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Volume 20 No. 42
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New deal gives Dew a say in running of tour

After years of putting its name on the Dew Tour and letting NBC’s Alli Sports run it, Mountain Dew has negotiated a new title sponsorship deal that will result in a wholesale reinvention of the property and give the sponsor a management voice in its operation.

Under terms of the deal, the Dew Tour will shrink from a seven-stop series with four summer events and three winter events to a three-event series with stops at a beach town, a city and a mountain resort. Ocean City, Md., San Francisco and Breckenridge, Colo., signed on as the host cities this year and next year.

Sources valued the renewal at $8 million to $10 million a year, which means Mountain Dew will pay slightly more for a smaller series than it paid for the seven-stop tour.

The guiding principle behind the change: fewer, bigger, better.

Mountain Dew is paying more for less because it wants to create a premium experience for fans, viewers and athletes. It also will have a seat at the management table alongside Alli Sports executives, which will allow it to weigh in on everything from the quality of TV production and the design of the athlete lounge to the layout of the festival village and whether Alli signs an associate sponsor.

The resulting management structure resembles the relationship between IMG and Nike as the owner and title sponsor, respectively, of the U.S. Open of Surfing. Ken Strnad, Mountain Dew’s director of brand marketing; Mark Rooks, Pepsi sports marketing director; and Vermont-based Fuse, PepsiCo’s agency, will all be involved in Dew Tour management decisions.

“The former Dew Tour was really good for many reasons, but the reality is that action sports tours have not evolved to meet the different needs of athletes and fans,” Strnad said. “We’re looking to evolve and innovate. We’re looking to make the most impactful broadcast, to make it a must-see and must-attend event.”

Alli Sports President Wade Martin said, “The industry has evolved remarkably since we launched in 2005. There’s more events. The stars are bigger and want to go to fewer events. The landscape is more crowded. We looked at that and said, ‘We need to evolve with it.’ We’re not going to worry as much about tonnage and the series and we’re going to worry more about creating grand slams.”

Each stop will go from three-day to five-day events and will be designed to create more of a festival atmosphere by including more concerts, eliminating general admission tickets and consolidating the sponsor village.

There will be more hours per stop on TV as NBC and NBC Sports Network air 11 hours for each weekend, up from six hours per weekend in 2011. There will be 12 hours total on NBC over the three events, three times what aired in 2011, and 12 hours total of prime-time programming on NBC Sports Network, which is up from no prime-time programming in 2011. But the total number of hours of Dew Tour programming will fall from 41.5 hours in 2011 to 33 hours this year.

The number of sponsors associated with the tour will decrease, as well. At its peak, the Dew Tour had 12 sponsors, but the three-stop series will cut that number to seven or eight.

The deal was cut at a time that most of the Dew Tour’s major sponsorships were up for renewal. Each stop will still have a title sponsor, and Toyota, Nike 6.0 and Pantech, the mobile phone manufacturer, are each committed to title one of the three new stops.

Associate sponsors Ball Park and Sony will not be returning. Sony declined to comment, and sources said Ball Park wasn’t asked to return. Alli hasn’t signed any new associate sponsors.

“We’ve reduced the clutter in terms of how many events are on the calendar and reduced the clutter of the number of sponsors needed to support the cost of seven events,” said Rob Simmelkjaer, senior vice president of NBC Sports Ventures.

The revenue model for the tour isn’t changing drastically. Though it’s eliminating some sponsors and making events free to the general public, it will continue to sell premium tickets that offer access to special viewing areas, and it will be paid by city sports and visitor commissions that want to host one of the three events.

Its operating costs will be reduced minimally by decreasing from seven to three events because the dollars Alli saves will be reinvested to improve TV production, hire musical acts and make other enhancements.

The new Dew Tour is a radical departure from what the series was designed to be. When it was founded, tour developers described it as the first “regular season” of action sports where athletes accumulated points over five stops and those points determined who would be crowned Dew Tour champion. Under the new format, there is no more regular season and no more champions. Event winners, for example, will be simply the “skateboard vert winner at Dew Tour Beach” or the “BMX park winner at Dew Tour City.”

“We thought we could build momentum from stop-to-stop-to-stop over time, but in the end, that’s not how fans consume action sports,” Martin said. “They want great, unique content and athletes to always be progressing and evolving. The fixed model we were in didn’t allow for that.”

The idea of overhauling the Dew Tour developed when renewal discussions between Mountain Dew and Alli Sports began nearly a year ago. The conversations began at a time when star athletes such as Shaun White were skipping stops on the Winter Dew Tour and Summer Dew Tour ratings were relatively flat, averaging a 0.5 Nielsen rating and 786,000 viewers over four events last year.

The change to three events will mean Alli Sports will have to reconsider how it sells the Dew Tour. In previous sales calls, it highlighted its five months of events in five different cities as a way for marketers to get more bang for their buck than a one-off event like ESPN’s X Games. But that is a tougher sell with three events in three markets.

“This puts us much closer to the X Games than we’ve ever been,” Martin said, “but there’s room for the X Games and Dew Tour to thrive from a corporate sponsor perspective.”