Friday, August 24, 2007

Hard to find any real winners in AT&T vs. NASCAR, but neither wants to be the loser

BRISTOL, Tenn. – Sometimes the right thing to do isn’t the smart thing to do, and vice versa.

The trick, I think, is not to get backed into a position to have to choose between the two too often.

That’s where I think NASCAR is right now, midday on Friday, on this whole thing with AT&T and its sponsorship of the No. 31 Chevrolets owned by Richard Childress and driven by Jeff Burton.

NASCAR, I think, has allowed itself to be cornered into a no-win public relations situation.

Burton’s No. 31 car is making laps at Bristol Motor Speedway with no sponsor logos on it, at all, and AT&T is managing to make that look like NASCAR’s fault.

It doesn’t matter that the situation is far, far more complicated than that. What matters is that NASCAR comes off looking like the bad guys, and is beginning to look a little petty, to boot.

Late this morning, a NASCAR public relations person sent an e-mail to various broadcast elements within the sport saying that "during this weekend's…coverage of the Sharpie 500 and in any on-air discussions, the Number 31 car should be referred to ONLY AS the "RCR Chevrolet."

"If you could clearly communicate this to your producers and hosts, it would be greatly appreciated."

This was "communicated" to me near the end of our show on Sirius radio. So we only had a few minutes to rip NASCAR for taking such a ridiculous stand. But we did take full advantage of it.

OK, a quick review.

The No. 31 car was sponsored by Cingular when Nextel took over as title sponsor of NASCAR’s top series. NASCAR gave the team, along with the Alltel-sponsored team for Ryan Newman, a clause saying they could keep those sponsors even though no other telecommunications deals could be made to conflict with exclusivity promised to Nextel.

Then, AT&T bought out its partners in Cingular and moved to change the name to AT&T Mobility. It wanted the No. 31 car to reflect that change, but NASCAR said that’s not what the grandfather clause allowed. Cingular was OK, AT&T was not.

AT&T sued. NASCAR countersued. In May, AT&T got an injunction allowing its logos to go on the car. Last week, an appeals court overturned that injunction. The actual case is still pending, but as the legal proceedings stand right now, NASCAR has the right to tell AT&T to take its logos off the No. 31 car.

NASCAR says it is trying to protect all of the teams in the sport by defending the title sponsor’s right to exclusivity. RCR and its fans feel NASCAR is trying to deny it the right to associate itself with a sponsor that has been in the sport for a long time and merely wants to stay.

It’s a tough spot all the way around.

NASCAR is trying to land a title sponsor for what’s now the Busch Series. If it tells a company it can guarantee exclusivity, that company could look at the Nextel-AT&T thing and wonder if that’s true. It also has to think about its major series sponsorships down the line. If AT&T has some right to challenge Nextel’s position, why couldn’t Firestone try to side-door Goodyear?

RCR wants to keep going with what used to be Cingular and feels like it should have every right to do that. Further, the appeals court decision last week basically denied that Cingular has "standing" to sue over this deal.

The aggrieved party would be RCR, the court says. That means that to show its sponsor it’s willing to fight for its rights, RCR needs to sue NASCAR. NASCAR, meanwhile, needs to show the industry it’s willing to fight by fighting in court, too.

All this week, AT&T has been looking for other avenues to use the courts to get its way. As of this writing, it has failed. There’s no question that AT&T is going to the mat to fight this thing, and NASCAR isn’t all that keen on that. NASCAR likes to get its way, too.

NASCAR this week rejected a couple of alternative paint schemes submitted by the team. In response, AT&T is portraying itself as a martyr for the team and the sport.

"I can’t think of too many occasions when a sponsor has run a car without a logo or any other identifying markings," said Mark Siegel, executive director of media and industry analyst relations for AT&T, in an e-mailed statement. "That is because NASCAR left us with no choice.

"We thought (the alternative paint schemes rejected) was more than a fair compromise, given the Court of Appeals’ recent ruling. NASCAR rejected this proposed paint scheme, leaving us little choice but to go with a logo-less, brand-less approach.

"Because we love the sport, we are willing to take this approach, which literally does nothing for our brand image or identity. We don’t want to disappoint the great NASCAR fans, and we want to continue to support Jeff Burton and Richard Childress Racing."

This battle has become one that neither side wants to lose. They’re fighting for what they think is right.

What needs to happen is for both sides to find some solution that works for everybody. I think that’s what would be smart.


Anonymous said...

Just one more reason for fans to be fed up with the NASCAR ruling body. Paint schemes out ? A.T.&T. out ? I hope everybody knows that the car is sponsored by A.T.& T. and switches from Nextel as soon as their contracts expire.

Anonymous said...

