The Impact of Real-Time Platforms on Sports and TV
As an avid sports enthusiast and social media user, live sports events have provided the ultimate convergence between broadcast media and the real-time web. Watching a NFL game and tweeting with my “Twitter Friends” has enriched the experience and the anticipation of every play – making Twitter a must have viewing companion. And beyond the personal connections and individualized real-time conversations, Twitter provides extended access to professional analysts from print, TV and web properties – adding an extra dimension to the viewing experience. For instance, you no longer must rely on the narrow opinion of the booth announcers to discuss a coach’s challenge or a key decision to go for it on a 4th down – or even just the thrill of sharing your excitement when your favorite team scores a touchdown.
Like most, I generally watch sporting events live; but because of the time-zone of most races I often watch Formula 1 time-delayed via my DVR. As such, tweeting in real-time is not a viable option. This has led me to become more distracted and less engaged during F1 races than prior to my “tweet while watching habit”.
When examining the broader television industry, mass-market penetration of DVRs made many fearful of time-shifting viewing – because viewers often skip over commercial advertisements. While time-shifting provides the ultimate flexibility, it also further alienates users and inherently makes TV less social. I don’t believe I’m alone in preferring to experience my viewing entertainment with others – physically or virtually. People should not have to choose between time convenience and real-time social interactions. Herein lies a major opportunity for innovation.
The discrepancy between my experiences between the NFL and F1 has been a real eye opener to the incredible potential of more personalized real-time platforms to enhance television and movie viewing. While Twitter has become the most widely adopted real-time communications platform, I expect more vertically focused services to accommodate the unique opportunities of the broadcast media industry.
Netflix Streaming: Separating Fact from Fiction
As someone on the front lines of the digital content industry I often hear entrepreneurs, venture capitalists and many tech bloggers speak about the Netflix Streaming service becoming the de facto digital movie experience ultimately cannibalizing Video On-Demand (VOD) or Electronic Sell-Through (EST). While I am a huge fan of the Netflix “experience” that includes streaming to most internet connected devices, I do not believe Netflix Streaming is the “Holy Grail” for digital movies. What I do believe is that Netflix Streaming is NOT a competitor for VOD or EST, but rather is an alternative for Pay TV services such as HBO, EPIX and Showtime.
Digging deeper into the marketplace, one recognizes that the content available on Netflix Streaming is at best equivalent to Pay TV. For further clarification, 80% of DVDs, VOD or EST purchases occur in the first 120 days after the release to DVD – well before the Pay TV window or availability on Netflix Streaming. (Note: New Release DVDs are available for rent on Netflix 28-days after release).
But even more revealing, the available content on Netflix Streaming may become increasingly more difficult to expand. Back in 2008, Netflix signed an agreement with Starz to gain backdoor access to Disney and Sony Pictures’ movies during the Pay TV window. However, the deal expires in 2011 and Disney has recently made a concerted effort to renegotiate its Starz deal to circumvent Netflix’s ability to renew its Starz license. With this being said, it appears difficult at best for Netflix to maintain the Starz relationship and its considerable portion of the content available for streaming. Conversely, if Netflix is successful in renewing its license with Starz my estimates would place the licensing cost at upwards of $300 million a per year or about $20 per user, which could drive up the monthly subscription price.
Many believe that the uncertainty surrounding its license with Starz was a driving force behind its deal with Epix. While much has been made by the media of the deal with Epix to provide Netflix the ability to stream movies from Lionsgate, Paramount (excluding DreamWorks) and MGM, the movies won’t be available until 90 days after the Pay TV window or approximately 1 year after the initial DVD release. While this is still a big win for Netflix, it has little negative effect on the VOD or EST marketplace. However, on the other hand, Netflix has a major impact on consumer behavior – by shifting more consumers away from physical discs – digital then becomes the primary method for consumers to watch movies. Unlike the music industry, where the most devoted music consumers can opt to subscribe to Spotify or Rhapsody to gain access to ALL music they want to consume, the movie industry is vastly different and is unable to support an all you can eatmodel for its premium content. Currently, consumers who want to digitally “rent” or to “own” a new release or recently released movie must choose an alternative to Netflix Streaming – which currently is only a la carteservices.
