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SBJ/November 17 - 23, 2003/SBJ In DepthPrint All
R.J. Reynolds Tobacco Co. executive Ralph SeagravesSME’s Ralph Seagraves (left) and Bill France Sr.
Legendary driver Junior Johnson travels about 45 minutes from his race shop to RJR's headquarters to seek a sponsor for his race car. When RJR officials tell him how much money they have to spend, he suggests that they sponsor not just a car, but the whole circuit.
RJR's Winston brand becomes sponsor of NASCAR's top division, the NASCAR Winston Cup Grand National Division. RJR creates a $100,000 Winston Cup point fund, with the champion receiving $40,000.Robertson
After almost a quarter-century in the position, Bill France Sr. retires as president of NASCAR. He's succeeded by his son, Bill France Jr.
The Winston Cup schedule is trimmed from 48 races to 31, marking the beginning of the "modern era."
The inaugural Western Winston 500 is run at Riverside (Calif.) International Raceway.
Winston brand becomes sponsor of the NASCAR Winston Racing Series, a weekly racing program held at local short tracks nationwide.
The Winston Cup point fund increases to $140,000.
Winston brand becomes sponsor of the National Hot Rod Association's top division, the NHRA Winston Drag Racing Series, and establishes a $100,000 point fund.
The Winston Cup point fund increases to $150,000.
Winston Cup racing expands to three TV networks — ABC, CBS and NBC.
For the first time, the Winston Cup Series takes the lead in worldwide attendance with 1,431,292 spectators.
The Winston Cup point fund is $210,000.
The Winston Cup point fund is $500,000.
Reynolds Industries acquires Nabisco Brands for $4.9 billion to become RJR Nabisco Inc.
Ralph Seagraves, president of SME, retires. T. Wayne Robertson takes the reins.
RJR awards the inaugural "Winston Million," a $1Bill Elliott cashes in at Darlington.
"The Winston" is introduced as NASCAR's all-star event, featuring a $500,000 purse, with the winner earning $200,000.
The Winston Cup point fund increases to $750,000.
NASCAR drops the "Grand National" name from the NASCAR Winston Cup Series. NASCAR had used the Grand National name since the sanctioning body was founded in 1948.
The Winston Cup point fund is $2 million.
For the first time, every NASCAR Winston Cup Series race is televised.
The Winston Cup point fund increases to $2.5 million, with the Winston Cup champion guaranteed $1 million.
The Sporting News names Robertson one of the most powerful people in sports.
The Winston Cup point fund is $3 million.
The Winston Cup schedule expands to include the 2.5-mile Indianapolis Motor Speedway.
The Winston becomes known as "The Winston Select." "Select" would be dropped in 1996.
RJR introduces the "NASCAR Winston Cup Leader Bonus" program, a $10,000-per-race bonus.
The Winston Cup point fund is $4 million.
Jeff Gordon becomes only the second driver to win the Winston Million.
Two new tracks are added to the Winston Cup schedule — California Speedway and Texas Motor Speedway.
The Multistate Master Settlement Agreement is signed, severely restricting advertising and brand sponsorships of, among other things, sports properties, venues and events. NASCAR and CART are the only two sports properties cited as examples in the agreement. The tobacco industry is instructed to spend $360 billion over 25 years on anti-smoking campaigns.
Robertson, 48, dies Jan. 14 in a boating accident in southern Louisiana. Cliff Pennell assumes the role of SME president.
Las Vegas Motor Speedway is added to the Winston Cup schedule.
The Winston "No Bull 5" program is created as a tribute to NASCAR's 50th anniversary season. RJR goes on to pay out $26 million to drivers and fans before the program ends at the conclusion of the 2002 season.
Ralph Seagraves, who guided RJR into its sponsorship in motorsports, dies at the age of 68.
The Winston Cup point fund reaches $5 million.
RJR Nabisco is renamed R.J. Reynolds Tobacco Holdings Inc.
Cliff Pennell turns over the president title to Rick Sanders and leaves RJR six months later to start his own consulting business.