Tom in PA says:

As a long-time Jeff Burton fan, it's saddening to see him once again suffering (indirectly or otherwise)due to sponsor issues. In his final days at Roush, they couldn't or wouldn't find one for him. Now that he's moved to RCR and re-established himself as a top contender in the eyes of his peers, the fans and the media, he is yet again beset by sponsor issues. Even though he's still maintaining his Chase position, you have to think that somewhere in the back of his, Richard's and the team's mind, this mess is weighing on them a bit.

While I guess they feel they need to take this stand from a business perspective, from a real world one, Nextel's position is utterly ludicrous. With all the yellow and black paraphernalia around ANY Cup track, the big simulator pavilion, and all the stands offering to sign you up and trade your money for minutes, how could ANYONE at that company reasonably feel like having *1* car on the track, and maybe a pair of souvenir trailers, would constitute a competitive threat to their series sponsorship?

Unless of course they're not confident that the product they're offering is superior...

I guess the best way to resolve this for now would be to have the #31 team come out fighting tomorrow night and win the whole thing. If nothing else, it would certainly make for an interesting post-race victory lane interview!

As always, David, thanks for your thought-provoking commentary!

GO 31!

Anonymous said...

Not only is this petty childlike attitude bruising NASCAR, it's showing the hypocrisy of NEXTEL. Someone please tell me why they can change THEIR brand name, as well as rename the series, but deny that right to others? Don't forget, people, next year it'll be called the SPRINT Cup.

Anonymous said...

I think the 31 team should take the high road, run a "Get Well, Max Helton" scheme, and shame NASCAR. How can NASCAR run a major sponsor out of the sport when it knows how many teams are fighting to find sponsorship? And maybe somebody should explain the term "Pyrrhic victory" to NASCAR. (And spell it for them.)

Anonymous said...

Obviously NASCAR (and for that matter add Teresa Earnhardt) don't pay any attention to the FANS and their comments, or do they really care. Among my cohorts NASCAR is the heavy and is alienating fans over this AT&T matter, just as TE has done with Jr. Not to worry Jeff Burton or Jr. we'll follow you wherever you go and no matter who your sponser is.

Andrew S. said...

There wouldn't be this problem if AT&T has signed up as the primary sponsor for BAM Racing at the beginning of the 2003 season, they would have fallen under the grandfather clause.

Anonymous said...

I guess it's easy to hate NASCAR on this one.

In the business world, ensuring exclusivity to your title sponsor is worth employing the grandfather clause. AT&T knew that this would happen and chose to fight it rather than accept it.

If you speed and get caught, it's not the police's fault for enforcing the rules. AT&T is trying to speed because they are AT&T

Anonymous said...

Well that was overboard..surely to god there is a compromise in there somewhere...I agreed with the Nextel_Nascar stance up till this point ..however this kind of childish action leaves a bad taste in my mouth..what ever points nascar had ganed they just lost and set themselves up as the bad guy PR wise...If we can have Camel in the Winston Cup series with some creative marketing with the Smokin Joe campaign surely we can have the same thing here...Somebody in Daytona Beach didn't have their thinking caps on

Anonymous said...

Obviously, NASCAR hasn't thought what will happen when due to their exclusivity contracts with series sponsors precludes the owners ability to maintain or gain sponsorship for the teams. No viable team sponsors means no car to field. No cars means no race.

Anonymous said...

Andrew, Nextel was smart enough to negotiate one name change into their contract, which is why they are allowed to change the name of the series. Too bad ATT didn't have the smarts to stay in the series and get grandfathered. Sounds like a bunch of sour grapes on ATT's part.

Anonymous said...

I think that AT&T should take over as title sponsor for the "former" Busch Series and make it more popular and attractive than the Nextel Cup. Have higher purses to attract the cup drivers and make it the "Premier" Nascar series and have Nextel (Sprint or whatever) play second fiddle. I am sure AT&T can afford to do it.

Anonymous said...

The comment about Nextel being "smart" enough to incorporate a provision in their sponsorship allowing them to change the name of the series once is not analagous to AT&T wanting to change their name. Obviously, NASCAR doesn't want the name of the series to be changing is expensive and dilutes the brand of NASCAR for the top series. AT&T could change their name daily, and it makes no effect on the sanctioning body, or the team they sponsor, so long as they are footing the bill for the sponsorship. Thus, even if Cingular had a provision that they could change their name once (which doesn't make sense, they should be able to change it as they please for co-marketing and branding, like Mars does with their candy brands and Coke does with coke brands), it would likely not be grandfathered in, as you asserted that it would, since the change would be contested by NASCAR and Sprint under the same grounds that they are contesting the change. Read the complaint.

In my opinion, this is incredibly hypocritical for NASCAR, and hurts the potential for sponsors to get into the sport, since there is a potential that they could be blocked from opening or expanding their brand into a new market due to exclusivity of that market potentially being given to another company. Monopolies aren't good for free markets, and no exception should be made for NASCAR. These exclusivity agreements don't increase sponsorship, they hinder it.

