., that their offices will be closed and their jobs eliminated. The move affects between 20 and 30 employees, including Alli President Eric Grilly, sources said. A small number of employees has been offered other positions at NBC Sports in Stamford, Conn.
NBC will eliminate the brand and name of Alli, which operates the 11-year-old Dew Tour, the second-largest action sports property. All remaining parts of the business will be integrated into NBC Sports Group headquarters, the network said in a statement.
The decision comes as PepsiCo and NBC remain far apart in negotiations to extend the soft drink brand’s title sponsorship deal, due to expire after an event in Breckenridge, Colo., in December. Talks continue, but about a year ago, NBC told Pepsi officials that it no longer would stage the events, which includes everything from picking the host city to constructing the complex.
NBC Sports is unwilling to maintain a relationship in which the network shoulders the financial risk of the imperiled action-sports TV industry while Mountain Dew benefits from the branding. NBC Sports Ventures wants a deal akin to its revenue-sharing deal with the obstacle series Spartan Race or the Red Bull Signature Series, in which it owns broadcast rights and handles sponsorship sales but does not stage the event. Sources said a decision on the tour’s future will come in a matter of weeks.
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NBC has told Pepsi officials that it no longer would stage the Dew Tour events.
Photo by: GETTY IMAGES
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Pepsi’s action sports marketing agency, Fuse Marketing, is looking for a third party to handle the staging of the Dew Tour events, leaving NBC to continue as a media and sales partner and Mountain Dew as the title partner. A potential scenario could have existing events be branded as the Dew Tour.
“We will be continuing on as title sponsor of the Dew Tour,” Pepsi said in a statement.
The tour, valued in NBC’s 2011 deal to buy back a stake from MTV at between $40 million and $60 million, has struggled for several years as TV ratings plummeted, sponsorship sales slowed across all action sports, and the target youth demographic abandoned traditional media.
Dew Tour viewership declined 53 percent from 2008, when it averaged 1.13 million viewers over 10 telecasts, to 2014, when 435,000 viewers watched on average across four telecasts.
Many industry experts suggested a TV-centric business model is no longer feasible.
“Now it’s more about action sports as an entertainment property than as a competition,” said Rick Bratman, CEO of action sports event company ASA Entertainment. “Trying to take a stick-and-ball mentality to action sports is a really tough business model. You can create these grand-scale events, but if television is what’s ultimately going to pay for everything, it’s challenging to find seven-figure sponsorship deals to support that when these events are getting a 0.2 rating.”
The August Dew Tour stop in Los Angeles provides a glimpse into the world of action sports as an entertainment/experiential marketing stage rather than primarily a TV competition. There, Mountain Dew sponsored the premiere of “We Are Blood,” a “film celebrating the universal bond created by the simple act of skateboarding,” including a film promotion on its soda cans in a tie-in. Organizers considered the movie branding play a success despite the paltry TV ratings for the competition itself.
Even without the Dew Tour, NBC would still have an action sports schedule. This summer, it cut a deal to carry programming from Nitro Circus, adding to its bucket of action sports that includes Spartan Race, the Red Bull series and Lucas Oil Pro Motocross.
For those looking to stage competitive events, “The question is, Do you have to be on television? In the old days, the answer was yes; now, I don’t think so,” said David Grant, a principal at sponsorship/event marketing agency Team Epic. “That model of sports packaged as entertainment is what made WWE a success, so clearly it’s viable.”
Alli Sports, an abbreviation of the Alliance of Action Sports, was formed after NBC sold a stake of the Dew Tour to MTV in 2008, near the peak of televised action sports. NBC reacquired its stake three years later.
Added Mike Sundet, senior vice president of sports and entertainment marketing at Momentum Worldwide: “Action sports still delivers an audience that’s always been hard for marketers to reach, but it has also always been tough to build scale there.’’
