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February 27, 2023

NASCAR's Phelps Sees Streaming as Good Option After TNF's First Season on Amazon

Credit: NASCAR via Getty Images

NASCAR’s 75

anniversary season is underway on the track.

Competition for the sport’s media rights is beginning to heat up off it. “The big story of ’23 will be where do they end up,” Mike Burch (chief operating officer, Speedway Motorsports) said.

NASCAR’s existing television contracts expire at the conclusion of the ’24 season. The sport recently began the formal process of negotiating for its next rights cycle.

Leadership entered an exclusive 90-day negotiating period with its two current media partners on February 1. It can begin to engage third-party broadcasters on May 1 if the rights have not already been locked up.

NASCAR president Steve Phelps was uncertain if the sport would reach the open negotiating window. He said both FOX and NBC have “expressed interest” in extending their agreements.

But he expects there will be “significant interest” if it does happen and is certain the value of NASCAR’s broadcast rights are going to climb regardless. “We are going to drive an increase for sure,” Phelps said.

Octagon global media rights consultant Dan Cohen agreed. “NASCAR generates [more than] three million viewers on average for the Cup Series. It also provides significant volume (think: Cup plus Xfinity, Trucks, P&Qs, IMSA, ARCA) that can be packaged and sliced across digital and linear platforms in meaningful ways, and we’re enjoying a motorsports renaissance of sorts which is a nice tailwind.”

NASCAR sport hopes to have its new agreements completed by mid-summer.

NASCAR began its current rights deals in 2015. The sport experienced a dip in viewership early on.

But ratings have bounced back over the last half decade. “We are if not the most stable property fairly close to it since 2018 from a television standpoint,” Phelps said.

NASCAR’s household share has risen 24% over the last five years.

Phelps attributes the resurgence to an improved product on the track, the emergence of popular young drivers (see: Chase Elliott, Bubba Wallace and Ryan Blaney) and efforts made to broaden fan base.

“If you think about where NASCAR was in 2020, the stance on social justice, our D&I efforts have led to new ownership coming in, like Michael Jordan and Pitbull, have led to a lot of new fans coming in who are younger, more female and more diverse,” he said.

It makes sense that FOX and NBC would be interested in extending their agreements. NASCAR “provides value to Fox free-to-air [or FTA] and FS1, keep in mind FS1 was launched with NASCAR as a key founding property. FOX networks also have a demo that is strong and allegiant to NASCAR,” Cohen said.

NBC has a long history of programming motorsports too. In addition to NASCAR, the network currently controls the rights to IndyCar. And “NASCAR’s volume offering is interesting [to the company] from a Peacock, FTA, and cable POV,” Cohen said.  

In the event NASCAR reaches May 1 without deals in place, it can begin negotiating with other potential broadcast partners.

The sport is not looking to maximize the value of its media rights. “We’re trying to optimize [them],” Phelps said. “Optimization comes with two pieces. One is distribution, the other is revenue.”

Reach remains important to the sport, especially on the team side where sponsorship plays a meaningful role in the revenue mix. So, there will be an over-the-air component to NASCAR’s distribution approach moving forward.

Phelps said the goal is to keep the same number of races on broadcast television as it currently has (21).

But races are likely to end up on cable and streaming too as the sport –and the networks–navigate an evolving media landscape.

Phelps sounded particularly bullish on the latter–even after Thursday Night Football lost

41% of its audience

moving from FOX and NFL Network to Amazon Prime this past season.

“Rights holders look at what happened with Amazon and the NFL, and that direct-to-consumer play specifically, as something meaningful; and honestly a good option,” he said.

“The [Nielsen] number was 9.6 million. Amazon would suggest that number was over 11 million. If you look at that relative to [ratings on] NFL Network, it held its own and then some,” he added.

There is an expectation consolidation will occur in the streaming space and that direct-to-consumer adoption will continue too, both of which are expected to drive future viewership figures upwards. Remember, NASCAR’s next deal doesn’t start until ’25.

If NASCAR re-ups with NBC it’s a safe bet some races will end up on Peacock. FOX does not currently have an integrated streaming platform. The company does own Tubi.

It remains to be seen if the races allocated to streaming come from the existing 36 race schedule or if a new package is created.

While revenue is driving the discussion, NASCAR expects the value of its agreements to climb. The sport is one of the last marquee properties available on the market until 2030, competition for the rights is strong and the FOX half of the package is believed to be undervalued relative to the NBC half.

Media insiders are convinced a 25% to 35% increase is achievable.