As Netflix has demonstrated, the Connected TV and Set-Top Box marketplace has transformed the digital entertainment landscape. I believe the result of this transformation will be demonstrated in the next few years with consumers gaining more choices in how they watch movies and will ultimately shift the power from cable and TV service providers into the hands of innovative services providing consumers with anytime, anywhere access to their favorite movies. The future for digital entertainment is bright – and I predict dramatic innovations for 2011.
Digital Content: It’s not Access or Ownership but BOTH
Throughout this country, in conference room after conference room and boardroom after boardroom, executives of content companies strategize how to respond to the alarming trends associated with owning physical media content. This has been mainly reflected in the downturn in CD and DVD sales. More recently, games have been added to the list. Many in the media industry are frustrated by the slower than forecasted growth of electronic sell-through or download to own content. And, specifically in the music industry, many are split between two ideologies for monetizing digital content – Ownership vs. Access.
While many believe that Spotify and/or Mog are going to transform the music industry and somehow replace the revenue from the fast eroding music purchaser, I am doubtful this approach will save the industry. Furthermore, this dialogue camouflages the true problems with digital sales. In the physical world, Ownership and Access are clear cut user experiences each with their own value proposition. In the Digital Age content is easily available through illegal file sharing, and digital ownership experiences are limited and governed in a way that challenges the integrity of the intended experience. Therefore, if media executives are committed to electronic sell-through or download to own content, they must re-examine how they define digital ownership and encourage meaningful innovations.
Again, looking at the music industry, Lala introduced a novel access based business model – but failed to gain traction because of other more compelling (free) access models in the marketplace. Without question “free” access is highly desirable for consumers, but content owners and entrepreneurs have yet found a profitable monetization strategy. In December, when Apple acquired Lala, most industry insiders recognized Apple’s desire to transform iTunes from a pure download to own experience to a cloud-enabled ownership model. The complexities of music licensing however, may prevent this vision coming to fruition.
In the music industry, there are competing opinions of what is meant by “Digital Ownership”. Michael Robertson, an outspoken critic of the licensing practices of the industry, founder of MP3.com and current CEO of MP3tunes.com, has spoken frequently that consumers should have the right to stream their personal owned music from personal lockers or cloud services without the service provider being responsible paying additional royalties to labels. But labels on the other hand, contest this position and argue that cloud based streaming constitutes a different licensing right than electronic sell through and thus triggers additional royalties.
No matter which side of the argument your business interests may place you, the greater argument where I believe most would agree is that increasing the rights associated with “Digital Ownership” will make digital content more attractive to consumers, thereby making them more likely to become purchasers.
Those who believe that consumers want Access and don’t care about Ownership may be right. But then again, it may be those who believe that consumers want to own content, who are correct. Regardless, both sides would likely agree that Digital Ownership needs flexible usage models that include anywhere, anytime access – and responsible sharing or trading, otherwise, it is just not an attractive enough proposition to purchase digital content. Without innovation around Digital Ownership, the media industry may not have a choice – leaving them without an electronic sell through option to monetize digital content.
Just as technology has created unprecedented opportunities for Access models, the same holds true for commerce models that deliver on the promise of Digital Ownership. To date, there isn’t a single digital music, movie, television, book or gaming service that has delivered a Digital Ownership experience that exceeds the physical media experience. Until entrepreneurs and content owners effectively deliver on the promise of the Digital Age – none of us will fully embrace digital content ownership.
(Disclaimer: I am the CEO of huvi, a digital media service that is under development that promises to revolutionize what it means to own digital content.)
NASCAR in the Next Decade: The Storylines that will Shape the Future
It is not possible to predict the road NASCAR will travel by the time we reach the final 2019 checkered flag, but it will be entertaining to speculate.
This decade begins as NASCAR tail spins in the wrong direction it’s a sharp contrast to the beginning of the last decade when NASCAR viewership, attendance and corporate interest were all surging. Today, all of those trends are in reverse, and this decade will truly define whether NASCAR remains as a mainstream sport or becomes another fledgling motorsport series.
I believe the major stories and events that will affect NASCAR in the coming years will have little or nothing to do with on track racing. So let me begin with a few predictions before we take our first green flag of 2010.
