Posts Tagged ‘racing sponsorships’

By Ray Paulick
With solid television ratings throughout the 2009 Triple Crown season and contracts expiring next year with NBC (which broadcast the Kentucky Derby and Preakness) and ABC Sports (which produced Saturday’s Belmont Stakes telecast), horse racing is in a strong position to negotiate a new deal for racing’s premier events.

The big question when the negotiations with various networks begin later this summer is whether the three racetrack companies that present the races — Churchill Downs Inc., Magna Entertainment’s Maryland Jockey Club, owner of Pimlico, and the New York Racing Association — will work together through Triple Crown Productions or continue to go their separate way on TV contracts.

The three tracks ended an 18-year cooperative venture in 2006 when the New York Racing Association worked out its own deal to telecast the Belmont Stakes on ABC. The breakup followed a rift among the tracks over how the rights fees would be distributed. According to published reports, NBC, which broadcast the three Triple Crown races from 2001-05, paid $51.5 million for the rights to the three events, with Churchill Downs receiving 50% and Pimlico and NYRA getting 25% each. In three of those five years, when a Triple Crown was on the line (War Emblem in 2002, Funny Cide in 2003 and Smarty Jones in 2004), the Belmont telecast drew the highest ratings of the three events, and former NYRA chairman Barry Schwartz was among those who felt the revenue split was inequitable.

Coinciding with the breakup of the TV package on NBC was the loss of the Triple Crown’s title sponsor, Visa USA, which ended a 10-year deal that included a $5-million bonus to any horse that wins the Triple Crown. That sponsorship was said to be worth $25 million. With Triple Crown coverage divided between two networks, Triple Crown Productions has been unable to secure another title sponsor since Visa’s departure.

Prior to Visa, Chrysler Motors had sponsored the Triple Crown Challenge, which in addition to the bonus to a Triple Crown winner also paid a $1-million participation bonus to the horse that accumulated the most points in all three races. Some critics said that bonus scheme might convince an owner or trainer to put an unsound horse that had won the first two legs in the Belmont Stakes just to make it around the track and win $1 million. That, of course, is a ridiculous suggestion when you consider the residual value or future earnings potential of a horse that could be compromised by such a move.

The participation bonus ended in 1993 after points leader Prairie Bayou broke down in the Belmont and the late Paul Mellon collected $1 million when his Kentucky Derby winner Sea Hero finished seventh in the Triple Crown’s final leg. It was a sullen presentation ceremony, and Mellon graciously donated the money to the Grayson-Jockey Club Equine Research Foundation.

The Triple Crown may have lost some continuity and promotional value since the participation bonus and points standings were dropped, though it can’t be proven statistically that such a bonus would convince more owners to run their horses in all three races. Participation does seem to have fallen in recent years.

This year, Mine That Bird and Flying Private ran in all three races; in 2008, Big Brown was the only one to do so; in 2007, there was Curlin and Hard Spun; 2006, no horses ran in all three; 2005, Afleet Alex and Giacomo; 2004, Smarty Jones; 2003, Funny Cide and Scrimshaw; 2002, War Emblem, Medaglia d’Oro and Proud Citizen; 2001, Point Given, A.P. Valentine, Monarchos and Dollar Bill; 2000, Impeachment; 1999, Charismatic, Stephen Got Even, Menifee and Adonis; 1998, Real Quiet, Victory Gallop, Basic Trainee; 1997, Silver Charm and Free House; 1996, Editor’s Note, Skip Away, Louis Quatorze, Prince of Thieves, In Contention and Cavonnier; 1995, Thunder Gulch; 1994, Go for Gin and Tabasco Cat; 1993, Sea Hero, Prairie Bayou and Wild Gale; 1992, Pine Bluff and Casual Lies; 1991, Hansel, Strike the Gold, Mane Minister and Corporate Report; 1990, Unbridled and Land Rush; 1989, Sunday Silence, Easy Goer and Hawkster; 1988, Winning Colors, Risen Star and Brian’s Time; 1987, Alysheba, Bet Twice, Cryptoclearance  and Gulch; 1986, Ferdinand; 1985, Chief’s Crown, Eternal Prince and Tank’s Prospect.

