Tuesday, December 21, 2010

The Money Train

Before we turn our attention to the Daytona 500 and the new season of NASCAR on FOX, there is some unfinished business with ESPN. Jeff Gluck of SBNation reported recently on a post-season poll he conducted. After wishing Dale Earnhardt Jr. was running better, the number two thing on the wish list of NASCAR fans was the request for side-by-side commercial breaks on the Sprint Cup Series telecasts.

This first drew my attention back in 2006 when a young reporter named Marty Smith prepared this (click here) article on the topic for the NASCAR.com website. Smith did a wonderful job of exploring the topic and interviewing the parties involved in the issue.

Back in 2006, ABC/ESPN spokesman George McNeilly told Smith that the network would enjoy the opportunity to bring side-by-side coverage to NASCAR fans, but obstacles abound. It's not as easy as simply doing it.

"ESPN is on the cutting edge of technology and would like the opportunity to pursue side-by-side with NASCAR, but we are contractually prohibited at this time from doing so," said McNeilly. "We see side-by-side as an opportunity to serve sports fans so they don't miss the action and still provide great value to advertisers on the telecast. We'd like the opportunity."

Ramsey Poston was the NASCAR spokesman back in 2006 and this was his response on the topic. "We are always interested in finding the best way to showcase our racing in a manner that serves fans, sponsors and the networks," Poston said. "Up to this point we have not seen a split screen solution that accomplishes that."

Money was said to be at the heart of the matter. ESPN is NASCAR's largest TV partner and paid a hefty sum to return to the sport. This huge TV contract put ESPN in charge of not only the final seventeen Sprint Cup Series races, but made the network the exclusive TV home of the Chase for the Championship.

Fans remember all too well the significant amount of commercial inventory run in the NASCAR on ESPN telecasts this season. Many believe that this is the primary revenue source for the company and being directly used to pay the NASCAR rights fees. Nothing could be further from the truth.

The reality is that ESPN has its own money train. It delivers each and every month and is full of items that may look familiar. Those are your hard-earned dollars spent to maintain cable or satellite TV service so you can watch NASCAR. ESPN's money train is full of your cash.

Reporter Anthony Crupi of Mediaweek.com calls ESPN the Uncle Pennybags of sports broadcasting. Pennybags is the jovial type who takes your money on a regular basis in Monopoly and never hides the fact he is flush with cash. Here is Crupi's take on the current college football situation.

Perhaps nothing illustrates ESPN’s rapacity (greed) quite like the college football bowl season. After blowing Fox Sports out of the water with a $500 million bid, ESPN won the rights for the Bowl Championship Series through 2014. In so doing, it now plays host to 33 of the 35 bowl games, including the Oregon-Auburn title match on Jan. 10.

And here’s the corker. Despite the towering expenses associated with hosting the BCS games, ESPN could air the championship event commercial-free and still walk away fat and happy.

The reason is very simple. ESPN charges cable and satellite operators an average of $4.40 a month per subscriber. Multiplying that by ESPN's 99.8 million subscribers means an annual cash stream of $5.27 billion. That, my friends, is one heck of a money train.

Remember the commercials? ESPN stands to make over a billion dollars in advertising this season, but that pales in comparison to the cash flow that is ultimately from consumers. As we all know, prices for cable and satellite services have never gone down. ESPN's windfall is here to stay.

This reality check should push open the door for a revamp of the dismal failure that was the 2010 Sprint Cup Series telecasts on ESPN. If these production and commercial problems existed with another major professional sport on ESPN, a solution would have already been found.

Side-by-side commercials and less inventory is the only way to let fans watching at home actually see the final seventeen races. What ESPN hopes you conveniently forget is that you are already paying to watch it with your monthly cable or satellite bill. Add in the incredible amount of commercials, and ESPN is smiling all the way to the bank.

We welcome your comments on this topic. To add your opinion, just click on the comments button below. This is a family-friendly website, please keep that in mind when posting. Thanks for taking the time to stop by The Daly Planet.


NTG_2011 said...

Is it any surprise we forego paying for cable, as it has been deemed "not worth it"? The least they could do is lower advertising rates so we don't choke on the same three commercials every time we feel the need to watch something live (a rare event these days, and only OTA, which isn't as bad as it sounds [unless you are a NASCAR fan]).

Jonathan said...