The Car of Tomorrow (COT)
By any account other than driver safety, the COT has been a miserable failure, and many point to the introduction of the COT as a defining moment in the accelerated decrease in fan interest. Since making its debut, the COT has been one of the most controversial rule changes to be introduced in NASCAR. There is no question that NASCAR will eventually make changes to their ill advised COT design, but the question is how dramatic and rapid will changes be introduced. I believe this decision will define the sport in the coming decade, because unless on-track racing significantly improves, NASCAR is doomed to become a second-rate sport with limited commercial exposure.
The Fall of Brian France
Mayfield vs. NASCAR is a fight NASCAR wishes it never fought. First, let me provide a bit of background information. In 2008 NASCAR implemented a clandestine drug testing policy where they refused to provide competitors a list of banned substances. And in 2009, long time driver Jeremy Mayfield, was the first driver to face a suspension for use of a banned substance. The drug was later identified as Methamphetamine, or more commonly known as Meth. (See my blog post in the summer of 2009 for more information – NASCAR in Peril: Victory for Jeremy Mayfield in Drug Testing Legal Battle). What NASCAR didn’t anticipate was Mayfield fighting back and filing a lawsuit to reinstate his license to drive in NASCAR. Both sides have won important decisions, but the court fight continues. However, just recently this soap opera is becoming even juicier, the U.S. District Court has ruled in favor of Mayfield to require sensitive documents about Brian France’s third (or fourth but who’s counting) marriage to be unsealed. Many insiders believe evidence will come forward further tarnishing Brian France’s ability to continue to lead NASCAR into the next decade.
Sprint as the Title Sponsor of the Cup Series
The elephant in the room is the pending expiration of the sport’s lucrative sponsorship agreement with Sprint as title sponsor of the NASCAR Cup Series. Back in the summer of 2003, when Sprint (f/k/a NEXTEL) agreed to a 10 year agreement with NASCAR, no one expected the rapid decline of fan interest and corporate sponsorship within just a couple of years. Ironically, Sprint too has blood on their hands for the sponsorship troubles of racing teams, which contribute to the overall problems in the sport. Sprint pushed out and prevented several companies from sponsoring racing teams, including AT&T Wireless who was prepared to enter NASCAR in 2004 as a primary sponsor, but Sprint through their exclusivity agreement with NASCAR, prevented AT&T from entering the sport. And then, after AT&T Wireless merged with Cingular Wireless (who was grandfathered into sport through their existing sponsorship agreement with RCR), Sprint pushed AT&T Wireless out once again. This was basically the same story for Verizon Wireless and Alltel. But I digress, we are discussing the future, and following the expiration of the current agreement with Sprint there is little doubt NASCAR will be left without a title sponsor of the Cup Series. And with the falling value of the title sponsorship rights, I expect NASCAR to be forced to sell the rights for a deep discount. But like everything else in NASCAR, the teams will bear the brunt of the negative financial consequences.
New Television Contracts
Not unlike, the situation with Sprint as the title sponsor, agreements with the existing television partners expire in a couple of years. And, with the enhanced competition from the NFL, all signs point to a significantly lower value being attributed to the NASCAR contract. The reduction in the sport’s revenues will further hamper smaller NASCAR teams from competing and consequently continue the most alarming trends of decreased fan viewership, attendance and corporate sponsorship.
The Retirement of Today’s Superstars
It’s no secret that Jeff Gordon has been suffering from significant back pain stemming from an on track accident. So the question begs, when will one of the greatest and most popular drivers hang up his racing helmet? Could the dominance of Jimmie Johnson accelerate Jeff Gordon’s retirement? And more so, Jeff Gordon isn’t the only NASCAR star that could retire in the next decade from full-time racing. Is it possible, if Dale Earnhardt Jr.’s performance doesn’t dramatically improve that he might head towards an early retirement? These questions will surely plague NASCAR in the forthcoming decade and could have far reaching effects on the entire sport. Even though in the past several years neither Gordon nor Earnhardt have been top performers on the track, they still remain the top two fan and sponsor favorites. And during a time when NASCAR is desperately trying to stop the hemorrhage of fan and corporate interest, the retirement of one or both iconic names could be devastating.