RJR announces that its sponsorship of the NASCAR Winston Racing Series will end immediately due to the terms of the Master Settlement Agreement.Bill France Jr. (left), Helton
NASCAR announces a six-year, $2.4 billion deal with Fox, NBC and TNT to broadcast the Winston Cup Series. The new deal begins in 2001.
The final Talladega Winston 500 is run. The race becomes the EA Sports 500.
The purse for The Winston increases to $2 million, with the winner earning $500,000.
The Winston Cup point fund reaches $10 million, with a champion's share of $3 million.
RJR announces its intention to drop its sponsorship of the NHRA after the season. The company had sponsored the annual all-star event, the NHRA Winston "No Bull Challenge," paid bonuses to each NHRA circuit and provided support to each facility on the drag racing series.
Two new tracks — Chicago and Kansas City — are added to the Winston Cup schedule.
The Winston Cup point fund is $13.02 million.
RJR signs a five-year sponsorship extension with NASCAR through the 2007 season.
The Winston Cup point fund is $14 million.
The Winston Cup point fund is $17 million, including a champion's share of $4.25 million.
RJR ends the No Bull 5 program, which awarded a $1 million bonus to a driver and fan at one of five selected races.
RJR, faced with growing financial challenges because of tobacco litigation, gives NASCAR permission to seek a new title sponsor. Nextel announces in June that it will replace Winston in the sponsorship role.Nextel deal marks the beginning of the end for Winston.Brian France
RJR announces a $3.5 million purse for this year's running of The Winston, with the winner earning a record $1 million. The race is to be called the "NASCAR Nextel All-Star Challenge" beginning next season.
As part of a $1 billion cost restructuring, RJR announces it will no longer market its Winston and Doral cigarette brands, although the brands will still be available in stores.
Although the 1998 Master Settlement Agreement permits SME to have one sports sponsorship, it is unlikely that SME will even exist at the end of the year.
Source: Sports Marketing Enterprises
R.J. Reynolds Tobacco Co. introduces Camel brand, considered the first "modern" cigarette.
Gen. John J. Pershing says during World War I, "You ask me what I need to win this war. I answer 'tobacco as much as bullets.'"
Richard Joshua Reynolds, founder of R.J. Reynolds Tobacco, dies at age 68.
RJR spends $8 million in advertising, mostly on Camel, and inaugurates the "I'd Walk a Mile for a Camel" slogan.
Camel claims 31 percent of U.S. market share, down roughly 10 percent.
Cigarette maker Parliament introduces the first commercial filter tip.
Cigarettes are included in GIs' C rations during World War II.
Camel is the top-selling brand, with 24 percent of the U.S. market share.
Camel is the top-selling brand.
RJR introduces the Winston filter-tipped brand.
Per capita consumption of cigarettes is 21 per day among adult Americans.
Congress passes the Federal Cigarette Labeling and Advertising Act requiring the surgeon general's warnings on cigarette packages. The warnings began appearing Jan. 1, 1966.
Winston becomes the top-selling cigarette in the United States.
The Cigarette Smoking Act of 1969 passes, as tobacco companies agree to stop advertising on the air.
The surgeon general's warning label is amended to say "Cigarette smoking is dangerous to your health."
R.J. Reynolds Tobacco becomes R.J. Reynolds Industries.
The Cigarette Smoking Act of 1969 goes into effect, costing the broadcast industry $220 million.
RJR senior scientist Frank Colby writes a memo suggesting that the company "develop a new RJR youth-appeal brand" based on 1950s-style cigarettes, which "delivered more 'enjoyment' or 'kicks.'"
The U.S. military stops distribution of cigarettes in troop rations.
Philip Morris' Marlboro overtakes Winston as the best-selling brand in the United States.
Philip Morris overtakes RJR to become the top-selling tobacco company in the United States.
Joe Camel makes his debut.
The Winston brand is still the No. 2 brand but now trails No. 1 Marlboro nearly 3-to-1 (Marlboro 134.43 billion cigarettes sold to 45.81 billion).
The Marlboro brand climbs to 43 percent market share, its highest ever.
The Joe Camel campaign is ended.
Multistate Master Settlement Agreement restricts advertising and brand sponsorships of, among other things, sports properties, venues and events. The tobacco industry is instructed to start anti-smoking campaigns.
