Fox hangs tough over NASCAR ad rates

'Most of
those sponsorships are at least three- to five-year deals. We have a number of clients who had them pre-established before the Fox deal, and now they’re going to have to spend millions of additional
dollars.'

Fox hangs tough
over NASCAR ad rates

Hey, look at these numbers. Pay up or shut up.

By Gabriel Spitzer

    When you got it, flaunt it.
    If you are Fox, and you have NASCAR, you flaunt your pretty grand numbers 'neath the noses of advertisers.
     You speak slowly, so as not to be misunderstood: No.
     No, as in no matter how soft the ad market we'd rather dump inventory than slash our rates.
     Even with as much as 20 percent of its inventory unsold, NASCAR is refusing to cut its rates.
     Nor is it backing down from demands that sponsors pay up millions more dollars for broadcast sponsorships. Companies used to get these practically for free, as part of their deals with the racetracks.
    Fox is getting its hardball gumption from NASCAR's rather stellar ratings in a sports marketplace where ratings declines are ubiquitous.
    While other sports have seen their audiences break apart and slip away, NASCAR on Fox is up 23 percent over last year, from an average 5.7 rating, 15 share, to 7.0/17.
   NASCAR races routinely beat up on NBA games, PGA golf and the occasional NCAA Tournament game.
   Two weeks ago, Fox’s Winston Cup Race from Bristol became the first sports telecast in at least seven years to out-rate an NCAA Regional Final game, beating the Temple-Michigan State contest by 13 percent.
   "I think we’re all a little surprised. In the first year of a contract you normally expect a ratings dip," says Hadrian Shaw, a sports analyst at Paul Kagan Associates.
   In key demos, NASCAR on Fox has demolished the National Basketball Association, a key competitor for young males.
   As of the end of March, Fox was drawing 155 percent more men ages 18-34 than the NBA, and 214 percent more men 18-49.
   Fox is using every bit of leverage it can wring out of those numbers to keep ad rates up this year. The network has refused to cave in to pressure to reduce them, even if it means letting large chunks of ad time go unsold.
    The cost of spots has nearly doubled, up to $125,000 for 30 seconds in a typical Winston Cup race.
   Moreover, Fox instituted a major change in the way title sponsorships are sold.
   Sponsors negotiate naming rights for races with the individual tracks, and in the past that has been enough to get plenty of on-air exposure from the broadcasters.
    But in the first year of its contract with NASCAR, Fox is requiring sponsors to make an additional, substantial media buy in order to get mention on television. As a result, some sponsors have pulled out and others are still in negotiations for races later this year. Last weekend’s Winston Cup race had no title sponsor on Fox.
    "Some of the sponsors were shocked or upset by the fact that now they were going to be required to make an ad buy to get the same exposure they had been getting before," says Shawn Bradley, vice president of client services at the Bonham Group, a Denver-based sports consulting firm.
    "Most of those sponsorships are at least three- to five-year deals. We have a number of clients who had them pre-established before the Fox deal, and now they’re going to have to spend millions of additional dollars."
   It is not inconceivable that at some point, if sponsorship costs continue to rise, sponsors may elect to skip the track sponsorship altogether and devote all their money to the broadcast networks.
    Meanwhile, bitter as the pill may be, advertisers heavily invested in sports marketing may have no choice but to acquiesce to Fox’s prices. It remains, after all, practically the only sport whose audience is increasing.
   "With the ratings on fire, they’ve certainly got some leverage there. They’re holding all the cards in terms of setting their rates. And from a TV side, Fox has to find any way possible to recoup its fees, which comes down to advertising. There’s no cheap way to do it," says Shaw.
   Fox’s production team is, understandably, thrilled with the response it has gotten from fans.
   "We needed to get new race fans. We needed the people who normally just tune in to the Daytona 500 to stay with us," says Neil Goldberg, a producer for NASCAR on Fox.
   "NASCAR may have gone on a bit of a decline last year, but here it’s a whole new era. I can’t say it’s going to see the growth it had from the mid-'80s to the present, but now it’s experiencing a whole new growth. You're going to see these ratings sustain, for sure."
    As difficult as the topic is, NASCAR seems to have gotten a boost since the tragic accident that took the life of Dale Earnhardt, one of the sport’s most popular drivers.
    And it seems that, beyond just sensationalism, the event opened viewers’ minds to the human-interest side of NASCAR, an essential ingredient in winning new fans to any sport.
   "We speculated that after that, with everyone so aware, you might get an audience spike. But it’s faded enough to where what you’re seeing now is a true picture of their fan base," says Shaw.

-Gabriel Spitzer is a staff writer for Media Life.

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