My negativity is an attempt to bring forth positive change to NASCAR. It is horrifying to watch a sport I have watched most of my life be destroyed. But without question, NASCAR, under the leadership of Bill France Sr. and Bill France Jr. made many wise decisions which helped to elevate the sport to the peaks in 2004. Unfortunately, the management decisions of NASCAR in the last half of the past decade have grossly undermined the sport. Even though the previous generations of the France Family were successful shepherds of NASCAR, under the faltering management of Brian France – NASCAR has failed its competitors, fans and sponsors. If the France Family truly loves NASCAR – then they must consider selling NASCAR to a new ownership group, who is prepared to rebuild the sport before all remains is a storied past.
NASCAR in Peril: Victory for Jeremy Mayfield in Drug Testing Legal Battle
Earlier today, Jeremy Mayfield was granted preliminary injunction from the U.S. District Court in Charlotte, NC – lifting his suspension levied by NASCAR – so he will be allowed to race this weekend at Daytona. This initial victory for Mayfield presents potential challenges for NASCAR and their credibility.
For those who are unfamiliar with the complexities of the judicial system, the legal threshold for receiving equitable relief is “irreparable harm” and without a question, IF Jeremy Mayfield is innocent, his continued inability to race, meets and exceeds this threshold for the U.S. District Court to intervene and provide relief to Mayfield. Or in the words of U.S. District Court Judge Mullen:
“Harm to Mayfield significantly outweighs harm to NASCAR”
While many in the NASCAR community may see this court proceeding as an isolated issue between Jeremy Mayfield and NASCAR – I believe this case could have significant rippling effects on the entire sport. Ultimately, it will challenge the “dictatorship” of the France Family and most likely require far greater transparency in NASCAR’s future actions. NASCAR’s arrogance may have finally caught up with them. Unlike any other major sport, NASCAR refuses to publish a list of banned substances – and Jeremy Mayfield claims (through his attorney) that NASCAR’s drug testing program does not meet federal workplace guidelines or follow proper procedure of SAMHSA [substance abuse and mental health services association].
But the greater dilemma that NASCAR faces is how to proceed with the ongoing Jeremy Mayfield legal battle. After NASCAR spokesman, Ramsey Poston, made accusations that Mayfield tested positive for methamphetamines, NASCAR would face a significant credibility challenge if they decided to settle the continued legal actions of Mayfield to circumvent continued discovery and future hearings/trials. However, on the flipside, the continued legal battle (Permanent Injection Hearing and Possible Civil Trial for Financial Damages) could expose very damning evidence for NASCAR and other competitors. It’s no secret that NASCAR “plays favorites” with their application of the rule book and other policies, so IF other competitors have tested positive for banned substances, and NASCAR failed to enforce their “policy”, it could cause severe and lasting damage to NASCAR. So everyone, watch out in the days and months ahead – lots of debris could be flying through the air.
Chrysler Bankruptcy: The Future of NASCAR Teams Hang in the Balance
Questioning the future of Dodge’s continuing involvement in NASCAR is nothing new – back in September 2008, I wrote about the pending withdrawal of Dodge from NASCAR and unfortunately this appears to be the plan for 2010. (http://tinyurl.com/dlymm8)
Many, at first glance, didn’t feel that the Chrysler bankruptcy filing on Thursday would have any effect on the Sprint Cup teams backed by Dodge. And Chrysler was quick to issue a statement on Thursday reaffirming their commitment to NASCAR. It really should not come as a surprise that the new management from Fiat realizes the current iteration of the COT and the marketing platform offered by NASCAR is too expensive and doesn’t align with their new focus. Fiat/Chrysler’s new focus is on small fuel efficient cars and not on outdated large cars that inspired the NASCAR “Car of Tomorrow”.
Many sources strongly believed that Chrysler (Dodge) may pull its NASCAR funding in 2010. As many know, Dodge already slashed its motorsports budget by 30 percent this year. Then the question becomes this: What would happen to the teams that Dodge financially supports, if indeed they pull their support? That is the great unknown.
As I have professed for over two years, NASCAR is facing a crossroad; but yet, it continues down an ill-fated pathway of an outdated “Car of Tomorrow” instead of adopting a fresh approach that would leverage “green technologies” such as, biofuels and renewable energy, and a branding platform that is attractive to companies like Fiat. As I stated in July 2008,
You must wonder – why is NASCAR asleep at the wheel? Over the past decade, NASCAR has developed a phenomenal market platform for all types of companies – but without the financial and marketing support of the carmakers – NASCAR teams can’t afford to operate.