Anonymous said...

Sprint/Nextel could come out of this being the big losers. NASCAR fans have always proven to be loyal to sponsors but usually to the driver's sponsors. Many other boards I have read are calling for a boycott of Sprint/Nextel. I have been with Sprint in the past and had nothing but problems. The best (or funniest) scenario would be for Jeff Burton to win the Championship.

Anonymous said...

Brian and his family members are only interested in what is financially beneficial to them. Business (can you say money), pure and simple.

It appears pretty apparent that AT&T is taking on NASCAR in its name so as to prevent RCR having to jeopardize its standing with NASCAR. The appellate court appears correct - one contract is between AT&T and RCR and the other is between NASCAR and NEXTEL, so what standing does AT&T have to intervene in a contract to which it is not a party? Unfortunately, none unless they can find another way to "back door" their way in, which is unlikely based on the appellate ruling.

While I don't like it I think everybody is going to have to live with it, even RCR and AT&T. But I am stymied trying to figure out how Ms. Earnhardt got brought into this. Think I'll sleep on that one.

Monkeesfan said...

The problem is NASCAR has no right to mandate exclusivity clauses in sponsor contracts - they have no right to tell sponsors they can't participtae in the sport, and this is what NASCAR is telling AT&T. We as fans need AT&T to win this battle because what NASCAR is doing to chasing away sponsors and taking more and more away from teams for its own personal aggrandizement; defeating NASCAR in court will force NASCAR to end exclusivity clauses and allow more sponsors into the sport. And no, Nextel won't quit because they'll then have competition from rival telecommunication companies any more than RJR quit when Skoal quickly established a promonent role in the sport's sponsorship.

Anonymous said...

Well, I did my part and dumped Sprint in favor of "Cingular", AT&T Mobility. It doesn't take up to 48 hours to get my voicemail notifications. I don't drop every other call and have a phone that will actually hold a charge and pick up a signal everywhere I go.

I live in a very large metropolitan area and my Sprint phone would lose signal and drop calls all over the place. The sweetest thing is my phone plan is cheaper, even with an extra phone on it. Gotta love it.

Personally, I think AT&T will ultimately prevail. There is nothing indicating that name changes are not allowed. If there is no verbage stating as such, then Nascar has a problem. Go get 'em AT&T and RCR!!

Anonymous said...

Has anyone noticed that The Espn poll Shown during the race is done by A.T.&T

Anonymous said...

I have no sympathy for AT&T. They knew the rules. Time for RCR and AT&T to move on and quit whining and crying. This is not NASCAR's fault.

Anonymous said...

Because of the exclusivity rights and the grandfather clause, Nextel/Sprint only had to worry about two competitors with regard to sponsorship.

Now with Cingular becoming AT&T, they have two competitors as before. Why would NASCAR or Nextel have a problem with that?

Cingular had the grandfather clause, just because the company changes hands it should not be penalized.

This is hurting Sprint big time. They ought to just tell NASCAR to lay off.

Daniel The Last said...

All you all that say NASCAR looks bad over this AT&T thing,grow up. Exclusivity inspires larger contracts, which is good for everyone, not just Jeff Burton. NASCAR don't want Cingular or Altell PERIOD. Get a new sponser for crying out loud. RCR has litterally had years to move forward with a new sponser and have chosen to dig in there heals. How's that working out for ya RCR? As for you folks saying your gonna drop Nextell/Sprint as your carriers over this, I bet every damn one of ya shops at Wal-Mart, which has done more to destoy America than any other business. (See: Wal-Mart the high cost of Low prices, @ your video store. Finally, Jeff Burton fans are a bunch of whining babies just like him. Hmm...I wonder if Tony Stewert fans are a bunch of talk before you think types. Have a nice day GO 48 !

Anonymous said...

The thing that gets me about this would be the arrogance of NASCAR. I read the other day where them winning in court was equal to "David beating Goliath". Which is funny. And horrible. If NASCAR is David, there's no way you could ever consider RCR Goliath. Now, I think they meant AT&T as Goliath, but what a bad word choice. RCR is gonna get screwed out of a loyal sponsor if NASCAR wins, and I doubt Mr. France or Helton care if the 31 car goes under due to lack of sponsorship.

The thing that pisses me off is they're sucking up so much money from official sponsors of NASCAR, and they're basically competing against team owners for those dollars. And team owners need the funding much much more than the sanctioning body does. Sunoco could be on a car, Tylenol could be on a car, etc... Maybe some of those smaller teams could have a chance, but it's difficult when you're fighting your own sanctioning body for sponsor dollars. NASCAR should be there to fairly sanction and govern the races, but they're way too greedy and arrogant. B. France just sees dollar signs everywhere.
To conclude, I wish someone would be able to fine NASCAR a large amount of money for violating Rule 12-4-A; "actions detrimental to the sport, conduct unbecoming of a sanctioning body".

