Superstar Racing Experience, CBS Partnership Highlights New Approach to Partnerships

BY ADAM GROSSMAN

The current environment may seem like a difficult time to announce the launch of any new business generally let alone one in the sports industry. The Superstar Racing Experience (SRX), however, is in pole position to be  “biggest disrupter to the auto racing business in decades” in large part because of its focus on partnerships.  

SRX was founded by and will be fully funded by a four-person board of auto racing and sports industry experts including Ray Evernham, Tony Stewart, George Pyne, and Sandy Montag. Evernham and Stewart will take a particularly strong hands-on role with Evernham designing cars and Stewart being one of the 12 drivers racing on short track courses (potentially including a venue already owned by Stewart).

One of the unique elements of SRX, however, is the organization’s approach to partnership that appears to be led by Pyne and Montag. Partnership has always been an integral component to auto racing, but SRX is making its media partner an integral part of its overall revenue strategy.

More specifically, Montag reached out to CBS Sports Chairman Sean McManus to become a partner in SRX from its inception. One of the challenges for any new sports venture (as demonstrated by both the Alliance of American Football (AAF) and the XFL) is determining how to generate revenue and maximize awareness through media rights deals.

SRX chose a novel approach that was likely to resonate with McManus. More specifically, SRX and CBS do not have a standard media rights agreement where the network broadcasts competitions. Instead, they are full partners with vested interests in each other being successful through an integrated business and content approach.

SRX is guaranteeing primetime live sports programming from a fully funded sports organization for six Saturdays each summer with a star driver already committed to racing. In addition, SRX races will be two-hours in length with no pit stops and only 12 drivers in each field. This is the exact combination (live events, established time windows, and stars) that almost every network is looking for in content right now.

SRX’s approach is reminiscent to the relationship my co-authors and I discussed in The Sports Strategist: Developing Leaders for a High-Performance Industry involving the PGA Tour and CBS Sports. In 2011, the network agreed to a new its broadcast deal that included a 33% increase over the past agreement at a time when Tiger Woods was still hampered by a number of on-course and off-course issues.

Why did McManus and CBS agree to an increase in this context? The PGA Tour proactively gained commitments from sponsors to buy approximately 75% of the advertisements during tournament broadcasts. As McManus said about the agreement in 2013, “It’s as close to a guarantee as you’re going to see in big-time sports today.”  

SRX clearly does not have the pre-existing relationship with partners today that the PGA Tour had in 2011. However, SRX has pivoted the pre-existing relationship to be with CBS to attract partners. As McManus stated, “[CBS] has a vested interest in this working not just from a television standpoint, but from a sponsorship standpoint and a revenue standpoint and a live gates standpoint; we’re partners in all that.”

This relationship means that partners do not have to go to SRX and CBS individually to secure broadcast and live event activations. Pyne said partners “can make one phone call to be integrated in all aspects of the [race]” because of the relationship. It also helps “guarantee” that CBS and SRX can better control their individual success by working together.

Not every sports property and media company can pursue this type of deal. In fact, one criticism of this approach is that only a new (rather than established) sports property could take this approach.

However, the NBCUniversal and LA 2028 serve as another example of this type of partnership and directly rebuts this criticism. More specifically, “NBCUniversal [will] offer long-term deals to partners for TV, digital, live event advertising, as well as brand activations and associations with Team USA, among other Olympic ‘touchpoints,’ as NBCU put it.” Exploring this type of partnership is something that new and established partners can consider going forward.