Sprint prepares to hang up after 13 years atop NASCAR
|Sprint’s data showed NASCAR fans had a higher average revenue per user and lower churn rate.
“Just so I’m clear, people, [it costs] this much money for one of the fastest-growing motorsports, but more importantly a sport that mostly all we’re talking about is making left turns?” Schweitzer quipped, as recalled by Brian Corcoran, then a NASCAR marketing executive who helped negotiate the wireless company’s original Cup Series title sponsorship.
The comment about the 10-year, $750 million deal was in jest, but it illustrated the magnitude of the partnership — that the brand was paying an unprecedented amount to become synonymous with a sport. It also marked the beginning of a pact that would evolve into a 13-year relationship, survive a corporate merger and name change with Sprint, and become recognized as one of the most successful sponsorships in sports.
“When you look at when we negotiated the initial deal … it was a bit of a perfect storm,” said Mark Coughlin, a former executive vice president of Octagon, which represented Sprint Nextel throughout the duration of the partnership. “I heard [former Nextel President and CEO] Tim Donahue say it was one of the best decisions he had made in his career, because it helped position Nextel to be a real player.”
The NASCAR-Sprint partnership comes to an end with this week’s Sprint Cup Series season finale at Homestead-Miami Speedway and Champion’s Week in Las Vegas at the end of the month. And while Sprint faced stiff headwinds at times, it ushered NASCAR’s top series into a more tech-savvy era after 33 years with R.J. Reynolds’ Winston cigarette brand, industry executives said. Just as importantly, the deal came right as the cellphone and internet were becoming ubiquitous, making the partnership one that seemed to fit with the times.
“They took a very successful model from Winston and took it to a whole new level,” said Brent Dewar, NASCAR’s chief operating officer. “They innovated every year … and that’s that technology mindset.”
The deal was not without its challenges, among them the 2005 Sprint-Nextel merger that changed the trajectory of the sponsorship, which eventually was reduced in scope. There also were multiple CMO and ad-agency changes plus a couple of difficult situations with competitors Cingular and Alltel.
The original $750 million deal comprised four required spends: a rights fee, which was around $50 million annually, sources said, plus track, media and activation commitments that made up the rest. In the early days of the deal, Nextel spent beyond its contractual obligation, sources said, routinely going into the low nine figures. In 2011, Sprint signed a three-year extension for 2014-16 that saw its spend drop below $75 million annually, sources said.
Internal analysis showed that during the Nextel era of the deal, the company attributed between 1 million and 2 million new subscribers to the NASCAR partnership, Coughlin recalled. By those figures, with the then-industry standard of two-year contracts, the partnership effectively would have paid for itself even before counting the multitude of business-to-business deals also struck in the sport.
“There’s no question the sponsorship was valuable from day one,” said Kimberly Meesters, Sprint’s general manager of NASCAR Sprint Cup sponsorship, who’s worked on the program since 2005. “With Nextel, right out of the gate we added millions of subscribers. So we had tangible, quantitative and qualitative data that showed the sponsorship was going to be what we needed it to be.”
Meesters said that through the years, Sprint’s data showed NASCAR fans had a higher average revenue per user and lower churn rate than non-fans, which boosted the return on investment.
During the headiest days of the deal, Sprint Nextel activated heavily. As it worked to form partnerships with industry stakeholders, it gave out everything from merchandise to fans, calendars to media, Tiffany gift cards to team members who won incentive programs, and winery getaways to top customers during Sonoma’s race weekend. It also donated more than $3.5 million to industry charities.
Nextel’s NASCAR driver-themed phone “skins” were popular in the early days of the deal, but Sprint eventually introduced more advanced technological tie-ins like the FanVision scanner, NASCAR mobile app, the massive Sprint Experience mobile display unit and the Sprint All-Star Race fan vote, which gave fans a way to affect on-track action through their phones.
|Drivers Clint Bowyer and Matt Kenseth dressed up as nursing home competitors in a memorable 2013 ad.
Sprint Nextel took advantage of that by pumping out numerous TV spots through the years, such as Dale Earnhardt Jr.’s ad on the dangers of texting and driving, a 2013 “Drive to Win” spot showing drivers Matt Kenseth and Clint Bowyer dressed up as motor scooter-racing nursing home residents, and a 2007 spot showing Jimmie Johnson using his Nextel push-to-talk device to have his assistant bring him his Cup Series trophy so he could talk trash to Elliott Sadler.
The pact eventually changed as Sprint, which merged with SoftBank in 2013, cut back on marketing. The company reduced the number of people working on the sponsorship — either in-house or at Octagon — from what was an average of about 35 people during the prime years of the deal to around a third of that in the final years. Alumni of the Nextel-Sprint program are still sprinkled throughout sports and many have gone on to prominent careers, like Jill Gregory, NASCAR’s senior vice president and CMO, and Chad Seigler, NASCAR’s vice president of business development.
While some track operators and other industry stakeholders pitched Sprint on staying in the sport after 2016, the company plans to stick with its plan to exit the sport, Meesters confirmed. Nonetheless, as the sport prepares for the final race under the Sprint banner, Meesters says the industry should be clear on why the deal is coming to an end.
“It’s been well-documented that Sprint is undergoing a major turnaround,” she said. “Any time you’re doing a massive corporate transformation, even if you have programs that have been working, you still have to make incredibly hard choices — and that’s what you see happening here with this sponsorship.”
Some who have worked on the sponsorship for years say the end of the deal still feels a bit surreal, although it’s become increasingly real as the final weeks of the season tick away.
“It will be surreal when the final flag drops at Homestead and this entitlement has officially come to a close prior to the banquet,” said Arnold Wright, an executive vice president at Octagon who has worked on the partnership since its inception. “This has been a big piece of who we’ve been as an agency for the last 13 years.”