NASCAR and AT&T go back to court this week, at odds over thepaint scheme on the No. 31 race car. But the larger issue of exclusivity in thewireless category will loom over the proceedings.
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| Cingular on the No. 31 Nextel Cup car. |
Sprint Nextel, NASCAR’s top series sponsor, bought the largest sportssponsorship ever sold, exclusivity included, and has spent close to $100million a year since 2004. Cingular and Alltel were allowed to stay as teamsponsors under certain restrictions.
But in a preliminary injunction ruling in May, a judge saidAT&T could replace Cingular on the No. 31 Nextel Cup car because therestriction on rebranding wasn’t spelled out in NASCAR’s contract with RichardChildress Racing.
Those in the industry said it was widely known that Cingular andAlltel could not rebrand if one of them merged with another company in thevolatile telecom world. But NASCAR didn’t put it in writing, so AT&T’s blueglobe has been on the hood of the orange No. 31 car for the last two-plusmonths.
“AT&T has nothing to lose,” said Zak Brown, founder and CEO ofmotorsports agency Just Marketing. “They might not have very good relationshipsin the industry, but they’ve got the globe on the car.”
AT&T’s emergence in NASCAR this year has led Sprint Nextel tosay that its exclusivity has been compromised. And it remains at risk, based onthe current legal precedent. Alltel is ripe for acquisition, analysts say,which could allow another company to rebrand Alltel on the No. 12 Penske Racingentry. Alltel was bought earlier this year by two private equity firms.
“For Alltel and other brands with competitive categories, thiswill make them take notice,” said Jonathan Gibson, vice president of marketingat Pierce Promotions and a former executive at Miller Brewing. “This is one ofthe first major cases of somebody pushing the envelope. NASCAR and othersanctioning bodies selling entitlements are going to have to closely monitortheir language in these contracts and watch for potential changes. You can’tpredict every change, but you have to be strategic in your approach.”
Unless the judge hearing NASCAR’s appeal ofthe preliminary injunction on Thursday overturns the ruling, Sprint Nextel mustplan its next move. There are any number of ways in which Sprint Nextel mightseek relief if AT&T prevails. NASCAR could attempt to add value withoutreducing the required spending, or it could offer a discount. Escalators in thecontract could be voided or additional years added.
How NASCAR reacts to Sprint Nextel is part of the intrigue.
“NASCAR should be proactive, understand that Sprint Nextel’sexclusive rights have been devalued and figure out what the damages are so theycan move on,” said Bob Cramer, the former president of Genesco Sports andformerly the MasterCard sponsorship chief. “If AT&T wins, and I think it will,NASCAR and the teams are going to have to get together so that this doesn’thappen again. Sponsors are supposed to be going down a mutually beneficial pathwith the league.”
Most team officials expressed some level of satisfaction thatAT&T has been allowed to rebrand the car. With funding as critical as ever,most people at the team level don’t want to see the sport lose a sponsor aslarge as AT&T.