Texas becomes the third state to settle a lawsuit against the tobacco industry, accepting at least $14 billion over 25 years to reimburse the state for Medicaid money it spent treating smokers. Minnesota, Florida and Mississippi sign similar agreements with the industry.
U.S. Supreme Court rules that the Food and Drug Administration cannot regulate tobacco as a drug.
Philip Morris loses a $10 billion verdict in a lawsuit filed over the company's use of the word "light" to promote cigarettes. RJR faces a similar lawsuit.
Source: SportsBusiness Journal research
Before Ned Leary left his role as head of the Winston brand to become president of RJR's Sports Marketing Enterprises, he sometimes tried to get his predecessors to cut aspects of the Winston Cup program that seemed to lack value. He couldn't see how taking a race team to dinner or supporting a team owner's favorite charity helped sell cigarettes.
Leary quickly learned lessons that he said SME has offered up for its successors at Nextel.
"Once you're out there, you find out why those things are important," said Leary, who managed Winston's sports sponsorships through their last two years. "You learn that these guys don't really owe you a whole lot when it comes to doing favors for you, and that building those relationships was the grease that made this thing go round and round. You can't just yank out the touchy-feely stuff and expect everything to go smoothly."
Cliff Pennell, who oversaw the Winston Cup program for RJR from 1996 to '99, is amazed at how, to this day, pit crew members approach him in the garage on race weekends to thank him for the savings bond that RJR sent when their child was born.
"It's the little things like that that make the difference," Pennell said. "People remember us paying to build media centers or put in 20,000 more seats, but it was the little stuff that really made it work. That's just how that industry is."
Pennell said the sponsorship is overwhelming and needs to be taken in pieces.
"This isn't just about writing a check and showing up for the event. If Nextel were to do that — and I don't think they will — this would be a failure. They would not be happy with the results and NASCAR wouldn't be satisfied with the relationship."
— Bill King
The walls are bare, mostly, save for those in the racing-themed, trophy-filled lobby, and in the half-dozen offices that remained in use through the final, melancholy days.
The 13th floor of R.J. Reynolds' Plaza building used to be a place with a pulse, the nerve center of the most expensive, most expansive sponsorship in U.S. sports, an endeavor that at its peak occupied 75 full-time employees in an RJR division known as Sports Marketing Enterprises.
But this was RJR's last season as sponsor of NASCAR's premier stock car series. Its red-and-white Winston Cup logo gives way to the black-and-yellow Nextel Cup mark after the championship banquet on Dec. 5.
With two weeks left in the final Winston Cup season, SME was down to six employees — with a target of zero set for year's end. No one left in a division that annually was spending an estimated $60 million on its NASCAR sponsorship.
"It hasn't been fun, seeing friends you've worked with for 21 years walk out the door," said Rich Habegger, an SME vice president whose office became a holding tank for the plaques, photos and other memorabilia that used to hang in the hallways.
Habegger hopes RJR will create a "shrine" at the company's Winston-Salem, N.C., headquarters that commemorates its Winston Cup program. If so, it may want some of the items. If not, he plans to turn them over for use in a local stock car museum.
"Thirty-three years of this sponsorship is not something that's insignificant," said Habegger, who has worked on SME's Winston Cup program for five years. "It's part of the company. A big part of the company."
Building the brand
You could burn through a carton of Winstons trying to sort out whether it was RJR that needed NASCAR or NASCAR that needed RJR. All you'd get is a reprimand from your physician and the realization that it was a dead heat.
Winston infused cash into NASCAR at a time when the sport was low on finances, promoting it into a sports marketing phenomenon that needed 30 years to outgrow the limitations of tobacco sponsorship.
NASCAR gave Winston a vehicle to reach consumers at a time when it was losing access to television viewers, a restriction that threatened its greatest edge over competing brands.
And what did Winston make of that vehicle?
In the last 20 years, Winston's market share among NASCAR ticket buyers has always been triple its share among all U.S. smokers. In recent years, the brand's share among spectators at Winston Cup events grew to 30 — or five times higher than its current national share.
