The Frontstretch: Give Credit to Sprint / Nextel In AT&T Sponsorship Resolution by Tommy Thompson -- Tuesday September 11, 2007

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Give Credit to Sprint / Nextel In AT&T Sponsorship Resolution

Thompson In Turn 5 · Tommy Thompson · Tuesday September 11, 2007

 

I hold in my heart the belief that reasonable people will come to a reasonable solution, and hopefully we can get there sooner than later. – Jeff Burton

With a compromise agreement being reached last week that effectively puts to rest the ongoing legal battle between NASCAR, AT&T, and Cup Series sponsor Sprint / Nextel, it appears that reasonableness has indeed won out. The topic, though generally considered a "sideshow" to the competition that attracts millions of fans to the sport, was nonetheless of significant importance to all parties concerned. It’s an issue that certainly needed to come to a quick resolution; but make no mistake about it, chalk this one up as a win for AT&T, NASCAR and Richard Childress Racing.

The agreement to put the wireless provider back on the car is perfect timing; it allows RCR to adorn the No. 31 with the contested AT&T logos just as the Chase for the Championship begins. Remaining associated with driver Jeff Burton, the company officially changes its branding with this compromise, a move that will be allowed by NASCAR through the end of the 2008 season. However, the agreement will also result in AT&T terminating their sponsorship agreement with RCR some two years early, prohibiting them from further primary sponsorship in NASCAR's most popular series. It’s but a small concession on AT&T's part, as they will still have 16 months to use the No. 31 as a platform for advertising their transition from Cingular to AT&T branding – a move that followed the merger of the two companies last year.

But don't be fooled by an agreement that seems to give a little something to all sides of the equation. The way I see it, AT&T essentially crashed the party and was allowed to get away with it. In a very calculated campaign to discredit NASCAR in the public eye, where right and wrong sometimes can be blurred by ill-conceived perceptions, the notoriously aggressive company simply made a big enough ruckus about the whole thing until Sprint/Nextel and NASCAR relented…just to shut them up. Frankly, the way they went about it was not unlike the toddler that flops onto the floor kicking and screaming, throwing a tantrum until Mom gives in to the youngster’s wants just to quiet the ill-tempered child. And quieting AT&T was of the utmost importance to NASCAR, as their threats of continued legal muckraking, though generally considered becoming more and more frivolous, began to take a serious toll on NASCAR's ability to sell themselves to corporate America.

Just look at the current state of their number two series for proof. With the departure of Anheuser-Busch from the Busch Series for the 2008 race season, concluding a 25-year sponsorship, the AT&T "sponsorship exclusivity" challenge has crippled the sanctioning body’s ability to attract a lucrative, deep-pocketed series sponsor. It is widely reported that the original asking price of $30 million dollars per year has been reduced by almost half as potential sponsors shy away from any deal in which they cannot be guaranteed industry "exclusivity" in advertising within the second-tier NASCAR division. Like it or not…exclusivity is important to companies who do not want to share their very expensive series sponsorship stage with direct competitors. Once AT & T sent NASCAR to court, that scenario was directly threatened…and many corporations simply decided they didn’t want to be faced with any such hassle.

With that in mind, it has baffled me all along as to how many have seemed genuinely sympathetic to AT&T's plight, in direct disagreement with both NASCAR and Sprint/Nextel in their efforts to enforce the exclusivity clauses. Can anyone truly say that if the shoe had been on the other foot that AT&T's position would be any different? Of course not! NASCAR spokesman Ramsey Poston, in statements concerning AT&T's challenge of the "exclusivity" agreements, echoed my previously stated opinions on the topic well.

"When AT&T merged with Cingular, they knew what the rules were,” Poston said. “They knew they could not rebrand that to AT&T. In the same way, I very much doubt AT&T is going to invite Sprint/Nextel or any other competitor into their exclusive deal for the iPhone, or invite Sprint/Nextel or any other competitor to advertise at AT&T Park, the home of the San Francisco Giants. They understand exclusivity."

