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Volume 21 No. 1

Leagues and Governing Bodies

The merger of NASCAR’s Grand-Am Series and the American Le Mans Series has invigorated the business of sports car racing by creating a unified series with more manufacturer support, team participation, sponsorship revenue and media promotion than anticipated.

“There’s already been unprecedented growth,” said Scott Atherton, president and chief operating officer of the International Motor Sports Association, the sanctioning body behind the new series. “It’s the healthiest [profit-and-loss statement] I’m aware of in this category, and that’s a testament to the vision of [NASCAR Vice Chairman] Jim France. The fans are going to be big winners here as a result of this merger.”

Last year’s Rolex 24 was the last before Grand-Am and the American Le Mans Series merged.
The merger began after NASCAR acquired the American Le Mans Series in late 2012. The acquisition brought an end to more than a decade of competing sports car series. Grand-Am and ALMS spent the last year and a half combining operations, securing sponsorship support, setting a calendar and developing a series of racing classes.

The combined series was named the United SportsCar Championship Series. It held its first race, the Rolex 24, last weekend in Daytona. The race featured four classes: pro-am and GT Daytona Prototype classes, which feature the type of cars in the Grand-Am Series, and pro-am and GT Le Mans classes, which feature the factory BMWs, Porsches, Corvettes and other cars that were showcased in ALMS.

The United SportsCar Series was expected to attract 63 participants for its inaugural race, but it received more than 80 entry applications. It condensed pit space and extended pit lane in order to expand the field from 63 cars to 67 for the race.

“For the first time, we actually have a waiting list to participate,” Atherton said.

The merger allowed NASCAR to eliminate some costs. ALMS closed its office in Georgia and moved most of its staff to Daytona. IMSA also saved money by beginning to use NASCAR’s accounting and human resources staff for support rather than having an independent staff of its own. IMSA’s full-time staff of 35 is 40 percent smaller than the 58 full-time employees who worked at ALMS, which had 33, and Grand-Am, which had 25, before the merger.

In addition to cost savings, the merger allowed IMSA to increase sanction fees for races. IMSA set a 12-race schedule for the season and increased sanction fees between 10 percent and 20 percent for most races and 10 percent for marquee events like the Rolex 24 and Petit Le Mans at Road Atlanta.

Team entry fees were increased “modestly,” Atherton said, because the cost of running a team increased with the new competition specifications.

Combining the series also gave IMSA the ability to increase its sponsorship pricing. It signed a five-year title sponsorship deal last year with Rolex’s Tudor brand. The Tudor deal is valued at more than $2 million a year, considerably more than Grand-Am received from Rolex and tequila Patron paid ALMS annually.

IMSA also kept Patron as a major sponsor by carving out a new presenting sponsorship of the North American Endurance Cup, which includes its four marquee races: the Rolex 24, 12 Hours of Sebring, Six Hours of the Glen, and the 10-hour Petit Le Mans.

The decision to make Rolex’s Tudor brand the title sponsor of the United SportsCar Series was strategic, Atherton said. Had tequila Patron taken that position, it would have been subjected to more federal marketing rules and restrictions placed on alcohol brands, but Tudor isn’t inhibited by that. The brand is using United SportsCar as its primary marketing platform for its relaunch in the U.S. It will begin promotions in earnest at United SportsCar’s third race in Long Beach, Calif.

“They’ve placed their trust in our ability to become the foundation of this relaunch,” Atherton said.

IMSA cut a five-year media rights agreement with Fox last year. Financial terms of the deal weren’t available, but it gives sports car racing its first live broadcast exposure on Fox, which offered two hours of live coverage of the Rolex 24 last Saturday. Other races will air on Fox Sports 1 and Fox Sports 2.

Atherton said the combination of the long-term media deal and sponsorship deals gives sports car racing more stability than it ever enjoyed when it was split between Grand-Am and ALMS. He said the support of NASCAR, which has made IMSA a corporate priority, has been critical to the stability sports car racing has achieved.

“That’s what makes this different,” Atherton said. “Ask Jim France and he would say NASCAR didn’t fully embrace Grand-Am, but the collaboration that’s occurring now is unprecedented.”

Atherton credited NASCAR’s support with helping United SportsCar secure live coverage on Fox and said IMSA staff members have been invited to join senior NASCAR staff meetings for the first time, as well.

He expects United SportsCar to return with a 12-race season next year. IMSA’s growth will come by sanctioning other series, such as the Ferrari Challenge and Porsche GT3 Cup. It will sanction 60 races this year, and he expects it to add more in the future.