Triple Crown Productions and the two bonuses were created in reaction to a decision by the owner of 1985 Kentucky Derby winner Spend a Buck to skip the rest of the Triple Crown and go for a bonus created for a Derby winner that also won a trio of races in New Jersey. For the first time, the three tracks worked cooperatively on marketing, television and nominations. Since the 2006 split by NYRA, Triple Crown Productions’ principal role has been reduced to securing nominations for the races and unsuccessfully seeking a title sponsor. Even the nominations aren’t fully cooperative; the three tracks have different eligibility conditions as we learned with this year’s Preakness Stakes and the short-lived conspiracy to keep Rachel Alexandra out of the field because she was a supplementary nomination.

Let’s hope the tracks opt to work together on a TV deal and put the races back on one network. Other sports, including the NFL, the NBA, and Major League Baseball, thrive by having their playoffs on more than one network, but the Triple Crown consists of just three events, not multiple rounds of playoffs that lead to one championship. This year, there was a very good promotional buildup on NBC leading to the Kentucky Derby, and even stronger marketing of the Mine That Bird vs. Rachel Alexandra matchup before the Preakness Stakes. But things seemed to fall flat in the transition from NBC to ABC, perhaps helped in part by the indecision regarding Rachel Alexandra’s participation in the Belmont. There seemed to be very little promotion of the Triple Crown’s final leg on ABC or on the ESPN sister family of networks until just a few days before the Belmont. ABC’s production values also seemed low in comparison to NBC.

Ratings were extremely solid for the Derby and Preakness on NBC, and even without a Triple Crown bid on the line and seemingly little promotion by ABC, the Belmont Stakes performed well in the ratings, too. This isn’t a sign that overall popularity in racing is on the rise but does suggest that the sport’s marquee events still capture the interest of a large segment of the public.

If the tracks work together, there are great possibilities, not only on NBC and ABC/ESPN but on Fox and CBS. The Triple Crown remains a highly desirable television property, especially if it is held together as a unit where 1+1+1 equals more than three.

Copyright © 2009, The Paulick Report

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By Ray Paulick

To hear Carl Pascarella tell it, you’d think corporate marketers would have lined up from Louisville, Ky., all the way to New York’s Madison Avenue to bid on the Triple Crown sponsorship that Visa USA dropped in 1995 after a 10-year run. The relationship between the Triple Crown and Visa ended the same year Pascarella retired as the credit card giant’s chief executive officer.

Pascarella, speaking at a Tuesday afternoon session on Marketing & the Customer Experience at the 32^nd Asian Racing Conference in Tokyo, used the familiar introduction from ABC’s “Wide World of Sports” to describe sponsorship of American racing’s highest-profile series, which begins with the Kentucky Derby on the first Saturday in May, continues two weeks later in the Preakness, and concludes three weeks after that with the Belmont Stakes.

First, there is the “thrill of victory,” Pascarella said. “From a sponsor’s standpoint, nothing gives you more of a thrill than the Kentucky Derby winner driving down the Preakness stretch with a three- or four-length lead and knowing, as a sponsor, that you’ve got legs, with another three or four weeks to promote in and outside the world of sports. It was something we could use from April on through to June.”

On the other hand, he said, there is “the agony of defeat. In six of eight years we had horses that won the first two legs and didn’t win the Belmont.” That defeat eliminated the possibility of further promotions congratulating the winner of the Visa Triple Crown Challenge and the accompanying $5-million bonus, as well as any additional races the winner might compete in, including the Travers Stakes or Breeders’ Cup.

The Triple Crown was one of several world-class sponsorships for Visa in the sports and entertainment world. “Each one of them,” Pascarella said, “had a common focus on a couple of very important things: understanding who their fan and audience was; and secondly, they understood how to drive value to that fan base. They had an unwavering commitment to both things. At Visa, we looked more to sports as being the pinnacle of entertainment for fans, or our customers. No other form of entertainment brings the same kind of excitement or elation as sports does.

“The sports that are best for our sponsorship,” Pascarella continued, “put the fan in the center of the activity. They create deeper relationships because it’s a fan-centric approach. They give the fan a way to get into the event itself.”
 
Pascarella recalled how much value he was able to give to Visa’s best customers — bankers and merchants — who would come to Louisville for the Kentucky Derby. “We’d bring them on a backside tour of Churchill Downs on the day before the Derby,” he said. “They’d see the horses who would be racing in the Derby the next day, meet trainers like Bobby Baffert and D. Wayne Lukas, and these people felt like they were part of it all. We were giving them something special because of a sponsorship that was invaluable. That’s what we were paying for, that extra feeling that allowed our customers to get inside the sport.

