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SBJ/20080623/This Week's News
Looking back on the biggest deal
Published June 23, 2008
As Tim Donahue walked through the midway at Daytona International Speedway in July 2003, he marveled at the U.S. Army’s massive 10,000-square-foot display.
Donahue, then the CEO at Nextel, only weeks before had signed off on the largest sports sponsorship in U.S. history, putting his company’s name on the title of NASCAR’s top racing series for $750 million over 10 years.
Nextel roared into the sport with all of the subtlety of a monster truck, and Donahue was touring Daytona in search of ways he could make an even greater statement.
“That thing,” Donahue said as he looked at the giant Army display, “times two!”
Donahue’s “Go big or go home” approach reflected Nextel’s business persona at the time. As the No. 5 wireless carrier in the category, it wanted to look bigger than it was, and in NASCAR it found the platform to do just that.
“The amazing thing was how decisive they were,” said George Pyne, NASCAR’s COO at the time and now CEO of IMG Sports and Entertainment. “They knew what they wanted and why they wanted it.”
When NASCAR and Nextel joined hands to announce the deal five years ago, on June 19, 2003, Donahue said he hoped the partnership would turn into “a lifetime arrangement.”
That’s how it felt at the time.
But with a technology partner came the volatility of its category, and the name Nextel didn’t even make it past the fourth season of a 10-year deal. Now that the company has merged with Sprint and taken its name, it’s on an almost weekly takeover watch as its stock price has plummeted and customers have slipped away to competitors.
Change has not been limited to the series name, either.
The press conference to announce the deal in the Nasdaq Building included NASCAR CEO Brian France and Pyne, as well as drivers Jeff Gordon and Dale Earnhardt Jr. Nextel was represented by Donahue, COO Tom Kelly and senior vice president of marketing Mark Schweitzer.
France is the lone executive whose position has not turned over. In the five years since, Pyne departed for IMG; Brett Yormark, NASCAR’s former vice president of corporate marketing and a primary architect of the Nextel agreement, left to become president and CEO of the New Jersey Nets; and each of the Nextel executives were wedged out during the painful merger with Sprint.
Michael Robichaud, who was Nextel’s senior director of sports and entertainment marketing and a key figure in the negotiations, took a buyout after the merger and wound up at MasterCard.
Dean Kessel, who joined Sprint after the merger as director of NASCAR marketing, spent two years as the face of the sponsorship before he left earlier this year to become president of Victory Junction Gang Camp. Now Steve Gaffney, Sprint’s director of sports marketing, oversees the sponsorship while the company looks for Kessel’s replacement.
Gaffney’s day-to-day contacts are NASCAR CMO Steve Phelps, Jim Obermeyer, managing director of brand and consumer marketing, and Chad Roney, director of series marketing.
Change, it seems, has been the only constant, yet Sprint maintains that the sponsorship delivers sparkling results for the $100 million or so it spends annually in sponsorship fees and activation. When Sprint’s new CEO, Dan Hesse, was hired, he met with some of his sponsorship chiefs earlier this year at the Super Bowl. After Kessel, still in his role at the time, spent an hour presenting sponsorship details and ROI, he said Hesse’s response was, “OK, I get this.”
“This sponsorship is not something that’s debated within the company,” Kessel said. “It doesn’t get touched.”
In a way, the partnership with a technology company also helped validate NASCAR by replacing 32-year sponsor Winston. That a technology-based company would make that kind of commitment to NASCAR indicated that perhaps NASCAR’s demographics were broadening and that this wasn’t the same old regional sport that generated so many negative stereotypes about its fan base.
Yormark called it “a game-changing deal. When you look at all of the things we were trying to accomplish, to contemporize the sport, that was accomplished.”
“I think it was an eye-opening deal,” Obermeyer said. “Having them jump in got a lot of people thinking about what the sport is across the U.S. and across a variety of demographics. It helped take down some of the stereotypes the sport tends to be faced with. It took us out of that stereotype that it’s just a Southeastern sport.”
Obermeyer and others said the Nextel deal also helped open doors for subsequent sponsorship agreements with Bank of America, Tylenol, Nationwide, Aflac and other businesses that have a national footprint.
“Nextel really was an enabler,” Yormark said. “It helped NASCAR broaden its base of sponsors and maybe break away from some traditional partners to go after more major businesses, companies that didn’t previously have a connection to motorsports.”