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IndyCar racing to line up sponsors to replace Izod

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The IndyCar Series’ quest to find a presenting sponsor that could eventually replace Izod as title sponsor—a task series officials earlier this year called their top sales priority—has taken a blow.

Greg Gruning, IndyCar’s executive vice president of corporate sales and the series’ point man in brokering big sponsorship deals, resigned in late June. Gruning could not be reached for comment.

indycar-timeline.gifIzod’s high-profile title sponsorship deal expires following the 2014 season, but many motorsports industry insiders expect the clothing maker will try to end the agreement early.

Some of the talks that began last year to bring in a new presenting series sponsor, along with some new ones, were heating up this summer when Gruning exited, sources close to the series said. Now, time may be running short to ink a deal.

“Right now is the peak of the selling season, so it’s not too late by any means. But they need to be on it pretty hard,” said Zak Brown, CEO of Just Marketing International, a Zionsville-based motorsports marketing firm that represents some of the biggest sponsors in NASCAR, Formula One and IndyCar. “I’d say they’d have to get a deal done within the next 90 days to have them in place for next season.”

Mark Miles Miles

Brown is confident Mark Miles, CEO of IndyCar Series and Indianapolis Motor Speedway parent Hulman & Co., will ease the transition of the post-Gruning era.

“I’m sure Mark has a plan to replace, absorb or reassign those responsibilities so it shouldn’t hamper sales efforts,” Brown said.

Others are less certain.

“The task certainly becomes more difficult with the exit of Greg Gruning,” said Ken Ungar, the former Indianapolis Motor Speedway chief of staff and IndyCar Series senior vice president before forming his own sports marketing consultancy, US Sports Advisors, in 2006.

“Greg is well-thought-of in this industry,” Ungar added. “He’ll be missed.”

Miles said Gruning’s departure was not part of his ongoing staff reorganization.

“He left to pursue other professional opportunities,” Miles said.

In any event, Gruning’s resignation increases the urgency for Miles to hire a president of IndyCar’s commercial side. That search has been ongoing for months.

“We have a half a dozen excellent candidates, and I’m very optimistic in fairly short order, we’ll have our person,” Miles said. “I certainly want to have that role filled by the end of this season.”

Former San Diego Padres President and CEO Tom Garfinkel has become a frontrunner to become president of IndyCar’s commercial side, said motorsports industry sources.

Garfinkel, who resigned his position with the Padres on July 9, has had multiple conversations with Miles, sources said.

Before joining the Padres in 2009, Garfinkel, 44, was an executive with Major League Baseball’s Arizona Diamondbacks for three years. Before that, he spent five years as executive vice president of Chip Ganassi Racing.

Miles said he will become more personally involved in sales efforts, adding that he is “bullish” on the series’ prospects of landing new sponsors in automotive, financial services and technology categories as well as a presenting and possibly a title sponsor.

“I’m optimistic we can bring in new revenue that is meaningful,” he said.

Instead of approaching companies with a singular pitch, Miles said IndyCar sales officials are showing them the series’ “entire portfolio.” This approach, he emphasized, “is a shift in strategy.”

Although series insiders say Izod is on the way out, Miles said he isn’t giving up.

“Izod may or may not be part of the series next year,” he said. “We’ve not concluded talking to them about what next year would look like.”

Izod replacement

Last summer, Gruning and then-IndyCar Series CEO Randy Bernard began quietly approaching companies to pitch them on a deal that would make them the open-wheel circuit’s presenting sponsor and eventually elevate them to title sponsor.

The duo approached at least three companies with such an offer—including Verizon, Firestone and another unnamed technology firm—but those conversations have yet to bear fruit.

indycar-table.gifThey were seeking a high-seven-figure sum with an additional mid to high seven figures spent on TV ads and other IndyCar-centric marketing.

Izod in 2009 signed a six-year, $60 million title sponsorship deal, but a management change at Izod parent Phillips-Van Heusen Corp. changed things.

In 2012, Michael Shaffer replaced IndyCar supporter Allen Sirkin as chief operating officer at PVH, and ordered a pullback in promotions related to the title sponsorship.

Last year, PVH pulled the plug on most of its IndyCar Series-related TV ads and other promotions, including its Indy 500 kick-off party Izod hosted with GQ magazine in 2010 and Spin magazine in 2011.

This year, the company dropped the majority of its remaining Izod IndyCar-related promotions—which had totaled $5 million annually in series marketing during the first three years of the deal.

While motorsports insiders said Izod has continued to pay the IndyCar Series $6 million annually, they are now refusing to promote the series. Izod, sources said, also has asked to have the deal terminated before it ends following the 2014 season. PVH officials did not return a call seeking comment.