“We’re not looking at fan numbers, we are looking at fans who are engaged, fans who will be engaged with us and our products and services,” Pascarella said. “We look at selecting and evaluating sponsorships based on being able to drive consumer behavior. How have we lifted the brand, how have we changed behavior, how have we made the consumer closer to us as a result of the association? The more we win, the more we put into a sponsorship. But it’s not just about the money. It’s about the relationships you can build with your sponsor and what you can give your sponsor in return. You need mutually beneficial objectives.”

Interestingly, while Visa dropped its sponsorship of the Triple Crown, it entered into a five-year agreement with Churchill Downs to sponsor the Kentucky Derby. No company has stepped forward to sponsor the Triple Crown since Visa’s exit from the series. One reason may have been a decision by the New York Racing Association to end its association with NBC Sports, and put the Belmont on ABC/ESPN. Another may have been fragmentation within the three tracks that comprise Triple Crown Productions and a power struggle over how sponsorship revenues were divided. Currently, of course, they have nothing to divide from a Triple Crown title sponsor.

 Pascarella, now an executive adviser to TPG Capital, also cautioned racing associations that the current economic climate will cause nearly every major corporation to reevaluate its advertising, marketing and sponsorship budgets. “Every economist projects a very deep and long recession,” he said. “That means your sponsors are going to be under a great deal of pressure. You need to reach out to them, even though your revenues also are going to be under pressure. If you reach out to them, and say, ‘How do we work together to get through this?’ that will go a long way.”

BRANDING GURU DAVID AAKER , professor emeritus of marketing strategy at the Haas School of Business at the University of California-Berkeley, talked about how racing can build its brand.

At a time when brand trustworthiness and quality perceptions of most brands are down significantly in the minds of the public, Aaker said there are opportunities to improve branding through increased energy. He cited the Nintendo video game brand as one recent phenomenon in the branding world. Five years ago, Aker said, Nintendo ranked 165^th among brand names in Japan, moved up to 65^th three y ears ago, fifth two years ago, and now ranks as the country’s leading brand, thanks to the energy created by the Nintendo Wii platform and games.

He cited five other very diverse brands that have energized themselves in recent years: 1) the Memphis Redbirds minor league baseball team; 2) the Indianapolis Motor Speedway; 3) PGA Tour golf; 4) Harley Davidson; and 5) Avon cosmetics.

All of those brands used one of two methods: energizing the business itself, or finding something with energy that is interesting and involving and attach it to the brand. “Both options are really powerful,” Aaker said.

The Memphis Redbirds, Indianapolis Speedway and Harley Davidson energized their brand by engaging their customers in multiple activities that built on the customer experience. The PGA Tour and Avon tied themselves to something with energy. The PGA Tour used Tiger Woods to its best advantage, and Avon linked its products to a breast cancer crusade and created the Avon Walk for Breast Cancer, with millions of people engaged each year. Similarly, Aaker said, Lowe’s home improvement stores attach their brand to Habitat for Humanity. In the case of Avon, he said, “Breast cancer is so important an issue and involving to the target audience that it provides Avon a way to get energy that it could never do through their products and services.”

Aaker said companies seeking to strengthen their brand should “find role models, companies in related or unrelated industries…someone who’s done it well with a brand people are talking about. What can you learn from them?”

In addition, he said, self-reflection is necessary. “What about the customer experience is boring or unpleasant? How can you mitigate that? What can be added to en rich and improve the customer experience.”

To find what he calls “branded energizers” like Avon’s breast cancer campaign, Aaker said companies should examine “what existing program has energy that fits your brand and can be connected to your brand…programs that aren’t part of the experience people are currently buying? What new program with energy can be developed that fits the brand and can be connected to the brand?”

“You have one of the most exciting events in sports and entertainment,” Aaker said. “But you need to ask yourself, ‘How can I add energy to my brand?’”

TELEVISION ADVERTISEMENTS PROMOTING RACING around the world were shown to the group and  audience members were asked to vote on their favorites. The ads were divided into five categories: Celebrating the Horse; Sex and Glamour; The Punt; A Good Laugh; and The Buzz.Most provocative were ads from Australia promoting sex and glamour. Other countries featured included France, Turkey, Japan, Hong Kong, Germany, Ireland and the United States (two ads from Santa Anita were featured). Details tomorrow on the winning ad.