NASCAR is reportedly asking the next title sponsor of the Sprint Cup Series to pay significantly more than Nextel did when it took over for Winston.
Sprint, which assumed the role of Cup Series title sponsor after the Sprint-Nextel merger, announced in December it was discontinuing its sponsorship of NASCAR's top level after the conclusion of its current contract in 2016. According to the Sports Business Journal, NASCAR is asking the next title sponsor of the Cup Series to commit approximately $1 billion over 10 years in naming rights and activation.
The sanctioning body has hit the market for Sprint’s replacement with a price tag of $45 million to $50 million annually in rights fees and the same in activation over a decade, according to sources. Sprint confirmed in December that it would end its 13-year sponsorship of NASCAR’s top series after the 2016 season.
NASCAR declined to comment for this story.
The asking price represents a 33 percent increase from the original deal, which was signed in 2004 with Nextel for a reported $750 million over 10 years before Sprint and Nextel merged. Amid struggling TV ratings and attendance for NASCAR at the time, Sprint negotiated that down to approximately $50 million annually when it signed a three-year extension in 2011, according to sources.
Yes, you read that correctly. Not only is the asking price $25 million more than the reported annual figure in 2004, it's double what the SBJ reports Sprint is paying per year in its three-year contract extension.
Of course, we all know how negotiations work, especially in these types of scenarios. What NASCAR is asking for won't likely be the figure that's officially agreed to. It's like buying a house, unless there are extenuating circumstances, you're going to negotiate with the seller and not immediately meet the asking price. And it's fair to say that NASCAR is entering the sponsorship search in a buyer's market.
When Nextel took over, the final race of the 2003 season, per Jayski, drew 7,326,000 viewers on television. Remember, that was the final non-Chase season and Matt Kenseth clinched the title the week before at Rockingham. Last year, the race on ESPN drew 5,223,000 viewers, a slight increase from 2013.
And as with most sports financial figures, the reported increase that NASCAR is seeking is higher than the rate of inflation over the past 11 years. Per this inflation calculator, there's been a 23.7 percent increase in inflation since Nextel took over.
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