There is little question that IndyCar needs a major boost in TV ratings if it hopes to grow the way Randy Bernard has set out to do. In the CART years IndyCar TV broadcasts were largely on the ABC/ESPN network and ratings were reasonable - around 2.0 on average and even as high as over 10.0 for the Indy 500. But those days were over when the split occurred and race broadcasts have bounced around between ABC, ESPN, ESPN2, Spike, Versus and a smattering on CBS.
The most recent years have seen 5 broadcasts per year on ABC and the rest on Versus. While the ABC ratings have been respectable (usually over 1.0, but sometimes not), the Versus ratings have been dismal.
But with Comcast buying NBC and Versus there is talk of making Versus the ESPN of the NBC network. Rumor is that it will be called the NBC Sports Network.
Could that result in a boost for IndyCar? Let’s examine some of the facts:
(1) For a "straight" rights deal involving motorsports, the "break-even" rating is 2.0. Anything below that rating threshold requires that the motorsports property buys time. Why so high you ask?
(2) Other sports have lower ratings thresholds, due to it lower production costs. For example, it's very, very difficult for a network to spend more than $350,000 to produce an average hockey game. Depending upon the bells and whistles, it can be produced for $100,000 or less. A typical race is in the range of $600,000 to $1.3 million
(3) The Indy 500 is a time buy. Every sports program you see on ABC is a time buy by ESPN.
(4) The IndyCar deal with ESPN is convoluted. Effectively, while ABC pays IndyCar a rights fee for five races (including the Indy 500), effectively, the rights fee for the Indy 500 is reduced by the amount which ESPN has to spend on the other four.
(5) The Versus deal is supposedly a rights deal, wherein Versus pays IndyCar a rights fee. What is unclear is whether IMS Productions picks-up the production cost. If that is the case, it would not be surprising if IndyCar is spending more in production than being received from Versus. If that's the case, Versus is a "time buy".
(6) The last CART TV deal with ESPN was a "joint venture". Basically, ESPN charged CART sponsors a premium to be on CART broadcasts, and then split the profits (after expenses) with CART
(7) While the Indy 500 has value to a NBC, CBS, and/or Fox (wherein they can make a profit on the broadcast and be willing to pay a rights fee), the rest of the schedule is useless in that regard at current ratings levels.
(8) Converting Versus to NBC Sports Channel can be completed with the stroke a pen. Expanding the NBC Sports Channel to be in as many homes as ESPN is also done with just the stroke of a pen.
The problem is that Versus is not on the "basic" channel tier.
Except for some holdovers from its life as the Outdoor channel, its channel placement is on a digital tier. Getting the NBC Sports Channel to the "basic" tier will take several years and will coincide when renewals occur for other Comcast/NBC properties such as the USA Channel. Until NBC Sports Channel is on the "basic" tier, ratings will continue to be affected.
(9) The problem with the Indy 500 going to NBC and the rest of the IndyCar schedule also being on NBC is that:
(A) IndyCar will have to "time buy" except for the Indy 500
(B) If the ratings are only 1.0, then the NBC affiliates will push the network to drop IndyCar (unless they're paid to carry it). By the way, a "time buy" on a broadcast network effectively just buys the transmission time through the NBC, CBS, and/or Fox. NBC, CBS, and/or Fox do not pay the individual affiliates
(10) If IndyCar chose the "time buy" route on NBC, then IndyCar must pay for promos. Ten or so years ago, there was an ALMS race at Sears Point. It garnered a 2.1 rating. Why? Everytime you turned around, there seemed to be a network promo on NBC for the race. There was also a full page, back page sports section broadcast ad for the race in USA Today
Stated differently, the promos cost ALMS a tremendous amount, but it brought viewers to the TV set. No promotion means no ratings.
So IndyCar is in a Catch 22 situation - does it decide to invest in a time-buy situation with NBC with the hope of growing a chicken from the egg? With three engine manufacturers coming into the series, and rumors of a 4th, other sponsors will take a look at IndyCar as well. And if all races are on network TV, IndyCar may see a good numbers of these sponsors and manufacturers buy TV ad time, and that can help make those broadcasts profitable....even if they are time-buys.
Many sports are time-buys, but that does not mean you lose money. If you have enough sponsors who want to buy ad time, the overall result could be breakeven, and as you grow the ratings, you grow the ad revenue.
But IndyCar has to lay the egg first, so how they structure a new TV deal in 2012 with NBC, and deciding how many races will go on network TV (NBC) vs. what I will call a cable channel (NBC Sports Network) will be key.
The more races on NBC the better the chance teams can land sponsors for their cars, negating the support they currently get from IndyCar (Leader Card Program).
Buying new cars for next year will be hard for the teams, and some may still need IndyCar's support, but starting in 2013, if we were IndyCar, we would invest that money in TV.
Get the ratings up and the sponsors will come.