SBJ Marketing: IndyCar looks to be leaving NBC

“Have more than you show, speak less than you know, lend less than you owe.” -- William Shakespeare, in “King Lear.”

Will this month’s Indy 500 be NBC’s last? NBC Sports Group, which last month walked away from NHL rights after 16 years, is heading down the same path with IndyCar, according to sponsorship and media sources that spoke to SBJ's John Ourand and me. Negotiations between NBC and IndyCar have not broken off -- they still are taking place, a network source said. But both sides are beginning to envision life without the other.

CBS is the likely beneficiary. CBS Chair Sean McManus told SBJ a few weeks ago that the company would look into other auto racing rights when their deals came up for renewal. McManus, whose network will begin airing the Superstar Racing Experience this summer, said, "If auto racing rights come up, we’ll take a good look at them."

IndyCar and NBC signed a three-year deal in 2018 bringing the series to NBC’s various platforms, including the Indy 500, which had been on ABC for more than 50 years. The deal also moved the other IndyCar races exclusively to NBC Sports, whereas they’d been split between NBCSN and ABC for a decade.

But with NBCSN shuttering at the end of this year, NBC finds itself with few options for IndyCar. It’s already said NASCAR, for which NBC owns right through 2024, will move to USA Network. In addition to IndyCar, NBCSN has been broadcasting IMSA races on NBCSN. “Across motorsports, people are wondering what their future is with NBC,” said one source with knowledge of the matter.

This season, IndyCar is averaging a total audience of 719,000 viewers for its first four races on NBC and NBCSN. While down 22% from the start of 2020, which was delayed due to COVID and didn’t start until June, the figure is the best for a spring start to IndyCar since 2014.

Gaining some media-rights clarity could help IndyCar close some bigger sponsorships deals. Penske Entertainment President & CEO Mark Miles last month said he expects IndyCar title sponsor NTT to reach an extension on its original three-year deal by the first half of this year. Miles also said that while Penske Entertainment hasn’t begun discussions with Gainbridge about a renewal of the presenting sponsor role for the Indy 500, there was “outside interest in filling the slot."

It’s one of the oldest debates in sponsorship: Are brands better served spreading their budgets across various properties, including smaller ones they can dominate, or is it more effective for them to buy and activate from the top shelf?

When it comes to buying assets at the top tier of American sports sponsorships, you get what you pay for. At least, that’s the conclusion of a study by North Carolina professor Jonathan Jensen, Notre Dame professor Scott Nestler and others.

Using mathematical modeling, the study developed a “median sponsorship lifetime” measurement. The NFL topped that list at 11.39 years; NASCAR was second at around nine years; the NBA and NHL were both around seven years, while MLS, at six years, finished ahead of MLB’s 5.7 years. The study also found that NFL sponsors have the least likelihood of exiting their agreements in any given year, with NASCAR sponsors just behind. 

Jensen cited the years when MLB and MLBAM sold against each other as a leading factor in MLB finishing behind the younger MLS.

The study also quantifies sponsorship clutter, another much-discussed topic. Add more dollars, or maintain value with the installed base? Revenue vs. retention. According to the study, each incremental sponsor added by a league increased the probability that other sponsors will exit by 3.3%.

“People have always said that the more clutter you have, the harder it is for your other sponsors to stand out,” said Jensen. “Here’s the evidence.”

Also examined was the widespread practice of sponsorship pricing tiers. Certainly, those make league rights more accessible, but at what cost? The study found that secondary sponsors were 79.8% more likely to exit than top league sponsorship rightsholders.

A notable caveat from the past year is that the pandemic has changed some of most elemental assumptions about sponsorship value and the availability of assets, especially those offering branding proximate to the field of play, including virtual and physical signage positions. Many of those were not available before finding “lost value” became the industry’s holy grail. Some sponsorships were also extended for an additional year as a way of “making good” on lost audiences, both at venues and on TV.

Even with those factors as precursors, the study discerned intriguing findings by types of sponsors. Categories least likely to exit league sponsorships (or more likely to renew) are the big-spending auto and credit card categories, all of which tend to park their budgets with large sports properties for decades.

For example, Visa has been an NFL corporate sponsor since 1995; Mastercard has been with MLB for nearly 24 years; Discover has been an NHL corporate patron since 2010. American Express’ NBA ties date back to 1995, but the company sat out for five years in reaction to the infamous November 2004 “Malice at the Palace,” before returning in 2010.

Within the auto category, Chevrolet/MLB is a 16-year legacy; Kia and the NBA is a 13-year relationship; and Honda originally signed on with the NHL in 2007; the NFL has been without an official car since 2019.

The study found that the telecom, financial services and tech categories -- all of which are sliced more thinly than top-grade prosciutto by sponsorship sales types every day -- are the most likely to exit big-league sponsor pacts when they expire.

• Fanatics will manage brick-and-mortar and e-commerce retail operations for the Suns, replacing Dyehard Fan Supply. With the Suns, Fanatics now has “omnichannel” e-commerce/brick-and-mortar agreements with six NBA teams, while administering e-commerce operations for 13 NBA squads.

• Navigate Founder & CEO A.J. Maestas said the NHL threw all of their teams a much-needed lifeline in December when it gave each of its 31 clubs permission to utilize a half-dozen newly created assets. SBJ's Mark Burns reports the NHL and its teams have recouped over $100 million in revenue due to the new inventory. Though nothing has been approved yet, the consensus is that just two of the new assets -- helmet decals and virtual slot branding -- will be available for teams to sell continuing with the 2021-22 season.

• Superstar Racing Experience has its first major non-endemic sponsor in Progressive, SBJ's Adam Stern reports. Progressive becomes the exclusive car and home insurance sponsor for the new racing series. The series, which will have its events on CBS, begins a six-race schedule on June 12. Brian Corcoran of Shamrock Sports & Entertainment has been selling sponsorships for SRX.

• The WNBA's first CMO Phil Cook was named to SBJ's "Five To Watch" for the future of the league. How he builds on the league's support of diversity, equity and inclusion and issues of social and racial justice will be crucial as the league aims to engage new fans and continues to grow as an entertainment and media property.

• As part of our in-depth looking at 25 years of the WNBA this week, SBJ also looked at the biggest business deals in the league's history. Among them: Nike’s 25th season uniforms, the Phoenix Mercury signing the league's first jersey sponsor in 2009 (LifeLock) and AT&T in 2019 becoming the WNBA’s first marquee partner.

• JMI Sports Chief Commercial Officer Paul Archey is the latest subject on SBJ "I Factor," as he talks with our Abe Madkour about the early influences on his career, taking a chance when MLB formed an international division and why it is important for young people to take jobs where they work for someone who can become a mentor. Archey was an SBJ "Forty Under 40" honoree in 2002 while at MLB.