A Wild Ride

Over the past decade, Nascar has raced to the top of the sports world. Is it finally beginning to slow down?

So do Nascar drivers. With the overall cost of sponsoring a top racing team now exceeding $30 million a year (that includes related promotions), teams have become beholden to sponsors. In fact, when a victorious driver is interviewed on TV, every few seconds an assistant will hand him a new cap to don, each with a different corporate logo. In racing circles this has come to be known as the Hat Dance.

Nascar also wears several hats: sanctioning body, marketer, and for-profit business. This can lead to conflicts. Take Nascar’s relationship with the three lead sponsors of the Nextel Cup: Nextel, Sunoco, and Goodyear. The sponsorship fees go to Nascar, as well as to the tracks and racing teams (in the form of bonus money, tires, and free gasoline). Nextel struck a 10-year deal in 2004 for a reported $700 million to turn the Winston Cup into the Nextel Cup. In return, Nextel (now Sprint Nextel) receives marketing exclusivity on the circuit for 10 years. “Teams are asked to restrict their [sponsorship] involvement in the three categories [represented by the three lead sponsors],” explains Wilson. “It’s important for us to be able to regulate that.”

But Nascar is finding it increasingly difficult to keep the peace between rival sponsors. One published account claims Sunoco complained about the size of the Shell Oil logo on Kevin Harvick’s uniform after the driver won the Daytona 500 in February. In turn, Nascar officials are believed to have asked Harvick to reduce the size of the logo.

Hold the Phone

More ominously, in a move that rocked the industry, AT&T recently sued Nascar. The reason? AT&T wants to stick its corporate logo on Jeff Burton’s No. 31 car. For the past six years, Burton’s car, which is owned by Richard Childress Racing, has been sponsored by wireless-carrier Cingular, a joint venture between AT&T and Bellsouth Corp. But with the recent merger between those two telecommunications companies, AT&T management has rebranded Cingular under the AT&T name.

There’s just one hitch. Nextel’s deal to sponsor the Nextel Cup bars other telcos from sponsoring Nascar events or racing teams, although it did grandfather in existing sponsors Cingular and Alltel. According to a Nascar spokesman, the clause prohibits the two from rebranding or changing paint schemes on the cars. AT&T doesn’t see it that way. Mark Siegel, a spokesman for the telco’s wireless group, insists that the clause only bars the company from changing its brand position on the vehicle or sponsoring a different racing team. “Not being able to use our logo is ridiculous,” says Siegel.

In May, a judge sided with AT&T, allowing the logo switch in a preliminary injunction. Less than a month later Nascar hit back, filing a $100 million countersuit. That suit, which derides AT&T’s actions as “ambush marketing,” claims the telco is interfering with Nascar’s exclusive sponsorship agreement with Nextel.


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