Subway balking at Busch sponsor deal UPDATE #3 NASCAR's once-promising negotiations with Subway to title sponsor its No. 2 series have hit the skids, sources say, and the sanctioning body has spent the past few weeks revisiting many of the brands that initially turned down the sponsorship.
KFC, Dunkin' Donuts and Allstate, each of which had been contenders for the sponsorship earlier in the process, are among the companies NASCAR has approached in the past several weeks as it tries to replace Anheuser-Busch. A-B sponsored the Busch Series for 25 years before deciding to make this its final season.
Subway, which was considered the front-runner 30 to 60 days ago, remains in talks with NASCAR, but industry insiders no longer characterize Subway as the favorite.
As NASCAR seeks a new title sponsor, industry insiders say the price is dropping.
NASCAR was asking $30 million a year when it began the sales process in the first quarter of the year, but that figure has dropped by nearly half. As part of the new price, NASCAR and ESPN, working jointly to sell the title sponsorship, have relaxed the required media spend on ESPN, sources say. At first, about a third of that $30 million was a required spend on ESPN's platforms.
NASCAR had no comment on potential partners or issues under negotiation and maintained that its goal is to announce a new series partner by mid-November, at the end of the Busch Series schedule. A Subway spokesman did not return phone calls.
Sources say category exclusivity has been a primary obstacle as Subway and NASCAR try to resurrect their deal. Exclusivity has dominated the news this season with AT&T's lawsuit against NASCAR and Cup series sponsor Sprint Nextel, which joined the lawsuit as a co-defendant, as well as an earlier turf war between Sunoco and Shell.
Exclusivity emerged as a major sticking point in Subway's negotiations because of the broad quick-service restaurant category. Arby's, McDonald's, Jimmy John's and Domino's are among the team sponsors already involved in the Busch Series.
"The rub is going to be exclusivity," said Trip Wheeler, vice president and general manager of Velocity's motorsports office in Charlotte. "How is NASCAR going to tell the teams that they can't sell to any QSR?
"You have to look at it like this: Every ESPN broadcast is going to be talking about your series because your name is on it. There could be a company out there that needs to look really big and doesn't operate in a category where exclusivity is an issue. Then there could be a fit."
Even at a reduced price, the clock is ticking on NASCAR to find a partner. Many companies have their 2008 marketing budgets on paper, especially when it comes to significant spends such as a title sponsorship. Assets, such as a driver, car or track, typically have been established by now.
"Many, if not most, companies are well into their 2008 planning, so trying to get a typical six- or seven-figure deal done would be a real challenge, if it hasn't already been budgeted," said Mike Bartelli, senior vice president of motorsports for Millsport.
But Bartelli, whose clients include Tylenol and Sunoco, added that a title sponsorship of this magnitude -- likely reaching nine figures over the term of the deal -- would require the advocacy of a president or CEO.
"A brand manager or a vice president of marketing are beholden to their budgets," Bartelli said. "The difference at the president and CEO level is that they don't have the same constraints. History has shown that what a president or CEO wants, they figure out a way to get it." Sporting News08/28/07 NASCAR’s “once-promising negotiations with Subway to title sponsor its No. 2 series have hit the skids, … and the sanctioning body has spent the last few weeks revisiting many of the brands that initially turned down the sponsorship,” according to sources cited by Michael Smith of SPORTSBUSINESS JOURNAL. Subway “remains in talks with NASCAR,” but sources “no longer characterize it as the favorite.” NASCAR, which “in the last few weeks” has approached KFC, Dunkin’ Donuts and Allstate about sponsoring the series, was initially asking $30M a year for the deal, but that figure “has dropped by nearly half.”
The article goes on to say that Subway could not be exclusive in the series, (recall all the trouble Sprint Nextel is having over the AT&T issue) so it's not worth nearly as much.
05/03/07 Louisville-based KFC Corp. was recently in talks with NASCAR about becoming the title sponsor of what is now the Busch Series, but spokeswoman Laurie Schalow said the company dropped out of the race yesterday. Schalow called NASCAR a "great fit" for the fast-food chain, but she said the title sponsorship didn't line up with the brand's spending priorities for the next couple of years. Business Watch
04/30/07 KFC and Subway appear to be the two leading candidates to take over naming rights for the NASCAR Busch Series, according to the Street & Smith's SportsBusiness Journal.
The story in this week's issue says that several companies have participated in negotiations with NASCAR and ESPN at one time. The entities are working together to sell the sponsorship, which is expected to cost about $30 million a year, according to the report.
That number triples what current sponsor Anheuser-Busch, which announced in December it would end its sponsorship after a 25-year run, has been paying.
Sources also told the publication that Dish Network could emerge as a candidate, though NASCAR's partnership with DirecTV seems to make that difficult. DirecTV broadcasts "HotPass" during the race and is the sanctioning body's official TV partner.