But by throwing a litigation tantrum, and keeping up the appearance of being the victim, AT&T got what they wanted. It’s not what was right or even what they would have necessarily conceded to had the roles been reversed…but they got it anyway.

The kindness through which NASCAR bestowed this agreement becomes even more impressive when you look at AT & T’s past history. The wireless provider was informed in 2005 that they would not be allowed a primary sponsorship with BAM Racing, coming as a result of the newly inked $700 million series sponsorship agreement with Nextel. At that time, AT&T accepted the terms of NASCAR's "exclusivity agreement" with their telecommunication competitor without so much as a peep. They had no complaints…and why should they? It was a series sponsorship bidding process that AT&T had participated in back in 2003, but they chose to allow Nextel to outbid them for it when push came to shove. That left Nextel with the upper hand in this whole situation, and rightfully so, considering the amount of advertising dollars they are pouring into the sport each year.

As with any such legal spat between businesses, there are always innocent victims. Richard Childress Racing had become nothing more than the pawn in this big-business tomfoolery. Just think of the bind owner Richard Childress was left in. On the one hand, he wanted and needed to keep his AT&T sponsorship, valued at an estimated $15 million a year; but on the other hand, doing so put him in danger to irrevocably damage his longtime relationship with NASCAR. It’s a position I don’t envy, but one Childress at least handled with both dignity and respect for all involved.

Clearly, there is no argument that the turmoil surrounding the No. 31 sponsorship was an unfortunate situation. But as harsh as it may seem, given a choice between the sponsorship of one team and a series sponsorship of more than $70 million annually that contributes to the coffers of all Cup team owners, Childress' plight should have inevitably taken a back seat to the greater good of the sport.

So, give Jeff Burton credit for his faith in a reasonable resolution being reached in this contentious matter; he certainly saw hope where I had not. Though the behind-the-door negotiations will undoubtedly remain confidential, I have to believe that Sprint / Nextel stepped up and became the dealmaker in this landmark resolution. Though it was clear that NASCAR – who originally lobbied Nextel to "grandfather" in these wireless providers in the first place – would welcome this type of solution, I could not predict Sprint / Nextel agreeing to allow the 16-month grace period. Truth be told, they had no reason to allow the AT&T branding on race day after having won their argument in court, except to stop the No. 1 wireless company’s continued harassment of both them and NASCAR before it got any worse.

That’s a key point in this whole theory, for the biggest loser in the whole episode stood to be NASCAR. Had AT&T's legal wrangling been upheld by the courts and the "exclusivity" allowance eventually been deemed unenforceable, it is reasonable to assume that Sprint/Nextel would have sought to void their sponsorship with NASCAR for breach of contract. This situation would have quite possibly left the Cup Series not only without a sponsor, but having to land a new one without the benefit "exclusivity" to offer a potential corporate partner. It’s a scenario that would have crippled NASCAR in an effort to gain the kind of sponsorship dollars that, as Poston explained, "…essentially sponsors every driver. The funds they put into the sport go into the point fund, go to help each race winner and help promote the entire sport through commercials and marketing."

"That's all part of the [sponsorship] package," the NASCAR spokesman continued. "Sprint/Nextel are the ones that have devoted their company and resources to NASCAR, and they benefit every single driver in there. So. that's why we need to protect the exclusivity of that contract on behalf of the entire industry."

NASCAR’s statements ring true in this case. Ultimately, it was Sprint/Nextel that held all the cards in deciding whether to allow AT&T to stay at the party uninvited…and they took the high road and agreed to do so.

Good for them!

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M. B. Voelker
09/12/2007 06:58 AM
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>>AT&T essentially crashed the party and was allowed to get away with it. In a very calculated campaign to discredit NASCAR in the public eye, where right and wrong sometimes can be blurred by ill-conceived perceptions, the notoriously aggressive company simply made a big enough ruckus about the whole thing until Sprint/Nextel and NASCAR relented…just to shut them up.<<

Thank you, thank you, thank you for stating that so plainly and clearly.

Way too many people have been so caught up in their “stick it to Nascar” attitudes that they have been utterly blind to AT&T’s perfidy in even filing their phony lawsuit to begin with.

