And the sponsor losses keep mounting. How are things up there in the ivory NASCAR tower, Z?
Business
Race is on at TMS to find new naming partner for April race
Friday, Nov. 02, 2012
By Barry Shlachter
Fort Worth Star-Telegram
On a large poster promoting next year's races at Fort Worth's Texas Motor Speedway, the big Sprint Cup series event in April carries only a generic moniker, a sort of space saver: Texas 500.
It won't be the Samsung Mobile 500 any longer.
The South Korean cellphone manufacturer, which began as the race's co-sponsor in 2002 with RadioShack and assumed sole naming rights when the electronics retailer fell on hard times five years ago, is taking a different marketing direction and opting out.
The loss of Samsung comes amid declining overall NASCAR attendance, down 2.4 percent by midsummer, according to USA Today, and down 8.5 percent from 2009. In its most recent quarterly report, the local track's owner, Speedway Motorsports Inc., blamed the down economy for lower revenues from admissions, broadcast and naming rights.
The situation could be worse.
Eight companies have expressed interest in naming rights of the April race, the track disclosed.
Each will send executives to the track today to get an up-close look at what NASCAR means to fans, says Devron Jeffers, the speedway's director of sales. His staff started by making face-to-face pitches to more than 70 companies after Samsung announced it was waving the checkered flag on its sponsorship.
"My gut tells me we may have a deal fairly soon," said Eddie Gossage, 54, president of Texas Motor Speedway. He gave Jeffers' team an 85 to 90 percent chance of "reaching some kind of agreement in the next month or so."
After three years of declining TV ratings, NASCAR viewership recovered last year.
Stephen Ho, a Cornell University MBA student who has analyzed the speedway's publicly traded parent, SMI, noted in mid-October that ratings dipped this year but quoted a Fox executive as attributing the trend to 18- to 34-year-olds channel-hopping to other eye candy.
On Sept, 8, the Federated Auto Parts 400 at Richmond International Raceway had top TV ratings for its time slot on ABC, beating Fox's college football matchup, UCLA vs. Nebraska. In April, when Fox had the Samsung Mobile 500, it trounced ABC, which televised Titanic, by pulling 6 million viewers to the film's 4 million.
"Viewership is the biggest barometer of how well and how quickly sponsorship will be sold," said sports business consultant Dean Bonham of Vancouver, B.C.-based Bonham/Wills.
"Viewership is not down that much," he said.
Bonham warned that U.S. interest in professional soccer was expanding quickly and could put greater pressure on NASCAR, even though it has established itself as a major sport.
Citing company figures, Ho says that naming rights and sponsorships provide SMI with about 13 percent of revenue, which works out to about twice that of merchandise sales, or half of gate receipts and slightly less than a third of broadcast fees.
Jeffers says naming rights could bring Texas Motor Speedway $1.5 million to $2 million, depending on the various marketing and signage options the eventual sponsor chooses.
That said, Gossage disclosed that the local track won't instigate a bidding war if more than one company is keen on sponsorship.
"That's not our style to have people bid [against each other]," he said.
Gossage also said that the local track has set a flat base price for naming rights and that it's somewhat lower than what Samsung paid. "It's a tougher economy than when we signed with Samsung."
"There's no doubt especially during the last few years when the economy went south, that attendance and ratings took a decline, and pricing also took a reset," said Jimmy Bruns of Charlotte, N.C.-based GMR Marketing, which has negotiated NASCAR race naming rights in the past. "Still, NASCAR gets 100,000 people each race weekend."
The April Sprint Cup Series race is a highly prized property because football and basketball seasons are finished, and Dallas-Fort Worth is a sizable metro market, Bruns said, adding: "And there's little motor sports competition elsewhere in Texas."
True, but attendance here has slipped -- from 169,000 at the 2011 Samsung 500 last year to 158,000 this past April.
Jeffers said that the eight potential sponsors include a large automaker, a financial services firm, a maker of household cleansers, a logistics company, a mattress retailer, a cheese snack maker, a communications infrastructure company and a convenience store chain.
During a speedway visit, representatives of the potential sponsors were given VIP treatment that included tours and presentations. Each saw original mockups of their respective company trademark redone as a naming rights race logo.
"They get a 360-degree look," said Jeffers. "They're going to see the suites, the midway and what people in the grandstand seat will see." At one such visit recently, he said an executive got up and grabbed the logo placard, saying, "I'm taking this to the board!"
The track insists that race naming rights imbues more than symbolic linkage with NASCAR. Sponsors will see a real return on investment. "We are going to over-deliver," Jeffers asserted.
Still, Bonham expressed surprise that five months before the April race a deal hadn't yet been struck. "I tell my clients that it takes six months to a year between contact and contract."
Gossage agreed, explaining that talks with the possible sponsors had been ongoing.
"Contact with these various prospects began many months ago," the track president said. "And even after we shake hands, it still takes months to have a contract signed. So it could well be six months to a year."
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updated by @dave-fulton: 12/05/16 04:04:08PM