While IndyCar officials don’t appear to be obligated to find an early replacement for Izod, Gruning said before he exited that a title sponsor’s willingness to spend on promoting the series is as important as the deal’s cash value.

Growth obstacles

Gruning’s exit is far from the IndyCar Series’ only challenge in selling sponsorships.

Little growth in live attendance numbers at series races and declining TV viewership are giving sponsors pause about partnering with the open-wheel series.

The still-wobbly national economy hasn’t helped.

North American-based companies will spend $3.8 billion to sponsor motorsports teams, tracks and sanctioning bodies in 2013, up 3.9 percent from 2012, according to Chicago-based research firm IEG LLC.

While that figure has come a long way from the dark days of 2008 and 2009, not all is rosy on the motorsports front.

The motorsports rebound lags IEG’s projections of a 5.5-percent increase in overall sponsorship spending and 6-percent growth for all sports properties this year.

The IndyCar Series’ future is likely more dependent on the direction Miles takes than any other factors, Brown said.

“A lot of sponsors are waiting to see what [Miles] does,” Brown said. “So far, I think they like what they’ve seen.”

Miles has been busy reorganizing his staff this summer, including promoting Doug Boles to president of the Indianapolis Motor Speedway and hiring Derek Walker as IndyCar Series president of operations.

The person Miles hires as IndyCar’s commercial president is expected to lead sponsorship sales—including the hunt to replace the soured Izod deal. But Miles will have to get that person hired within 60 days for the new hire to make a big difference for 2014, sports marketers said.

TV ratings major concern

Before his exit, Gruning seemed optimistic the series could nail down not only a presenting sponsor, but also category sponsors in technology, financial services, and health and wellness.

“We’ve got some conversations going,” he said last month. Now, sports marketers say, there’s confusion about who will continue those conversations.

Gruning added that “there was interest out there” in series sponsorships, but conceded that TV ratings were a major concern.

IndyCar TV ratings have been down on network and cable TV this year, according to New York-based Nielsen Media Research. Through the first nine races, telecasts on ABC and NBC Sports Network were averaging 1.47 million TV viewers; that’s a 24-percent drop from the same period in 2012. The Indianapolis 500 this year had 5.7 million viewers, down 16 percent from 2012.

Nine of the first 10 IndyCar Series races this year scored a rating below 1.0, according to Nielsen, with the Indianapolis 500 being the lone exception. But the 11th race this year—at Pocono—showed promise, scoring a 1.1 overnight rating. Each rating point means 1 million households nationally are tuned in.

“The series has to get its ratings consistently above a 1.0,” Brown said. “That’s what sponsors are looking for at the minimum.”

Dave Moroknek, president and owner of MainGate Inc., an Indianapolis-based sports and licensed merchandising firm, sees a brightening future.

“I think the series is gaining a lot of traction all across the country,” said Moroknek, who served as senior director of marketing and consumer products for the IMS and the IndyCar Series from 1992-2002. “We’re seeing an increase in [IndyCar] merchandise this year and we’ve recently had a meeting with a national retailer with more than 8,000 stores that is interested in carrying licensed IndyCar products.”

But Moroknek concedes that the lack of an “active” title sponsor is dragging the series down.

“Activation is paramount to the deal. It’s more important than top-line cash,” Moroknek said. “The series has to have a sponsor that will take them where the people are, whether in grocery store aisles, malls or wherever. If they don’t have that level of awareness, it’s going to be very difficult, if not impossible, to grow.”•