They acted just like a playground bully who grabs hold of a toy another kid was playing with then yells until he fools the adults into scolding the kid who had the toy first for stealing it from the bully.

Bill
09/12/2007 09:27 AM
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“Clearly, there is no argument that the turmoil surrounding the No. 31 sponsorship was an unfortunate situation. But as harsh as it may seem, given a choice between the sponsorship of one team and a series sponsorship of more than $70 million annually that contributes to the coffers of all Cup team owners, Childress’ plight should have inevitably taken a back seat to the greater good of the sport.”

That Statement right there is the reason I side with the team’s sponsor (in this case it happens to be AT&T) and the Series sponsor (Nextel). My opinion would be no different had it involved other players.

In simple terms, you are of the opinion that a huge Series sponsor that increases the ante for the end of the year points fund is good for the sport. In some situations I would agree with that, but not with the current state of NASCAR.

The one thing that seems to matter anymore in the sport of NASCAR is ‘where are the drivers in the points?’. The individual races at hand don’t seem to matter anymore. It is slowly creating more boring races because all the teams are on an agenda for points and points only. What about going for the race win?

With that in mind, it is of my opinion that the Series sponsorship with its exclusivity agreements is chasing away other sponsors. It is even admited in this article that the Busch Series is having difficulty finding a sponsor for that very reason. Now, the teams and the individual races aren’t getting the sponsorships needed for quality teams and quality races.

In my opinion, the payouts for the individual races would mean more for the quality of racing than the end of the year points fund. Yes, the contracts signed need to be enforced, but NASCAR didn’t need to create the situation in the first place.

Scott
09/12/2007 09:49 AM
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M.B.,

How in the world can you call A T & T/Cingular the bully in this battle? Sprint/Nextel and NASCAR are the playground bullies in this fight.

When Sprint/Nextel started sponsoring the series, A T & T/Cingular had been involved for several years. Now that they have merged with A T & T, Sprint/Nextel is telling them that they should not be allowed to do that because of their agreement. The funny thing is that Sprint/Nextel is doing the exact same thing!

I agree with Bill in that all of the series sponsorships are driving possible sponsors away from individual teams. If someone approaches NASCAR about possibly sponsoring a team, NASCAR convinces them to become the “Official” whatever “Of NASCAR” instead. Just look at the list of “Official” whatevers. They pretty much preclude hundreds of sponsors from coming into this series. Brian France, in his greed, is actually destroying this series because the teams are having trouble finding sponsors to help pay for everything the team needs.

Gymmie
09/12/2007 10:56 AM
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Tommy—One error regarding the BAM sponsorship. It was AT&T the PHONE company, not AT&T wireless who wanted sponsorship. Nextel wouldn’t let them because they feared folks would associate it with the wireless company. And IIRC, AT&T cable was an associate sponsor on Roush (Matt’s car I believe) also at the time and they weren’t allowed to return. I’m having trouble finding reference now, but I’ll keep trying.

Anyway, I’m probably biased being a Jeff Burton fan, but if it was pretty much any other driver, I’d still be in their corner. I’m pushing even harder for Jeff to win it all!

While I’m glad that they have to logos back, I’m VERY upset that they’re being forced out of the sport.

Yes, I can understand a sponsor wanting exclusivity, however, when teams are having a hard time finding a FT sponsor, it seems ridiculous to fight over who can and can’t be a sponsor.

How many nekkid cars and folding teams do there need to be before someone GETS IT and makes it easier for sponsors to come into the sport.

Mark
09/12/2007 11:11 AM
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You might want to go ahead and just put Ramsey Poston’s name on the by-line of this column, cause it sure sounds like he wrote it for you. And why would we accept Postons’ version of all of this as being the truth? What else do you think he would say if not the official NASCAR line. The lawsuit against AT&T by NASCAR had only one component to it. It was not about exclusivity for poor little Sprint/Nexrel. It was not about the good of the sport. It was about a sponsor or anyone else having the audacity to stand up to NASCAR. In case you haven’t noticed, the France family tries to deal harshly with anyone who dares threaten their authority. Well this time NASCAR lost and had to back down. But what this really accomplished was to lose a sponsor for RCR that spent millions on the team and on race advertising in general. It has also scared away other potential sponsors for teams and for the replacement for Busch.