Monkeesfan said...

Anonymous #18, they know the rules and followed them - NASCAR is jerking them around.

Bruce E Simmons said...

Hi David,

I think it's an interesting request NASCAR has made of the industry regarding the AT&T 31 car that has no logos! (OK, with that being said)

NASCAR is a business. They are protecting the contracts they have drafted with entities.

AT&T is making a lot of media by digging in. (It's all press for them.) So whether they win or lose, they've got more media exposure. (Does anyone remember the last time AT&T fought a major case against them?)

Exclusive contracts do draw the sponsors interested in taking advantage of the growing NASCAR market share. Without sponsors, we wouldn't be watching our races in the comfort of our homes, because if you haven't noticed, everything you do and everywhere you go is saddled with advertising.

And with that being said, here's my dose of irrationality:

AT&T: Put the old logo back into play, and call it your Cingular Racing Division. Then, rather than spending your money in the courts, spend it in a brazen marketing storm so we can quit being distracted.

by Bruce Simmons

Anonymous said...

I was on hold with AT&T over 45 minutes one day and 25 minutes the next. It seems to me that they need to put their money and efforts into their customer service instead of cars running around in circles.

Monkeesfan said...

Burce, NASCAR can afford to have dueling sponsors in the sport - this whole exclusivity deal is not protecting sponsors as much as chasing them away.

Anonymous said...

"The problem is NASCAR has no right to mandate exclusivity clauses in sponsor contracts - they have no right to tell sponsors they can't participtae in the sport, and this is what NASCAR is telling AT&T."

Why does Nascar not have that right?

I think AT&T is being ridiculous. I don't have any intention of switching from AT&T (which I've had for years with few issues) to Nextel/Sprint, but if there was no clause that allowed Cingular to be bought out and use the purchasing company's logos on the car, then sorry, too bad for them.

Switch roles: If Nextel was Burton's sponsor and AT&T was the Nascar Cup Series sponsor, you could almost guarantee that AT&T would refuse to allow RCR to run the Sprint logos on Burton's car, if they had the same contract that Nextel has right now.

If Nascar isn't allowed to uphold its contracts, that could tumble down through the ranks and affect team sponsorships.

okla21fan said...

AT&T has 'exclusive' rights to the Iphone, and now some 17 year old kid with a soldering iron has broken the security code that allows Iphone to be used by any wireless company.

The irony of this Iphone deal is the AT&T also is paying big bucks to Apple to insure that no other cell phone provider will be able to use the Iphone. Just a guess here, but I am thinking that AT&T will fight just as hard as Nascar/Nextel to protect their exclusive investment.

Anonymous said...

Can someone please explain why NASCAR is so wrong here? They made a deal with NEXTEL for exclusivity, one that pays 70 MILLION DOLLARS a year. NASCAR is well entitled to do that, and they can set the rules as to who races, what kind of cars get driven, what the paint schemes look like (notice, no internet porn sites), and the rules. The race teams out there - RCR, Hendrick, Gibbs, DEI, etc) are all INDEPENDENT CONTRACTORS. They have no RIGHT to race at all, they are welcome to compete as long as they follow NASCAR rules. In theory, they dont HAVE to have a sponsor at all, but they all do in order to offset costs and make a profit (it is, after all a business). So the rules are laid out by NASCAR, and if that happens to interfere with one of the business dealings with one of the independent contractors, too bad!

Everyone just loves to get all over the France family, but if it wasnt for them and their good business sense, there would be NO NASCAR as we know it, if at all. Yes, they as a family have more money than any of us out here could possibly dream about, but thy earned it and they deserve it.

How would some of the smaller teams feel if they could no longer get a cut of that 70 million per year to offset costs? Would they survive? Everyone loves to get pissed at the big guy - big teams, NASCAR, whoever, but did what would happen if/when Sprint/NEXTEL decided that their investment was no longer paying dividends because of an AT&T car and pulls out? Whats going to happen if they cant find a major sponsor for the Busch Series next year? Is it a coincidence that they havent announced anyone yet? Could there be a company waiting to see how this law suit plays out before committing all that marketing money to this series? How much money is being exclusive worth? I know for 70 MILLION DOLLARS A YEAR I best damn make sure there are no other cellular carriers driving around during MY event!

Dont be fooled into believing that AT&T is a victim here, they too have tons of money and have had plenty of opportunity to be involved in the sport. This is a gigantic PR game that AT&T is playing with the NASCAR fans, and for those of you who cant see it, thats a shame. If you feel the need to switch carriers, do it for the service, not because you've been duped.

How is it that they have no RIGHT to dictate who can be a sponsor?