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  • Answer Man
    "Can you explain to us why Zak Brown is wrong when he says the series needs consistent 1.0 to arouse sponsor interest?" Sure. He is simply pandering to the handful of loudmouthed lowest common denominator 12+ overnight television executives that go to comment sections of blogs with cutesy vulgar names such as 'Phil Leshioh' to put their ignorance on display. "Do you think that they think the tv deal was 'Ahead of its Time' as you have ben claiming?" At least five years ahead of its time. IndyCar actually gets ratings unlike the majority of programming on cable sports channels. "I would love for you to explain to us here why you think the leaders of Indycar are wrong." Wrong about what? The current direction actually has a direction.
  • Disciple
    Can you explain to us why Zak Brown is wrong when he says the series needs consistent 1.0 to arouse sponsor interest? According to what you have told us over and over again he is wrong and the sponsors really love it. Do you think that they think the tv deal was "Ahead of its Time " as you have ben claiming? I would love for you to explain to us here why you think the leaders of Indycar are wrong. The floor is yours if you care to answer if you care.
  • What's happening?
    HaY Burl....I heard Toronto took out about 80% grandstands compared to the heydays of AOW in Canada. What happened? 23K sold seats I hear...and thats the combined total for Saturday and Sunday races. No moar Thunder Alley, no more front grandstands, no more beer stand in T11, no T2 grandstands, no back straight grandstands, no show carz, no Paul Tracy, no awesome speed or sound, nuthin but RUSH advertisements all over the walls. Turbo no where to be found....like the Indycars, must be slow from the start line.
  • On the rise
    Indy Car is on the rise because on NBC Sports Network it has gone from 0.29 to 0.30 so, yeah, I see the logical there Disciple. I do. What's gas though are the high school bleachers at Toronto. Are those the same ones Penske uses at Detroit? And another thing, since you are in the know, what high schools do they borrow the seats for Indy Car races from, and when do they have to have them back? High School Football starts in less than two months!
  • 24% DROP in TV Ratings
    You got nothing to DEFEND that ol' IRL supporter. Nothing. Save our track. Indy TV ratings DOWN 16%. Maybe you should race at Las Vegas again with 33+ ? Or, get a double-header with the 8 Indy Lights cars in Saskatoon or Biloxi...the gulf is ready for some Indycars!
  • Predictable Response
    'Tubby?' 'Oldtimer?' 'crap product?' 'trashmobiles?' Stay classy. Are you saying IndyCar generates no income? You are factually incorrect. $900 million? Any chance of any sort of rational accounting in our lifetime? I understand that is one of your more popular taunts, and that you enjoy fiction, but try to interact with others with any degree of intelligence. Have you checked the the stock value of PVH since they became associated with IndyCar? Not saying IndyCar is directly responsible for its impressive rise, but perhaps their is merit to their ROI claims. I understand that does not jibe with your cutesy taunting, but try dealing in facts once in a while.
  • Disciple!!!
    Do your part to increase TV ratings now, son, by getting back to work and hooking up Atlantic Scientifics. Now wonder it takes so long to get cable TV these days! Get back in that truck now and get some Tv's hooked up, media boy! You're killing daylight. You must have a relative at the company. Yeah, you do...
  • Tubby
    Look oldtimer, it's a new era in AOW sport....no $$$ for crap product. You've been beating the odds with these trash-mobiles since 1996. Here's a tip...Zak Brown said she's a dog, then she's a dog. We've been telling you that since $900MILLION dollars ago, no matter how you wish to paint up the fantasy behind your crooked little bangs. This article proves you know nothing and have been spouting such for as long as there's been an internet. But, the fans know what's good. And it ain't Indycar. So, "Save Our Track"! Bwahahahha When they dump Indycar, I shall rush to my Macy's or BonTon and fill up my shopping cart. 350% ROI my friend, 350%! Key metrics are skewed..hahahaha!
  • An Adult Perspective
    I see the classy, mature behavior among usual obsessed squatters remains intact. First, thanks for continuing to watch. I remain curious about the purpose of credibility destroying taunting; e.g., '.1rl,' 'Death Race 2011,' 'clown car,' '16th and Jonestown,' etc. What purpose does acting like four year olds accomplish? Are any of you capable of conducting a rational adult conversation? Let's begin with IZOD and basic facts. The IZOD folks who struck the deal remain pleased with results. IZOD is fulfilling the financial terms of the contract. Are they exiting early? That has not yet been determined. In the event they do it would involve a buyout. One of the widely taunted misconceptions foisted by the cutesy children of the cart that squat here is that IZOD is leaving because they are not happy with IndyCar. In reality the possible change of direction is the direct result of recent executive level changes within PVH. Their more recent strategies involve brand acquisition and their marketing is increasingly focused on other targets such as golf, yachting, etc. Attempts to position possible changes as the result of unhappiness with IndyCar constitutes misrepresentation not reflective of facts. Not unusual considering the demeanor and literacy levels of the taunters. This is the same bunch that positions me as a poster boy for advocating 'saving' the Speedway. IMS does not need to be 'saved' from anything. It does need to be effectively spruced up, which is a point that has eluded the mental grasp of the youthful gallery of taunters whose reading comprehension skills are essentially non-existent. As