John
09/12/2007 11:57 AM
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Sometims these writers just amaze me with their bias. First toyota and now sprint………Gimme a break!!!

John L
09/12/2007 12:37 PM
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What a load of bull this article is spewing. The fact is that the decision by AT&T to rebrand Cingular had 0 to do with trying to pick a fight with Nascar. I’m willing to bet the sponsership didn’t even get discussed at the meeting where AT&T decided to rebrand. Rather than Nascar and Nextel being such idiots they should have just accepted that Cingular has changed its name. I wonder if Nascar will also try to force out Coke if Pepsi decides to take over the Busch series sponsership? Or force out McDonalds if Yum brands takes it. Maybe they should prevent Home Depot from being on the car at Loews Motor Speedway. Or even beter, maybe they should keep all manufacturers out but Chrysler at the UAW-DaimlerChrysler 400. Obviously they can’t do that, so why do it with the Cup Series sponsership?

One other statement in the article that is laughable is that RCR is somehow innocent in all this. That’s crazy. I assume that they took the check for the sponsership and that they didn’t go to AT&T and say here’s your money back we don’t want it. Had they been more involved in this situation then it would have ended much sooner. The court ruling that AT&T lost wasn’t that they were wrong, just that they didn’t have any direct connection with Nascar. In other words, AT&T should have been taking RCR to court since their contract was with RCR.

M. B. Voelker
09/12/2007 02:48 PM
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@Scott,
AT&T certainly succeeded in conning you.

From the very beginning when Nextel first came in it was thoroughly reported that Alltel and Cingular were grandfathered in but that they were not permitted to,

A — Change teams,
B — Change cars,
C — Change names.

AT&T knew this up front. It wasn’t ambiguous or unclear in any way. They knew exactly what they were getting when they bought it.

But they counted on gullible people like you and the other posters today — who spew hatred at the sport you theoretically love — to make so much noise that Nascar would have to give in to their unreasonable demands to stop the bad publicity before you succeeded in returning a major national sport to the status of a small-time, regional curiosity.

As for the childish, “But Nextel is doing it!” whine, it was equally reported from the beginning that Nascar had put a clause into the Nextel contract that Nextel was only permitted 1 name change during the duration of the contract.

You and those others who are taking AT&T’s side out of some crazy, misguided, “sympathy for the little guy” have been completely taken in by a massive company’s clever marketing coup. They’ve manipulated your emotions while turning off your brain.

Otherwise you’d realize that to destroy the title sponsor’s expectation of exclusivity is to, in the end, destroy title sponsorship completely. Expecting that to have a positive effect on Nascar would be like expecting to improve your car’s fuel mileage from “saving weight” by taking out half the screws and bolts that are holding it together.

Fred
09/12/2007 03:25 PM
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Get the facts right. AT&T Wireless did not merge with Cingular. Cingular won the bidding war with Vodafone and bought AT&T Wireless for 41 billion dollars, then decided to give up the Cingular name and take the more well known AT&T name becoming AT&T Mobility.

So unless in the grandfather clause of letting Cingular and Alltel remain sponsors said that the company couldn’t change its name (no clue where M. B. Voelker got his information considering the secrecy of NASCAR), then I think AT&T has every right to have its logo on Burton’s car.

I just think it was down right stupid to even bother worrying about the name change. All it did was make NASCAR, along with Sprint Nextel, look like a big bully and give AT&T a ton of media coverage.

Then to top things off, Sprint, who bought Nextel (it wasn’t a merger either) is doing the exact same thing renaming the Cup series.

As for the “whining”, well, what do you do when you change the name of a 100 or so billion dollar company but still have a contract to sponsor a car and they tell you that you can’t use the new name of the company? You fight it. Simple as that.