The time is now for NASCAR to embrace tomorrow’s future – alternative energy and fuel efficiency branding is required for the long-term viability of the sport as a marketing platform for the automotive manufacturers. (See: http://tinyurl.com/cwcjpj)
I am a strong believer that negative events create opportunities. NASCAR and the Big 3 (GM, Ford and Chrysler) at one time were going down a parallel road, but unfortunately as NASCAR started to become a rapidly growing mainstream sport in the early part of the decade and corporate sponsors rushed into the sport with their large marketing budgets looking to tap into this brand-loyal demographic, NASCAR lost sight of the value proposition and ROI required to keep the Big 3 involved in NASCAR. In the next couple of years, many will ask, why didn’t NASCAR do more to keep the Big 3 involved? The answer is quite simple, NASCAR and their Teams have a huge disconnect, and what’s good for NASCAR isn’t always what’s best for their Teams. Unlike all other major sports, like the NHL, NBA, MLB, and NFL; NASCAR team owners don’t have any say in the direction and decisions of the sport, nor do they participate in the financial upside during the good times. But what I do know is that they do bare the majority of the consequences during the difficult times. When Chrysler/Dodge leaves NASCAR, many teams will suffer and likely shutdown, but NASCAR Corporate will face very little short-term repercussions.
With the economic recession, dreadful environment for automakers and falling ratings of NASCAR racing, NASCAR has the opportunity to implement needed changes to put the sport in a position for growth and long term sustainability.
The solutions and answers for NASCAR are quite simple: race a car that is aligned with the automakers objectives, provide a fair distribution of revenues to competitors (teams), implement rigid cost controls; and, equally as important, please allow the drivers the freedom to race without the fear of penalties for relatively harmless actions. NASCAR, after all is said is done, should be entertainment.
Need More Clarification? – NASCAR in Crisis
Over the past several weeks, I have been inundated with inquiries about a variety of topics that I have discussed about the state of NASCAR and the sponsorship crisis. I feel compelled to address and clarify some of my previous statements and respond to a recurring theme of certain readers’ comments.
Many of the NASCAR faithful have repeatedly stated: “the sky is not falling NASCAR has a larger television audience today than in 2001”. While this may true – it has little to do with the enormous problems facing NASCAR today. The problem is one of economics that simply don’t add up.
As a former team owner, I can speak to the fact that there is an alarming disconnect between the highly profitable NASCAR Corporate; and the costs of operating a team and the corresponding costs to sponsor a team. It is NASCAR’s “disconnect” and perhaps even ignorance to the fact that NASCAR teams are facing a sponsorship depression that is the fundamental problem – and it is this blindness that will ultimately cripple NASCAR if they continue down this same pathway.
On Sunday, Brian France, Chief Executive Officer of NASCAR was asked; Are you certain you’ll have 43 car fields next year?
We’re pretty confident about that. I said before to many of you, you know, we’re also criticized for having too many cars.
I don’t know if he is taking lessons from the former Iraq Information Minister – Baghdad Bob.
But unless he is counting on Dave Marcus and Morgan Sheppard – having 43 competitive cars is extremely unlikely.
Just like the global financial crisis, the problems were not created overnight and may require the governing body to stimulate the NASCAR economy. But NASCAR needs far more sweeping changes than just the teams receiving a larger share of the television revenues. A variety of topics that must be addressed include; dramatic cost savings for the teams, incentives which drive fan interest – larger focus on winning — less on consistency, and greater shares in revenues so teams can sell sponsorship packages for considerably less — increasing the value proposition for corporate sponsors.
The basic message which seems to be lost in the entire dialogue over the sponsorship crisis – is not that companies haven’t wanted to become involved in NASCAR marketing – it is just cost prohibitive; too much risk and the ROI is difficult to measure. If we withdraw ourselves from the current economic crisis and rewind the clock to 2007; and if teams could have marketed Sprint Cup primary sponsorships for $10 million – do you think we would have the dramatic sponsor shortage of today? I don’t think so – the problem is primarily the price not the product.