"What's the expression? Necessity is the mother of invention, right?" said Ned Leary, who managed SME for the last two years after heading the Winston brand. "That's one of the things I'm proudest of throughout my career. As a company, we've always been the ones out there innovating."
Brian France, who this year replaced his father, Bill France Jr., as NASCAR's CEO, was struck by that creative thinking from the time he began visiting SME's offices as a junior NASCAR staff member.
"They always understood the dual obligation of selling their product and making investments in growing the sport," he said. "For a lot of years, it was the perfect match."
Money to spend
As the story goes, NASCAR and Winston found each other thanks to Junior Johnson, the hellion race team owner who learned to make cars go fast while running moonshine through the Carolinas."They always understood the dual obligation of selling their product and making investments in growing the sport."Brian France, NASCAR
It was Johnson who approached RJR about sponsoring his race team late in 1970, after the tobacco companies had been banned from advertising on TV. While intrigued by the proposition, Winston quickly realized it had the money to do far more.
On the other side of the equation, NASCAR desperately needed more.
The automakers that had funded most of the top stock car teams had withdrawn their support after the 1970 season, breaking ties after years of quarreling with NASCAR. Without backing from Ford and Chrysler, all but one of the top teams — Richard Petty's — were on the verge of shutting down. Tracks were filing for bankruptcy. NASCAR's major touring series, then known as the Grand National, was headed for life support.
Into that breach stepped Winston, a brand faced with restrictions that threatened its standing as the nation's No. 1 seller. Winston had hitched its identity to television and radio advertising. Its chief competitor, Marlboro, could put its strapping cowboy on billboards or in magazines. But Winston's hook was a jingle — Winston tastes good, like a cigarette should — that was destined to fade from memory.
For the leading company in an industry that had spent $220 million on television advertising in 1970, the cost of sponsoring a national racing series — $100,000 for the points fund that attracted the top drivers — amounted to pocket change.
"Money, I promise you, just flat out didn't matter," said Cliff Pennell, a marketing consultant who worked for RJR for 20 years and headed Sports Marketing Enterprises in 1998 and '99. "We've got all this cash. TV is going away and we need to find other ways to reach adult smokers.
"You spend whatever you have to."
Aside from a propensity to turn left, the NASCAR that Winston found in 1971 looked nothing like the multibillion-dollar enterprise that it is today. Only eight of the 30 points races run that year attracted more than 40,000 spectators. The largest, the Daytona 500, drew 80,000, or about half of the track's current capacity. Neither NASCAR nor the speedways had the staff or budget to promote their events.
So Winston began building, not only strategically, but with hammer and nails.
When the first surveys that Winston conducted with stock car fans showed that their No. 1 complaint was that they missed half the race while waiting in line to use the rest rooms, Winston paid to build more rest rooms.
When track operators said they couldn't get media outlets to cover their events, Winston paid to build better press facilities.SME sold fans on NASCAR’s fender-rubbing competition while making a pitch for fans to replace their Kools and Marlboros with Winstons.
When the millions that Winston spent on promotion began to pay dividends and tracks started filling to the rim, Winston paid to build more grandstands.
When sponsors asked for better accommodations to entertain clients, Winston wrote checks to add suites.
"All that expensive new infrastructure of these old tracks, we just about financed all of it," said Denny Darnell, an SME spokesman who worked at Bristol Motor Speedway in the 1980s. "If a track needed something, we usually built it."
What RJR didn't build, it painted.
Winston decided early on that it wanted to embed its trademark red in the minds of race fans. It also wanted to improve the look of tracks across the United States, many of which were aging and run down. So RJR struck a deal with a Winston-Salem company and began shipping red and white paint to racetracks across the country. If a track had a NASCAR-sanctioned event, it got a shipment of paint every few years. Tracks that played host to Winston Cup events got at least 100 gallons. Some got 200 gallons. SME executives estimate that the total exceeded 100,000 gallons.
RJR also spent heavily on race promotion.