“We’re on the threshold of a new era of sports car racing,” Atherton said. “The stability, the sustainability, the positive energy permeates all we do.”

Par might be a good score in the U.S. Open, but the game’s governing body, the U.S. Golf Association, has made it clear that it’s not satisfied with par from a business perspective.

Mike Davis, the USGA’s executive director, has been charged with oversight of the association since 2011 and a new direction has been evident, especially in the last year. The USGA’s controversial new 12-year broadcast agreement with Fox for $93 million a year, almost triple the old deal with NBC and ESPN, led critics in the golf space to wonder if the USGA’s new course had created a rift in the association. Golf Digest called it the “Corporate Guys vs. the Golf Guys.”

Davis, a 25-year veteran of the USGA, said the association needs both — strong golf leadership complemented by a seasoned business side. He talked about the changing dynamics within the USGA, among other topics, during a 45-minute conversation with SportsBusiness Journal’s Michael Smith.

Davis has seen great change at the USGA in his 25 years there.
On the USGA’s new relationship with Fox, which begins in 2015:

DAVIS: For the game of golf to get the “other big network” engaged in the game is a positive. One of our biggest priorities in 2014 is to integrate Fox. Golf is a unique sport to broadcast. You’ve got 18 arenas out there and the announcers have to be very golf savvy. If you don’t know the nuances, the audience will know it. Fox has hired their executive producer, Mark Loomis, and soon they’ll have a lead host and lead analyst. … What’s neat about this is they can focus on our events. It’s not 30 weeks a year where they’re doing golf and the U.S. Open sneaks up on them. They plan on taking their announcers to the site months in advance to learn the golf course, and I’ll be there with them to take them through what we’re trying to do. …
While there may be a new group, in some ways they’ll be more knowledgeable than what we’ve seen in the past.

Do you buy that there’s a tension between the USGA’s golf side and business side?

DAVIS: You’ve got to have both. The people who argue that, well, they don’t understand that we have to continue to grow. When I started at the USGA 25 years ago, we were a golf association and there really wasn’t a corporate way of doing things. Back then, we didn’t have a legal department or a marketing department. There was a skeleton communications department. It was all about golf. We’ve moved to a time where we now have these corporate functions that really do support the golf part. I would argue that golf vs. corporate, well, it needs to be both. … We’ve really focused the last two years on making the USGA more efficient and more business savvy. We have to evolve because now we’re running a $200 million organization.

How will the USGA spend all of this new revenue?

DAVIS: We’ve got a five-year strategic plan. When you think about what the USGA does, it’s national championships and international competitions, it’s governance, jointly, with the R&A, and it’s service to golf, like junior golf and turf grass research and state and regional golf associations. So many people have missed that this Fox deal will not only provide our championships with more broadcast hours and focus, it’s also a game-changer for the USGA financially. We’re not going to shy away from that. People are missing the point that these moneys are going to go back into the game. We’re going to do things that we’ve never been able to do before. As a nonprofit, we’re focused on how best to serve the game and the focus on those three areas. … We’re at a crossroads now with the game of golf, so now that we know our financial future a little better, we can spend money to help the game.

On the men’s and women’s U.S. Open double this year at Pinehurst:

DAVIS: It’s fair to say there’s not a lot of clarity in the golf world as to why we’re doing this. I think a lot of people feel that we’re just saving some money on the operations. While that may be true for NBC or ESPN because they don’t have to pick up and move, really, it’s not a big money saver for the USGA. In fact, it’s not a money saver for us. The whole intent is to take the world’s best women and the world’s best men and compare the two sexes. When you think about it, that’s not really been done before. … The closest we’ve been able to do that was 2007 and 2010 at Oakmont. Three years after the men, the women came in and the whole goal was to set it up like the men, except distances. The whole intent is to showcase the men and the women on a golf course that will be set up relatively the same.

Will we ever see another men’s and women’s double at the same venue?

DAVIS: We will probably wait and see, and assess everything. We want to know what interest it creates from a broadcast standpoint. Will it create story lines that we wouldn’t otherwise get? Also, there are challenges. If you get bad weather week one, what does that do to week two? You’ve got two straight weeks with volunteers, with vendors, with people in the North Carolina area. You also have to realize that you couldn’t do this with most of the venues where we go. You’re not going to Oakmont or Merion or Olympic and say, “We need your place for two weeks.” A resort like Pinehurst, it’s easier to justify because ultimately they’re a business and they look at it that way. It’s promotional for them. It’s different if you’re a private club.