for 'friends' who work in advertising, I would simply say this. There are those of us whose livelihoods directly involve such commerce, and 98% of what we read by Internet television mavens is laughable. The lack of even fundamental understanding of that business constitutes head-slapping ignorance on a consistent basis. For one thing there is no 'base' number. Buys are made based on mixes. No one really buys a particular thing (like IndyCar) unless they are a sponsor or it is a stand-alone event; e.g., a Super Bowl. Even then such buys are generally part of a larger package that includes diverse programming aligned with demographic and delivery targets. The numbers about which the critics gnash their teeth over are 12+ overnight estimates. No spots are EVER sold based on any 12+ overnight estimates. The numbers that sell spots are numbers the Internet executives never see unless they pay for them, and the fractions that are dealt with would make the minds of the taunters explode if they ever took the time to learn what they unsuccessfully attempt to pontificate about. The algorithms that go into the average spot buy usually involve like programming across a network (or networkS), and consider a variety of programming dayparts, demographics, and calculations related to the cost of reaching a certain audience number. In virtually all cases the buy/mix is determined by software. In most cases delivery is guaranteed; i.e., if a buy underdelivers the advertiser gets additional spots (known as ADUs). It might surprise the 12+ overnight hawkers to know that most programming on sports cable networks such as NBCSN gets no ratings of any kind, and when programming is rated the vast majority is lower than IndyCar. Would it be nice if ratings of any kind were higher? You bet. That is a goal. These days it is just as important to attract OTTs in ways that do not involve traditional television. I might suggest that is where a more focused approach is. IndyCar holds the same relative position it always has in the television pecking order. As usual this attempt at rational discussion will sail right over the heads of those who will trip over themselves to respond with nonsense, but innocent readers who may inadvertently stumble across these bits of inane commentary deserve factual information once in a while, especially in a relatively classy publication such as IBJ.
  • But but but
    Disciple (who's plea to "Save Our Track still resonates at 16th and Jonestown) has told ALL of us here at the IBJ blogs that those TV ratings are meaningless...that REAL cable TV installers have read the contracts and Indycar is getting north of $20 MILLION for it's current century adult AOW racing. These 12+ TV ratings never sold a sponsorship nor turned away a sponsor either. So, don't you worry your pretty little heads...just SAVE OUR TRACK. Bwahahhahahahaha...another prognostication CORRECT by the factual hater crowd, yep, TV ratings DOWN 25% in 2013. That'll sell title sponsorships! Huh, Disciple?
  • Tough Sell
    A friend of mine in corporate advertising/pr once told me the base number was consistent 1.5 ratings on network televison for substantial and sustainable major corporate sponsorship. This articel suggest 1.0. So somwhere in that 1.0 to 1.5 range must be the "sweet spot" and it is a long, up hill climb for the series to get there. Pocono's 1.1 tells us something, I think, especially in comparison to the NBC Sports Network road races. Indy Car racing's identity, entirely, is high spped, oval track racing, mostly the Indianapolis 500 and a few like-events. The future of the series must be the Indianapolis 500 and a schedule of four or five, naybe up to seven other oval races at places like Pocono, Fontana, Texas, Iowa, and maybe Nashville again, even Richmond. Why is the series not on two cities that draw fairly high TV ratings, Richmond and Nashville and instead runs around on city streets and in parks in front of a few thousand fans sitting in high school bleachers? Nothing seems to be done correctly over there. The future: The Indianapolis 500. Five to eight other oval races. Nothing more, nothing less. Phoenix or a like warm-weather oval in Marhc or early April. The Indianapolis 500 in May. Texas and Iowa in June. Pocono in July. Nashville in July. Michigan or Chicagoland in August. Richmond around Labor Day, under the lights. Fontana at the end of September, first of October under the lights. There is your season and series. Maybe a Gateway or Milwaukee can find a spot now and then. Having British-accent announcers on an obscure cable channel, screaming about Dario Franchitti anmd Sebastian Bourdais driving aorunf city streets in Toronto or places in South America has ZERO, ZERO, ZERO, NOTHING, NADA, NYET, to do with the public's perception of what an Indy Car is and does. The powers-that-be NEVER seem to get this and as a result, hardly anybody is watching anymore and hardly anybody cares.
  • Indy500
    Perhaps they will limit their activity to the Indy500 and have a real old fashioned bump-day. This series has shown itself to be in decline for a few years but many Americans still like the Indy-500. Izod probably lost money, but the party was fun for the executives.
  • Nice article
    I enjoyed this story very much. It should be noted however, that the .1rl breached their contract with .1zod when they failed to hold enough events in 2012. Also, sponsoring Death Race 2011, probably didn't help........................ As we all know by now, TV ratings don't matter, because the target demos and such are out of this world for the clown car league. :roll: I gotta imagine that sponsoring a series where their main event race is in a dilapidated facility where the bathrooms leak raw sewage and is surrounded by a ghetto, might make for a hard sell to sponsors, outside of local Indiana garbage collectors, anyway...

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