Winston was the first company to bring point-of-purchase displays to NASCAR, giving the sport a level of promotion that track operators couldn't afford. It was the first to develop a show-car program, a tactic now viewed as essential by sponsors who trade appearances by the cars for shelf space for their products. It took out national print ads promoting the sport, another first that was beyond NASCAR's budget.
"We were nonexistent when they joined us in terms of marketing and promotions," said Brian France, NASCAR's third-generation CEO. "They put their resources in an area that was necessary for this sport to grow and took the lead and went well beyond a promotional partner.
"We couldn't have afforded it. The tracks couldn't have afforded it. Without [RJR], it probably doesn't get done."
Winston also understood that its tactics could work for other brands. And that if it could convince them of that, they, too, would promote the sport, helping Winston extend its reach.
With that as a goal, RJR instituted a stunning program meant to attract more sponsors for race teams. RJR would fund the first year of a sponsorship for a brand, allowing it to put its name on the hood and doors for free. All the company had to do was promise to match RJR's cost by running NASCAR-themed promotions.
If the relationship drove business for the sponsor, it could take over the entire program. If not, the sponsor was free to leave. RJR put its resources and expertise not only behind the execution of a sports sponsorship, but into the foundation of the sport itself.
At the memorial service honoring T. Wayne Robertson, the longtime SME head who was killed in a boating accident in 1998, NASCAR Chairman Bill France Jr. said Robertson was so devoted to growing the sport, at times he had to remind him that his business was cigarettes, not racing.
In reality, Winston's business had become both.
"That thought process, I think, is what changed sports sponsorships in general," Pennell said. "It was this belief that we've got to grow us and them together in order to truly benefit.
"NASCAR had a vision and Winston had the clout and business savvy to help NASCAR get there. They did a lot of things because they had a vested interest in each other's equities, not just their own."
When Pennell describes the goal of Winston's massive promotional effort as "putting butts in seats," he doesn't realize that his phrasing can be taken two, equally accurate ways."Money, I promise you, just flat out didn’t matter. We’ve got all this cash. TV is going away and we need to find other ways to reach adult smokers."Cliff Pennell, Former director, Sports Marketing Enterprises
Winston wanted to put spectators' butts in seats. But throughout the 33 years of the sponsorship, Winston's angle was the same: getting its product between the fingers of NASCAR fans who smoked.
"Everything we did was meant to get interest built up for that Winston Cup event," Habegger said. "Why? Because the more people that attended that event, the more that we could impact. If we've got 100,000 instead of 50,000, the percentage of smokers is going to go up and it's going to make more sense for us."
From the beginning, the core of the company's efforts was in sampling. It's how Pennell used NASCAR when he started his career with RJR as a salesman in Florence, S.C.
"People talk about exclusive, but we didn't always have exclusive [at the tracks]," Pennell said. "I used to have to go to the concessionaire at Darlington Raceway, a guy named Mac McBride, who was an accountant the rest of the year but who had the concessions [rights] at Darlington. I had to give him the product for nothing to have the exclusive."
Pennell remembers the conversations and chuckles.
"People want Marlboros and Kools," McBride would say.
Pennell would offer him 50 cartons free and the rest of his supply for the race weekend at cost.
"Forget your Marlboros and Kools," Pennell would tell him. "I want nothing but Winston sold here."
Similar negotiations played out at speedways across the United States.
"In my day, they sold right many at the track," Pennell said. "It still wasn't any more than a pimple on a whale's ass, but you wanted to make sure that if somebody did run out, that was an opportunity you didn't miss. And you believed you had bought that right."
By the early '80s, sampling had evolved into conversion, an initiative meant to not only put Winstons in smokers' hands, but get Marlboros and Kools out of them.
"We were very effective at switching adult smokers to our brand," said Leary, who was the Winston brand manager before taking over SME. He called it "a great example of fishing where the fish were."
Winston's conversion program became the heart of its marketing efforts at the track.
It worked this way: At each Winston Cup event, SME would contract with local agencies to canvass the speedway grounds, where they approached adult smokers andTrackside conversion programs allowed consumers to trade their smokes for free Winstons.
Winston offered access to tents where fans could cool off, kill time and be entertained — while being pummeled by Winston brand messages and filling out surveys that could land them more free cigarettes. Winston even offered some fans the opportunity to upgrade their seats.