Ron
09/12/2007 05:34 PM
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To all concerned that wrote in, We need to go back to RJR and bring back the Winston Cup and we would never have to worry about this situation again. Maybe they could go ahead and ban Jeff Gordon and Nicorette. I’d be all in favor of that if it was the only reprecussion! Nextel’s point fund when split among all the teams amounts to little more than chump change when compared to the costs of putting a competitive car on the track. The largest chuck of cash is clearly heading to the France family coffers which is too taboo of a subject to talk about by any paid nascar writers!!! By the way good luck finding a title sponsor for the Busch series as well. Looking at those Busch and Truck series purses are a complete joke anyhow! Some of the races are paying out less than $10,000 a race for last place which doesn’t even cover the cost of transporting the car, hauler, and putting the crew in motels and feeding them for the night. Look at the agony Morgan Shepard had when he wrecked his primary Busch series car several weeks back. Guys like him and Johnny Davis are the heros bringing their cars so the sport doesn’t suffer the embarrassment of not having a full field. Not only that they get very little back in return in the way of points funds and the like!!! These funds should be 2 to 3 times higher than what they currently are in the series!

Annie Mack
09/13/2007 10:43 AM
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I guess I should be counted on the “stick it to Nascar” team. My reasons have little to do with exclusivity of sponsors and more to do with what I’ve seen lost from the sport in recent years. Personally, I’d like to see the whole package dissolved and start from scratch. Nascar has gotten way too big, way too fast and they are courting sponsors who want to put up big bucks to call the shots and run the sport their way. Nascar has made too many decisions based on the welfare of the sponsors/networks and too few based on the welfare of the fans/teams. Their balloon is, indeed, going to explode. I only hope that there is enough left in the end to rebuild something good.

Darin
09/13/2007 12:49 PM
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Good job for At&T—— NASCAR is built on competition period, the teams compete, so should the sponsors. When you have the 800lb gorilla going out and undercutting the Busch teams so NASCAR can get these sponsors to be the “official whatever of NASCAR”, this is a bunch of crap… Look at all the truck teams that can not compete, all the Busch teams struggling just to fill a 4-7 mil$ budget or less. NASCAR needs to look back at how they got so big. They left the business plan long ago. Take trucks back to the small tracks. Increase the purses to the teams. NASCAR is forsaking the folks who got them there. The fans do not want to see these big money bags coming in like Gillet & Fenway, but the way things are going they do not really have a choice.. And Gannasi screwed up champ car—(Bringing in foreign drivers) He will screw up the cup series and NASCAR series as a whole…

ACEr
09/14/2007 03:48 PM
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@M. B. Voelker wrote:
A — Change teams,
B — Change cars,
C — Change names.

AT&T knew this up front. It wasn’t ambiguous or unclear in any way. They knew exactly what they were getting when they bought it.
___________________________
However, even then Cingular was half-owned by AT&T. The other half was owned by Bellsouth which AT&T bought earlier this year.

I’ve heard about this no name change before and if then Cingular’s lawyers dropped the ball.

What happened was AT&T went from being half-owner to sole owner of the wireless company and there was no longer any need to keep the Cingular name alive.

The company hasn’t changed, only its ownership and its name.

Now, if you and I read correctly and that no-name change clause is in there, then $print/Nextel and Na$car are in the right.

But, common sense says that since it’s the same company, just with a different name they should be allowed to change it. To me, this is the same as a company saying an employee cannot change their name. It might be legal, but it’s doggone stupid. (Of course, the law has little to do with common sense.) But, in the court of public opinion, $print/Nextel and Na$car, look like the bad guys regardless of what the court says. And since public opinion drives sales, $print/Nextel and Na$car lose money even though they, correctly, won the battle.

IMHO, the same thing happened in the Dale Earnhardt, Jr. – DEI negotiations. Dale had no legal right to 51% of the corporation and, after he left, his step-mom was on firm legal ground with her stand on “selling” the number. But, she looked like the bad guy. Here too, Teresa and DEI won in the negotiation but lost in the public eye.

And, just so everyone knows, I have no reason to favor either party. My home phone service is delivered by AT&T (formerly BellSouth) and I have been a loyal Sprint customer for almost 10 years.

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