Hold the phone. AT&T has not given up on NASCAR, despite its agreement to exit the Sprint Cup Series at the end of the 2008 season, sources said.
The telecommunications turf war that raged throughout much of 2007 between AT&T and series sponsor Sprint supposedly was settled last September with an agreement — mediated by NASCAR — that allowed AT&T to keep its marks on Jeff Burton’s No. 31 car. In exchange, AT&T agreed to leave Sprint Cup, NASCAR’s top series, after the 2008 season.
But that hasn’t stopped team owner Richard Childress from lobbying NASCAR to keep AT&T in Cup racing, sources say, and Sprint’s continuing financial woes are only adding to the sense that AT&T’s sponsorship might not be dead yet.
Also, AT&T is in the first year of a three-year contract with Richard Childress Racing to sponsor the No. 31 car and there are no exit provisions or refunds for AT&T in the deal, sources said, which obligates AT&T for the sponsorship fee through the 2010 season. AT&T agreed to the deal last June before the settlement was reached with NASCAR and Sprint in September. The deal between AT&T and Childress did not require NASCAR’s approval.
If it eventually leaves, AT&T has said it will work with Childress to find new sponsorship. AT&T’s annual costs for the sponsorship are believed to be $16 million to $18 million.
RCR officials said they’ve had no formal talks with AT&T about its plans beyond this season and offered no further comment. NASCAR reiterated that the door is not open for AT&T’s return.
The AT&T logo replaced Cingular’s last year
on Jeff Burton’s No. 31 car.
“To my knowledge, nothing has changed,” said Ramsey Poston, NASCAR’s managing director of communications. “The fans certainly don’t want to hear any more of this. As far as I know, this is a closed issue. Agreements were made and we expect all sides to live up to them.”
AT&T’s official stance continues to be that it will abide by the agreement and exit the sport if nothing changes, but there’s always a chance the climate could shift over the course of a year, especially if Sprint’s business problems persist. Sources close to AT&T said the company has contingency marketing plans in place if it’s still in the sport in 2009.
The chances of that happening, though, remain slim as long as Sprint maintains its current position as series sponsor. Dean Kessel, Sprint’s director of NASCAR marketing, fielded several questions during the NASCAR Media Tour about the status of Sprint’s sponsorship, on which it spends close to $100 million a year.
“This program works,” Kessel said. “The business case remains solid for us staying in the sport, and that’s why we’re not going anywhere.”
Sprint has undergone significant personnel shake-ups in the last month, including the departure of Tim Kelly, chief marketing officer, as new CEO Dan Hesse evaluates his top executives and embarks on a mission to cut 4,000 workers and 125 retail outlets. John Garcia has been named the interim CMO until a permanent replacement is found.
The company also reported on Thursday that it will record a write-down of up to $31 billion on its lagging wireless business. Sprint stock was trading at just more than $10 a share late last week, a drop of close to 60 percent since the company bought Nextel for $36 billion in 2005.
Sprint’s difficulties have led to numerous reports that it could be ripe for acquisition by another company.
AT&T is the nation’s largest wireless carrier (70.1 million subscribers), with Verizon second (65.7 million) and Sprint a distant third (53.8 million). AT&T, Verizon and No. 4 T-Mobile combined to add 5.65 million new subscribers in the fourth quarter of 2007, while Sprint lost 109,000 subscribers. AT&T also enjoyed a record fourth quarter in 2007 with 2.7 million new customers.
The dispute between Sprint and AT&T came to a head last year when AT&T filed suit against NASCAR to rebrand the No. 31 car. Sprint joined the lawsuit as a co-defendant.
As part of its 10-year agreement with NASCAR that runs through 2013, Sprint allowed Cingular and Alltel to stay in the sport, while other wireless brands are forbidden from entering the Cup series. When Cingular, the original sponsor of Childress’ No. 31 entry, merged with AT&T last year and AT&T sought to rebrand the car, Sprint balked.
In AT&T’s lawsuit, it said it wasn’t entering the series as a new sponsor, it was simply taking over Cingular’s existing sponsorship. A preliminary injunction was filed in AT&T’s favor, but the parties settled before the formal lawsuit ever made it to court.