All smokers had to do was show their cigarettes — and a photo ID that allowed Winston to collect their names and addresses for future direct-marketing pitches.
"Because of the value of converting an adult smoker from Marlboro to Winston, we made a fortune on the program," Pennell said. "Once you convert somebody over on a product that is smoked, on average, a pack a day, 365 days a year, even with the margins hurting like hell you can justify spending quite a bit of money [on the program]."
With time, Winston's conversion tactics grew in sophistication. Beginning in 2000, the company began to input names and addresses into computers at the track. The company also tracked smokers that it had converted, contacting them several weeks after the race to see if the switch had stuck and plying them with more benefits when it didn't. That sort of follow-up, data-based marketing also enabled SME to measure which of its trackside hires were performing most effectively and which sales pitches worked best.
When escalating costs forced Winston to bag the conversion programs at the end of the 2002 season, it was closing in on a system that would pay the field staff based on how many smokers switched to Winston and stuck with it."Once you convert somebody over on a product that is smoked, on average, a pack a day, 365 days a year, even with the margins hurting like hell you can justify spending quite a bit of money."Cliff Pennell
"That was one of the most exciting things we were doing," Leary said. "We were in the process of building a mobile sales force that wasn't just interested in 'How many hours do I have to stay?' and 'How many packs do I have to hand out?' But, more importantly, 'How many adult smokers can I switch today?' In other words, a business focus."
Winston's NASCAR merchandise promotions played upon fans' unquenchable thirst for all things racing. Each week, fans would show up at Winston's redemption tents with trash bags filled with proof of purchase seals that they could use to bid on premium merchandise or exchange for T-shirts and caps.
When Winston sensed that fans would go bonkers for items used during a race, it came up with the "Crash Tray," a tire-shaped, clear-bottomed ash tray that held a piece of sheet metal. The Crash Tray came with a certificate of authenticity that revealed whose car the memento came from and in which race it was used.
SME also hatched lug-nut key chains, which it collected at no cost, dispatching the driver of its mobile marketing rig to sweep nuts up in the pits after all the teams had left the track.
As brand manager of Winston, Leary wanted SME to do two things: spend less money and align more closely with the messages that he designed for the brand.
He couldn't get the former. Industry insiders estimate that about 40 percent of Winston's discretionary marketing budget went toward NASCAR in recent years. But Leary got the latter beginning in 1998, when Winston rolled out a new brand position.
"When we repositioned Winston around the concept of 'No Bull,' we were able to tap into the attributes of the sport and make those things work in tandem," Leary said. "That's when a sponsorship is really hitting on all cylinders: when the sponsorship and the sport's assets line up with the brand's. The 'No Bull' concept was hand-in-glove with the sport."
Truth be told, NASCAR didn't always see it that way. It loved the "No Bull Five," the Winston promotion that gave both drivers and fans a chance to win $1 million five times a season. But when Winston hatched the "No Bull" slogan, NASCAR blanched at one of the campaign's first ads, which featured a towering, tattooed biker who was meant to be taken with tongue in cheek.
NASCAR was at the early stages of pitching itself as a sport that was angling toward the mainstream. "We're trying to move beyond tattoos," NASCAR patriarch Bill France Jr. told Pennell, failing to see the distinction between Winston advertising and NASCAR advertising.
In hindsight, it was an early indication that the marriage was headed for a break.
From the time he began dealing with NASCAR in 1996, Pennell heard concerns that Winston's advertising limitations, along with mounting public displeasure with tobacco companies, might be holding back the sport's growth.
He responded by welcoming NASCAR to explore other options.
"Folks," Pennell told NASCAR senior executives during a meeting in 1998, "the day that you believe that we are getting in the way of you growing your equity and causing you more harm than good, you raise your hand, because that's the day we don't have an effective partnership. And all we're going to ask is that we make sure that we manage our way jointly out of this partnership.
"That day came some four years later."
Leary describes Winston's exit as equal parts inevitable and inconceivable.
"In the back of your mind, you knew that one day it was going to happen," Leary said. "It just can't be this day, can it?"