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IndyCar seeks sizable increase in rights fees

ABC and NBC Sports now hold the series’ rights.
Photo by: GETTY IMAGES
Weeks away from opening negotiations on new media rights deals, IndyCar executives will highlight the sport’s recent ratings gains as the main reason it expects to see double-digit percentage growth.

ABC and NBC Sports are the incumbents, with rights going through 2018. Mark Miles, CEO of Hulman & Co., which owns IndyCar, said talks would start in the coming weeks but would not say which of the networks asked to open the exclusive first negotiation period.

IndyCar consults with Bevilacqua Helfant Ventures on media rights. Miles and Chris Bevilacqua, co-founder of BHV, said that given IndyCar’s upward ratings trajectory, plus the relatively antiquated structure of IndyCar’s current deals, the new deal could have some interesting new elements and interested suitors.

Miles said IndyCar wants a double-digit increase in rights fees, but added that “trying to increase exposure is probably our highest priority.”

IndyCar averaged 1.28 million viewers in 2016, up 10 percent from 2015 and its best since 2011. The number was less than half that — 488,000 — for NBC Sports’ portion of the campaign. But the series retains one of the world’s most prestigious sporting events in the Indianapolis 500, which drew more than 350,000 attendees and 6 million TV viewers for last year’s 100th running.

IndyCar’s current deals are structured differently. ABC’s deal “is more of a traditional rights buy,” Miles said, where IndyCar receives a rights fee and ABC gets to show the Indianapolis 500 and five other events. NBC’s deal “is more of a partnership,” where there are shared expenses and revenue-sharing opportunities, with races shown on NBC Sports Network.

IndyCar’s negotiations come as the traditional media industry is in upheaval, dealing with overall declining TV ratings, a tepid ad market and increased cord cutting. One of the sport’s TV partners, ESPN, went through a round of layoffs in 2015 and is now planning to lay off on-air talent.

IndyCar’s advantage is that it does not have a lot of competition for media rights money right now — it is one of the few big sports brands that is renegotiating its deals. But the talks do come as the new ownership of Formula One looks at the U.S. as a big growth market and will seek opportunities with media rights partners.

Jon Miller, NBC Sports’ president of programming, said in a statement that “we love our relationship with IndyCar” and “look forward to discussing the future media rights later this year.”

Julie Sobieski, ESPN’s vice president of league sports programming, said that “right now, the property is doing really well for us,” and “we’re feeling really good about that future.” As for a possible renewal, she would say only that the network is looking forward to the negotiations.

Fox Sports was viewed by some inside IndyCar as a possible suitor, but a Fox Sports spokesperson said last week that the network has no interest.

Bevilacqua said it could make sense for IndyCar to have only one media partner, which could give that partner incentive to promote the entire season instead of only its portion of the schedule. However, the series isn’t ruling anything out.

IndyCar also is examining how it will structure over-the-top rights. Bevilacqua expects IndyCar to offer robust TV Everywhere rights to whichever partner picks up its U.S. rights. And he said that if talks open to the outside market, IndyCar will test interest among nontraditional players like Amazon, Google and Facebook, and how to handle its international rights, which are now owned by ESPN.

Moreover, IndyCar’s title sponsorship with Verizon expires after 2018, too, which adds another element to negotiations and the way media rights content could be offered.

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