Jim Host discusses his new contract with the National Thoroughbred Racing Association to secure corporate sponsors for horse racing and the Breeders' Cup. The Lexington sports marketing pioneer also discusses why an ESPN Sports Poll shows most casual racing fans don't realize the Breeders' Cup is Thoroughbred racing's championship day.
Sports marketing pioneer W. James (Jim) Host is accustomed to big challenges.
In 1975, he offered the National Collegiate Athletic Association $30,000 for the national radio rights to its Division I men's basketball championship. At the time, Host's fledging communications and marketing business in Lexington, Ky., had three employees and recently relocated from an apartment above a barber shop to a small white house on the edge of downtown.
Host developed the national radio network from scratch by getting up at three or four o'clock in the morning to take care of other company business at home, then spending business hours knitting together radio stations. Host parlayed his success with the radio network and his marketing skills acquired at Proctor & Gamble into an exclusive NCAA marketing rights deal that was renewed in 1996 for $75 million. Host Communications holds the marketing rights to 84 NCAA championships through 2002.
Host, 63, is now focusing his sports marketing skills on Thoroughbred racing. In December, the National Thoroughbred Racing Association appointed Host Communications as its lead sponsorship sales agency. Host talked with Eric Mitchell, senior writer at The Blood-Horse
in April about his role in creating the sports marketing industry, about attracting new fans to horse racing, and about racing's potential for attracting corporate sponsorship dollars. The following questions and answers are excerpts from that interview.Q: What was typical of sports marketing around the country when you started your association with the NCAA?
The professional leagues had certainly started, but the professional leagues' idea of sponsorship was signage. There was no real profession in sports marketing at all. It really started to emerge in the late 80s and early 90s. What has driven it is simple. In 1980, you could throw a lot of money at the major networks and know you were going to get 98% of the households. Then what happened? Cable television came along and fragmentation of the market came along. With the fragmentation of media, the natural solution in my mind was to take to Corporate America solutions that would give them exclusivity in the supermarket. For example, when I was selling for Proctor and Gamble, we would go into supermarket and offer 5 cents off Tide. All Lever would do is counter that with 5 cents off something else. My thoughts were, why not take something to Proctor & Gamble like win four tickets to the Final Four and brand them exclusively? Guess what? Your competition can't match. You can even do it exclusively with a supermarket chain as a pass through, so you now have a promotion that is exclusive to you at a particular time of the year that can dramatically drive business and provide longtime loyalty to people who are part of this affinity for college sports.
Now there is more and more cable. Who would have ever though we'd have 250 choices or 300 choices with DirectTV?
Well let me predict what I think the next step will be. I think in five to seven years we'll have 5,000 choices and those 5,000 choices will all be Web based. Think about that, that is less and less time that people are watching events and more time participating in the areas that they want. The thing that will not go away in the future is the big events: the Final Four, the World Series, the Super Bowl, the Kentucky Derby, the Breeders' Cup. That is why the over-the-air television networks continue to go after these events and why you see the fees they pay for them. (In 1999, CBS paid $6 billion to carry the NCAA men's basketball tournament for 11 years.) Q: How do you assess the interest in corporate sponsorship of sports right now?
It is an emerging market and business. There are a number of corporations that still do not understand it. When you realize there are literally no undergraduate courses at major institutions that teach sports marketing, that tells you how young it is. There was nothing here prior to 1984. The mistake that a vast majority of people make is thinking that all you have to do is sell it and it happens. The hardest part of this business is the execution. A vast majority of corporations don't have people who understand what to do and how to do it.Q: When you see how horse racing is being marketed now, what is your impression?
Well I think (NTRA Commissioner) Tim Smith has done a phenomenal job, for starters. He is one of brightest most talented people I've ever been around. I met him first when he was with ISES (International Sports and Entertainment Strategies) in Atlanta and we were marketing the SEC (Southeastern Conference) championships. He is a brilliant guy.Q: Give me an example of what Smith has done so well?
He has formulated the idea of the league. I think because of his drive he got Breeders' Cup involved so there is a more concerted marketing effort. It is to both his and D.G.'s (Van Clief) credit.
In 1982, Ted Bassett (then president of Keeneland) called me and said we have got to put this industry together. He asked if I would come out to Keeneland and talk to the heads of various tracks about how we did the NCAA stuff and so forth. I don't how to describe the meeting. You could immediately tell the vibes and the politics. I told Ted, "I love doing what I'm doing and I'm just not going to get into a hornet's nest." He said, "Well, do me another favor. Go to New York and meet with J.B. Faulconer (who was head of the Thoroughbred Racing Associations) and Gerry McKeon (head of the New York Racing Association) and talk to them about putting together some kind of national umbrella." I spent two days up there and met with some key people. I went back to Ted and told him I didn't think it could be done. There was so much fragmentation and jealousy that existed in the business.
Today, it's been done. (The NTRA) has had its ups and downs, but there was nothing there three years ago. I think there are some people in the industry who are impatient. Well, I can take them back to when we started all this with the NCAA. It took us two and half years to get the first (corporate sponsor). That was Gillette. It took us a year and half of presentations and another year to get the contract signed because we were breaking new ground. Once we got the first one then boom, boom, boom.Q: What is the potential for marketing horse racing?
There is no other industry--college basketball, college football, pro football, pro basketball--that has got the amount of hours of exposure on television this has got with everything all defined under one roof.
Everybody else, the NFL and NBA own their own marketing rights but don't own the television rights. You have one group going out and selling television and you have another group going out and selling marketing, and the two are in conflict constantly. At the NFL, you have CBS and Fox that sell the advertising and then you have the corporate partners who the NFL has, some who advertise and some who don't. This is the first totally integrated package that you can do an exclusive deal that will give you national television reach and the corporate marketing. Tim did that. I didn't do that. Separately, the NCAA is going that way. That is why I feel so strongly about this because I already know from the NCAA that this is what had to be done.Continued. . . .