Now I want to be clear – the product needs innovation and a fresh approach to bring die-hards back into the fold and make the sport more interesting to all sports’ enthusiasts. However, Brian France has only focused on the latter; and subsequently, by attempting to reach out to non-core fans he not only failed to grow the fan base, but he alienated many loyalists which has diluted the value proposition for many NASCAR sponsors.
NASCAR for Sale – Is “Change” Coming?
On Sunday Morning, Bruton Smith conducted an interview with ESPN. After questioned about the challenging times that is facing NASCAR; Smith reaffirmed his desire to acquire NASCAR and said, “And it’s getting closer”, referring to the possibility of the France Family looking to sell NASCAR. Is Smith just stirring the pot? Or perhaps, is the France Family finally considering ending their strangle-hold on the sport?
Hypothetically, let us assume Smith’s statements are backed by an element of fact and that the France Family is looking to sell NASCAR. It is my opinion that a change in ownership from the France Family to Smith would not bring about the change needed to put NASCAR back on the track for growth. As discussed in my most recent blog entry, The Failing NASCAR Economy: A Time for Action! - NASCAR must act to bring forth changes to support its lifeblood – the race teams. A Smith regime would only continue the same old policies of providing the race tracks a disproportionate share of the television revenues as compared to the racing teams. These policies need to change – NASCAR Sprint Cup Teams must receive a greater portion of the television revenues earned by the sport – because without Teams there is no NASCAR. Yes, tracks are valuable, but as Formula 1 has proven, track owners and promoters are willing to host events without large subsidies from the governing body.
The best avenue to save our sport and put it back on track, allowing it to grow into the next decade, is for an entrepreneurial executive; who understands the sport, new media and the market trends to lead a leveraged buyout – partially funded by a team franchise model – where 43 Sprint Cup Teams would receive a minority ownership and participate in profit sharing to ensure the stability of the premiere NASCAR series – the Sprint Cup.
The impending fluctuations expected in the number of competitors in the second most watched sport in country – the Sprint Cup Series, is completely unacceptable. A new ownership structure must include policies and an agreement to secure the future of the Sprint Cup Series by enabling Team Owners to purchase Franchises and receive votes in the future of the sport that they have all built. This new structure would eliminate the sanctioning body from competing with teams for sponsors and create a more healthy sport to ensure its long term future.
2008 has been the year of “change” – Americans want “change”, NASCAR Fans want “change”, NASCAR Teams want “change”. If the France Family provides the opportunity for “change” in the leadership of NASCAR – let us all hope that it is the “right change” that comes to Daytona Beach.
The Failing NASCAR Economy: A Time for Action!
Most will agree that the current economic recession will have a significant financial impact on NASCAR teams and the sport as a whole – but does it really need to be this way? In 2009, there will be significantly less Sprint Cup teams competing on a weekly basis – and yet, in economic downturns other sports such as the NFL or NBA do not have reductions in teams. Why is this so? The answer is rather simple – other sports operate as a democracy with all teams participating in the economic benefits of the television contracts; while NASCAR on the other hand, is structured much closer to a dictatorship – with the profits being retained by NASCAR Corporate which is owned solely by the France Family.
Let’s examine the recent history and evolution of NASCAR: during the global economic expansion following the tragic events of 2001 – 9/11 & the death of Dale Earnhardt Sr., NASCAR experienced unprecedented interest from corporate sponsors; and growth was fueled by new television contracts with Fox and NBC. Because of NASCAR’s unique business model, which is vastly different than other sports, the industry flourished from 2003 until recently, gathering new teams, with investors and manufacturers flocking to the industry.
As a point of reference, NASCAR is the ONLY major US sport without a franchise model including profit sharing agreements. NASCAR Teams operate in a free market where teams must survive without much financial assistance from NASCAR Corporate; and where new teams can easily compete if they have the financial backing. I was a personal beneficiary of this policy – and at 23 years of age secured an agreement to led Toyota Motorsports into the NASCAR Craftsman Truck Series and went on to build their competitive platform for their NASCAR operation.
I am very fortunate to have realized my lifelong dream of owning and operating a top tier NASCAR team; and even more rewarding to have brought Toyota Motor Sales their first two NASCAR victories.
