Not all rah-rah for TV sports ad sales

Even the NFL is suffering during downturn

The TV sports ad marketplace traditionally offers the networks that carry sports a sure bet in attracting revenue. But as with everything else in this economic crisis, nothing is as it has been, and TV sports has lost much of its instant sellability, even the once-invulnerable NFL.

"Clearly, we are finding out that TV sports advertising is not recession-proof, so we are having to work harder to get business," said a sports sales executive at one network. "Every advertiser wants to pay less and get more, not only in entertainment but also in sports."

Sports media buyers still tick off TV sports' positives, particularly live coverage: delivery of male audiences, family-friendly viewing, a lower incidence of time-shifted viewing and generally consistent ratings. But they add there are too many negatives that make this an unusually weak market, notably pressure from their clients to get better deals and softness in two formerly strong sports ad categories. Buyers agreed they are simply not going to blindly pay cost-per-thousand prices at the levels they have in the past.

"We are going to be more aggressive negotiators this fall, so we can try to adjust pricing and bring it back to more realistic levels," one sports buyer said. "And if we can't do sports upfront deals, we'll take our chances in scatter, particularly with the NFL."

Why the NFL? The fact that upfront entertainment negotiations between networks and buyers remain stalled has hamstrung football-carrying networks from selling. The reason: Pricing for NFL ad inventory is predicated primarily on rates the networks get for their primetime entertainment. And since little primetime business has been written, there's no basis for comparison.

Most of the networks that carry NFL games said they are about one-third sold out for regular-season advertising. But most of that is due to multiyear deals and long-term sponsorships already in place. Buyers and sellers concurred that the last time NFL games on the TV networks sold at negative cost-per-thousand rates from the year prior was 2000.

"We have our work cut out for us," said one network sports sales executive. "Sports sales are usually immune from soft economies, and the last four or five years have been incredibly healthy. But this year is different. Things started to slow down last October, but deals for last season were already done."

Not helping matters are softness in two of sports TV's biggest ad categories: automotive and financial. "General Motors and Dodge (Chrysler) were spending tons of money, and financial companies like AIG and Wachovia are virtually gone," one sports sales exec said.

The bottom fell out of Nascar advertising this year for Fox and ESPN, not only because of the difficulties of the U.S. auto companies but the related problems felt by many auto-related products and services.

However, all might not be so bleak. While GM has cut back on its overall ad spending significantly -- cutting out some of its big entertainment-event sponsorships -- sports is one area where it continues to spend. "That makes sense," said a sports network sales exec. "If you look at the car brands GM is keeping, Chevy and Cadillac are traditionally strong male brands, and GM has a long tradition with Buick in golf telecasts." One sports seller said spending by GM is down only by about $10 million on his network's sports telecasts.

At ESPN, Chrysler is still a heavy sponsor of college football, while foreign carmakers Toyota, Kia and Nissan have multiyear deals as sponsors of the Monday Night Football halftime show, the NBA pregame show and the Heisman Trophy Show, respectively.

While GM and Chrysler cut back on ad spending, Ford largely has maintained its sports spending. And some upscale foreign automakers such as BMW, Lexus, and Mercedes have ramped up their presences, too.

Still, overall auto spending in TV sports could be down by as much as 30%, and that has to be made up somewhere. Sports sellers contend that they can pick up the slack in categories that are doing better in the current economy including fast food, telecom/wireless and "sit-down" restaurants such as Denny's or Chili's.

"There are still battles going on between Apple and Microsoft, with Lowe's and Home Depot and with McDonald's and Wendy's," one sales exec said. "So they are not going to pull too much money out of sports."

And don't forget beer. Foreign brewers including Heineken and Corona have been investing more, to compete with Anheuser-Busch and MillerCoors. As a negotiating tactic, some media agencies have whispered that the consolidation of MillerCoors last year is going to mean a reduction in its TV sports outlay. Not so, said Jackie Woodward, vp marketing services at MillerCoors.

"We have taken no money off the table," she said. "But we are looking to get value added for our TV buys, with other opportunities online and on mobile. Our customers love sports, so we're going to be there."

While the national networks are starting to feel the pinch, regional sports networks have taken a sizable hit for close to a year now, primarily because local auto dealer advertising has dried up. Both Comcast SportsNet and Fox Sports Net have gotten more aggressive in going after local, nontraditional sports advertisers and have had some success.

Ray Warren, chief revenue officer at Comcast SportsNet, said CSN has picked up about 100 new local, nonauto advertisers since January, many of them smaller spenders. "This has kept us in the game," he said.

Kyle Sherman, executive vp ad sales at FSN, said the loss of domestic auto is being compensated, at least in part, by foreign auto makers, as well as pharmaceutical and packaged goods advertisers.