For Nascar's sake it better happen! This would benefit both parties A. Nascar keeps more viewers glued to the tv B. and C. ESPN and the ones who shell out all the advertising money would be assured more people will be watching!!! aka better ratings

NO ONE WOULD MISS A BEAT heck this is better than a TV timeout! I hope something happens but again dont see it

51 yr. fan said...

ESPeeN is further adding to the torment by charging so much to air
the commercials that we have to
endure the same ones over and over
in lieu of new ones. Just think
how many times we seen Junior
and his "fitty fi, fitty fi"
Nationwide commercial? Makes me want to cancel my policy.

MRM4 said...

What is the real hold up on getting split-screen commercials during the races? Is it NASCAR, the sponsors, or the networks? TNT is able to do it for the July race at Daytona. Why can't TNT do it for their other races? It seems like those involved say it can't be done, but they aren't saying why. They really don't answer the question except to say they can't. It sounds more like they won't.

GinaV24 said...

Wow, those are some amazing numbers for the "money train".

After watching the debacle of coverage on ESPN the last couple of years and now hearing this number, my gut reaction is to call my cable provider and ask them whether or not I can get rid of ESPN. That will save me money on a product I'm already dissatisfied with AND I can have my own money train.

Ziggy said...

From where I sit I never watch any commercials since I'm channel surfing while they run. (I've actually got prettty prettty good at the timing aspect). If side by side was used the advertisers would get a lot more for their money from people like me & I'd bet a couple of hundred thousand other viewers too.

motoroney said...

here is my solution… tape the races start watching about 2 hours after start of the race fast forward through the commercials… forget about the side by side I have been watching for 20 years I don’t think side by side is a deal breaker here… sponsors used to flock to NA$CAR because we the fans are ,were very loyal to the people and the products that make our sport work no more we are tired of being exploited…now I’m strictly about the racing nothing more nothing less I love this page as it tells the truth about the corporate greed that is ruining this sport (aka) Brian France and the stupids that think they know what race fans want in a race broadcast… the internet was something I thought was going to make things more interesting instead I think it’s diluted the product too many yo yo’s with a web site and an opinion… I do like the idea of an alternative to the TV broadcast I thought the stationary cameras on Race Buddy were better at capturing the speed and action than those dummies that zoom in on one car as if it were the only one on the track… even “jayski” seems to have lost his enthusiasm when I first found his site I thought I died and went to heaven now it seems like even he has a filter on since he sold out to E$PN …

JohnP said...

I am constantly absolutly stunned at these long term contracts Nascar signs when the world of technology changes every 12 to 18 months. And has been since the 1980's. Nascar should simply of known better. And yes, I remember 8-tracks to cassette to cd and now Ipod. Technology changes. Always has.

Here is my layman's opinion of Side x Side commercials.

Without SxS - I leave the room during the comercials. I don't see any of them. I do some laundry, dish's, whatever needs to be done. Simply not going to sit there for 3 minutes watching nothing of value to me.

With SxS - I watch. And this might sound sad, but it's the truth so I'll say it. "If" the commercial is good and just not another repeat of the boring Gieco or Progressive style commercials, I find my attention on the commercial over the racing.

SxS is a winner for both Nascar AND the advertisers. I'm totaly amazed at their resistance to change.

Contracts CAN be redone. I do it as conditions change and both parties agree to the change. Just write in the last contract is nul & void and sign the new one.

Nascar simply CAN'T hide behind "we have a contract". It's just not true. I can't remember how many contracts I've signed just to have something modified for the best interest of both parties.

If they don't - I'll continue to do other things during commercials. And normally don't make it back for quite some time and miss a lot of the race.

It's up to them.

Vicky D said...

51 year old fan, I was going to say the same thing about Jr's NW commercial too, plus the one last year that Logano did at Home Depot how many times did we all have to sit through that???? We need side-by-side racing with commercials.

Anonymous said...

The action in NASCAR doesn't stop once the network takes a commercial, unlike other sports. The viewers miss a lenghty 20% of the race watching the same commercials replayed all year long. In addition, we are plagued by too many in-race advertisements and mandatory in-car cameras as well.

When will NASCAR realize this business model is not working? This topic needs to be the #1 priority over online coverage.

The Mad Man said...

In order to understand why we don't have side by side, you have to go back to when the BSPN contract was first announced. BZF said that the side by side did not allow for their sponsors type of "branding". Branding? Now where have we seen that word before? In other words, NA$CAR's sponsors, supposedly, did not want the side by side because it wouldn't allow them to try to brainwash us about their products/services on a smaller screen. They needed a full screen to attempt their brainwashing. Instead, they've managed to drive away more and more of the TV audience. If last year's TV ratings haven't gotten their attention then nothing will.