However, this so-called free market is a complete farce! The teams must secure over 90% of their operating budgets from corporate sponsors – a/k/a advertisers. What is more infuriating, and what is not common knowledge, is that NASCAR and its sister company ISC retain the vast majority of the sport’s healthy television contract revenues, and even compete against the teams for corporate sponsors - the lifeblood of the race teams. As many know, AT&T was forced to leave Richard Childress Racing (RCR) as a primary sponsor because NASCAR Corporate signed an agreement with Nextel (now Sprint) with an exclusivity provision precluding other wireless and telecommunication companies from sponsoring any racing team. So with teams on the verge of a depression – and with automotive manufactures and corporate sponsors reducing their involvement – NASCAR is busy lining their pockets at the expense of the teams.
The most fundamental precept is that without teams – there is no NASCAR; but somehow teams have failed to act on this most basic concept to leverage their position within the sport. Maybe in the past the very wealthy owners such as Rick Hendrick, Jack Roush and Roger Penske were complacent and satisfied with receiving a nominal share in the television revenues; but in today’s economic climate and the ultra competitive advertising marketplace – teams who want to keep standing on their feet, need to act now and demand a fairer share in revenues – not for personal profit; but simply to survive.
The management of NASCAR has a real opportunity to bring forth a “rescue plan” to save teams from closing their doors and fracturing the appeal of NASCAR; which could have irreversible effects on future television contracts and ultimately the profits of the France Family. The beauty of the NASCAR “dictatorship” is that they don’t need to hold a vote or seek the opinions of others; instead, they can just swiftly act to provide an increase in the teams’ alterative revenues, which would enable teams to offer sponsors a lower cost of entry to advertise in NASCAR.
You can’t expect any company to spend $20M to sponsor a NASCAR Team – the ROI isn’t remotely competitive. NASCAR needs to think long term and be willing to sacrifice some of their short term earnings for long term stability and growth in the NASCAR economy.
NASCAR Must Embrace New Media: Proposal Attached
Over the past several months, as the advertising market has become increasingly more challenging, I have written numerous posts about the need for NASCAR and Sprint Cup teams to evolve and innovate to stay competitive in the corporate boardrooms. In my posts NASCAR 2.0 and NASCAR Sponsorship 2.0, I discussed opportunities to generate revenues and exposure through digital media.
My unique perspectives are a result of “one of kind” experiences which are vastly different than any other thought leader in the NASCAR industry: a web 1.0 entrepreneur, NASCAR Team Owner (Bang Racing), and today, an executive in the current social and digital media industry. While there are unlimited opportunities for NASCAR to leverage digital media technologies and corresponding social/digital business models; I have a specific proposal for NASCAR and specifically Paul Brooks, President of NASCAR Media Group.
I know from my personal experiences in working with Paul Brooks at NASCAR, he is one of the most forward thinking executives at NASCAR and I hope he embraces the following proposal. For those unfamiliar with NASCAR’s approach to partnerships and licensing; NASCAR has historically required substantial licensing fees to pursue any type of business relationship, which in all fairness has generated significant profits in the past decade. However, moving forward in the dynamic digital economy and facing the challenges to continue to grow their audience and fan base, NASCAR must now look to tap into emerging technologies and unlock entrepreneurial ingenuity to develop innovative business models to increase fan exposure and create new revenue sources.
The first initiative I believe NASCAR should pursue is to open up access to the racing data acquired through the on-board computer/black box. Just to be clear, I am not suggesting that NASCAR should allow live telemetry for the racing teams, but I am proposing an online database which could be accessed for technology entrepreneurs, game developers, media, and entrepreneurs and racing teams. By enabling open access to the racing data that could be parsed and leveraged, businesses and entrepreneurs could bring forth innovation to drive new revenue sources and digital media exposure for NASCAR and its teams.
Technically speaking – NASCAR needs to publish a set of Application Programming Interfaces (APIs) which could be available for commercial and non-commercial use that could create the opportunity to unlock the creativity of technology and digital media entrepreneurs and leverage the private equity markets to develop business models to reignite the excitement and consumer interest in NASCAR.
Even though my current business focus has little to do with NASCAR or motorsports, I strongly believe that NASCAR must embrace new media business models and techniques. Paul, if you are interested to speak regarding these ideas -you know how to reach me.
Best, Alex Meshkin.