Has FOX and NBC paid too much?

[MR_MRee]

Is it possible that FOX and NBC have miscalclated what the rights to broadcast NASCAR events are worth? Do they know something that ESPN and TNN doesnt? In this situation one would think ESPN and TNN would have the upperhand.After all,they've been at it for the last decade.They know first hand the cost to produce a race as well as what revenues to expect from advertising.

As part of the contract,NASCAR has mandated a limit on the number of commercials allowed during the broadcast.The limit is slightly less than what we see now.Based on the current system the cost of advertising during a race would probably quadruple.This raises some serious questions.

Will NASCAR's recent publicity blunders change advertisers perception of their image? Anyone who follows racing knows that NASCAR has tarnished its reputation with most of its fans.Their efforts to control every aspect of the sport have left many feeling betrayed.This could very well leave corporations unsure if the new high cost of commercial time would be a sound investment.

There is already another scandal brewing at NASCAR.Rumors are starting to surface that Mike Helton and Lesa France Kennedy are locked in a power struggle with Brin France.Brian is allegedly responsible for the infamous article-4 in the press credentials agreement.He is also credited with the drivers entry form provision giving NASCAR exclusive promotional rights to all teams particapating at Daytona.Both demands were reportedly made without Heltons or Kennedys knowledge or approval.Helton did sign off on the document but assumed it was the standard agreement from years past. Given Bill France Juniors increasing age and recent health problems this is sure to draw questions about the quality and stability of NASCARS future leadership.

What if NASCARS popularity slips or television ratings dont meet the networks projections? Unlike their predecessors,FOX,NBC and TBS dont have the luxurary of touting their product as the best advertising bargain in sports.Sponsors will expect immediate results,and nothing less will do.If they fail to meet these expectations the end result would spell disaster for the networks.They would be forced to either lower the price of commercials or lose advertisers altogether.

I'm not so naive as to think this would bankrupt any of the parties involved.Time Warner(who owns NBC and TBS)and FOX are two of the largest media and entertainment companies in the world.Each however is a publicly held corperation with investors they must answer to.If they start losing money on their contract with NASCAR their stocks value will be sure to suffer major losses,making for some very unhappy stock holders.

While theses are worst case scenarios its not at all far fetched.TNN has already said its bid would reap little or no profit. Are they spitting sour grapes? Time Warner and FOX had better hope so.

[Joe Fan]

Mr Mree, I don't think Fox and NBC has miscalculated the broadcast rights of NASCAR--so long as give as good of coverage as ABC/ESPN did. Both Fox and NBC needed to fill programming voids and what better sport to fill it that is one of the fastest growing sports in the U.S.. Lukewarm coverage will be the only thing that could screw up a good thing.

To demonstrate how popular NASCAR has become, my area (Kansas City) already had NASCAR themed bowling leagues several years before it was ever a possibility of us getting a NASCAR Winston Cup track and race. I don't agree with your statement NASCAR has tarnished its image. Sure maybe in some people's minds it has gotten too commercial and is getting away from it roots but that is what it takes to sell it big time to the masses.

As far as the future leadership of NASCAR, I am a little concerned but I am sure that things will work themself out eventually.