"I know what's best for the sport" - BZF

And if frogs had wings they wouldn't bump their behinds.

Anonymous said...

You are missing the point on a couple of levels:
1. The recall rate of an ad on side-by-side is about 10% that of a regular commercial.
2. Like most businesses, ESPN's mandate from their shareholders is to make as much money as possible. It doesn't matter that they can make a profit without a single commercial, as with any business, your success is measured by how much money you make.

I don't recall that the IRL's rating went up when they introduced side-by-side and I doubt it would help NASCAR's either.

One thing it would do is chase advertisers away..they aren't looking for less effective means to advertise their products, they are looking for more effective means.

Daly Planet Editor said...

Anon 11:42AM,

I respectfully disagree. No TV network has provided any kind of data showing a percentage decline in ad revenue for this concept.

IRL sources say side-by-side caused no decrease in ratings or affected relationships with advertisers.

In today's world, recording the NASCAR races on a DVR and then fast-forwarding through the commercials to see small chunks of the race is very popular.

Side-by-side commercials would cause fans watching live to put down the remote and encourage fans using the DVR to return to the live telecasts.

Advertisers who participate in this plan can expect to enjoy a higher level of brand loyalty and higher number of fans who actually see the commercials.

The bottom line is that side-by-side ads would end channel surfing, encourage live viewing and put the story of the race back into the homes of fans watching on TV.


Anonymous said...

@Anon 11:42 AM

"1. The recall rate of an ad on side-by-side is about 10% that of a regular commercial."

Can I ask where you get this data from, and when this data was made. I know personally that we as a family rarely watch races live and often DVR them so that we can FF the commercials. If we watch the race live, we really only watch commercials that are new and/or funny, otherwise we leave it muted and do other stuff during those times. At this point, I'm sure many people DVR and FF commercials as opposed to watching them, but I am less likely to fast forward during side-by-side (on IRL races). So I am curious, is the 10% recall rate for those who actually watch commercials?

As far as the issue, although ESPN has money to burn, I agree, they certainly don't want to "burn" that money. They are a corporation looking to make maximum profits. They are not going to maximize their profits by doing things such as side-by-side, unfortunately.

Anonymous said...

Of course they wouldn't dream of ever doing this now because the Underwater Basketweaving Championships or competitive booger flicking or my gosh the 18th million straight hours of SportsCenter showing the SAME.STORIES.OVER.AND.OVER.AND.OVER.AND.OVER.AGAIN can't be pre-empted but I heard back in '89 for IIRC the Michigan race they ran the race on one channel with the commercials and on the other channel they ran it commercial free.

@anonymous 11:42--possibly true however, with the DVR people aren't watching commercials as it is. As stated above many watch a few hours later & fast forward. Even those who watch it live often will do potty breaks, take the dog out, make another sandwich, or even see what's on another channel because they're tired of seeing Nationwide every other commercial or Danica & GoDaddy for the umpteenth time (and yes I know with IRL she's there a lot too).

JohnP said...

@anonymous 11:42. Don't know where you got that 10% from. Document it if you can. But you will need to also document the amount of recall rate of full blown commercials for a real comparison.

In this house during race commercials I leave the room to do something else, change the channel or mute. The advertisers get 0% viewership here. With 0% chance of recall rate.

I only see in race advertising and that's why SxS should be used. To keep me, and others like me, watching live.

SxS would keep me watching a good race without interuption. It's kinda simple actually. Sell the product the consumers want. Kinda a novel idea for Nascar evidently.

Anonymous said...

This is one of the sad reasons I do not think any real changes will be made to the nascar coverage on fox or espn. When it comes down to it, neither company needs the fans to make LOTS of money. And if ratings are down, espn does not have to pay as much for the rights but they will still get LOTS of money on all the commercials and cable fees. We are screwed. MC

Anonymous said...

Cable companies should send out a list twice a year with how much they are paying for each channel, don't think most people are aware they are paying out money.

Eventually the internet will be the death knell for cable companies

earl06 said...

Side-by-side doesn't matter to me, I'm still going to mute/ff/switch. You really can't see much and without PxP it's kind of pointless. The action is recapped after the break regardless, seeing it live first hold no thrill for me.

I don't see ESPN's motivation to take less money for anything, ever...