Gordon deal shows Muhleman paying off for IMG
Three-time Winston Cup champion Jeff Gordon severed a three-year partnership with the William Morris Agency in favor of International Management Group, a move aimed at building his endorsement portfolio.
Gordon already trails only Dale Earnhardt in earnings among NASCAR drivers. Including salary, endorsements and winnings, Earnhardt earned $26.5 million and Gordon $17 million in 1999, according to Forbes magazine.
Terms of the IMG deal, which begins immediately, weren't disclosed. Industry sources say the terms are standard: IMG receives a percentage of revenue, estimated at 10 percent to 20 percent, for all deals it produces for Gordon. The contract is a multiyear agreement.
The deal is the latest example of the Cleveland-based sports agency's desire to become a player in stock car racing. It also demonstrates the potential of IMG acquiree Muhleman Marketing Inc. Last year IMG bought Muhleman, a Charlotte-based firm with extensive NASCAR ties, including a longtime partnership with Gordon's race-team owner, Hendrick Motorsports.
"Not long after the IMG merger, Rick [Hendrick] told me Jeff might have some interest in working on his endorsements," said Max Muhleman, Muhleman Marketing principal. "We all got together, discussed the benefits and put something together. Jeff is comfortable with us because of the past relationship. We'll concentrate on his work from our Charlotte office, but we will also use all of IMG's resources to get the most potential benefit for everyone."
IMG and Muhleman are eyeing several categories for new deals, including financial services, telecommunications and a computer-related endorsement. Another likely possibility: a national fast-food restaurant.
Gordon's major endorsements include PepsiCo, Ray-Ban and Close-Up toothpaste. Bob Brannan, vice president at JG Motorsports Inc., which continues to handle all the driver's contracts, merchandise licensing and driving sponsorships, said all of Gordon's endorsement contracts end in 2000. Brannan won't discuss whether Gordon will shed any existing deals. Industry sources say Gordon and Pepsi are negotiating a contract extension.
Earnhardt and Gordon account for 70 percent of all NASCAR-licensed sales. Last fall Gordon signed a lifetime contract to drive for Hendrick Motorsports. That deal doubled his salary to $3 million annually and gave Gordon an equity share in the race team for the first time.
The latest moves come at a time when Gordon is struggling — by his standards — on the track. Crew chief Ray Evernham left late in the 1999 season and Gordon endured the longest winless streak of his career (13 races) before winning at Talladega Superspeedway April 16.
IMG and Muhleman will consult with Brannan on potential deals to ensure a streamlined approach — and to avoid competition with other sponsors. Muhleman said the resources of IMG, whose clients include Arnold Palmer, Derek Jeter and Peyton Manning, will help Gordon, 28, build a stable of blue-chip endorsements for the long haul.
"The thing about Jeff is that he's so young and he's already done so much," Muhleman said. "He's a very 21st-century personality because he appeals to younger people and his business is about speed. It ties into the age of technology — the faster world — we now live in."
ISC RADIO UNIT GAINING SPEED: Motor Racing Network, the radio arm of publicly traded International Speedway Corp., has increased its affiliate roster to 650 stations and reaches 3.5 million listeners weekly with broadcasts of Winston Cup and Busch Grand National Series events as well as specialty programming.
This month the Daytona Beach, Fla.-based network signed on in Chicago, a Top Five radio market. Its affiliate there is WAIT-AM 850, a station that averages 240,000 listeners per quarter hour, according to Arbitron Inc.
"To be able to claim Chicago is a milestone — it helps you sell," said Tom Taylor, editor at radio newsletter The M Street Journal.
David Hyatt, Motor Racing Network general manager, said the network has doubled its affiliate roster during the last decade. He wouldn't disclose revenue, which is not specified in ISC's public documents. Industry analysts peg Motor Racing Network revenue at $12 million to $15 million annually, dwarfing its nearest NASCAR rival, Performance Racing Network. Performance, owned by Speedway Motorsports Inc., generates $4 million a year with a hefty 50 percent profit margin.
"We have plenty of room to grow," Hyatt said. "It could be getting stations to take all of our programming, trading up to bigger stations or making our mark in secondary markets. It's a big job."
Erik Spanberg can be reached at firstname.lastname@example.org.