Subject: [NEXTEL-1] When NASCAR and Nextel inked a 10-year deal, several other potential sponsors were left out in the cold.

From: [email-masked]
Date: Fri, 24 Oct 2003 22:45:34 -0400

Posted on Fri, Oct. 24, 2003

The trouble with exclusivity
When NASCAR and Nextel inked a 10-year deal, several other potential
sponsors were left out in the cold
By JIM McLAURIN
Staff Writer

By locking out a few potential sharecroppers, did NASCAR sell the farm to get the
Nextel deal? Or was it merely the cost of doing business?

The former question was raised by Geoff Smith, the president of Roush Racing, last
week. The latter question was answered by NASCAR’s chief operating officer, George
Pyne, quite succinctly: “It was necessary.”

Smith raised the issue in a North Carolina newspaper, saying that by allowing
Nextel certain exclusive rights in exchange for replacing R.J. Reynolds/Winston as
the title sponsor of NASCAR’s biggest racing series, NASCAR in effect shut out
potential sponsor dollars that teams need to stay healthy.

There is no doubt that it had that effect. When NASCAR and Nextel brokered their
blockbuster 10-year, $750 million deal in June, NASCAR gave the telecommunications
company assurances that it wouldn’t have to worry about competitors in its
marketplace.

The primary sponsorship deals that Richard Childress Racing had with Cingular
Wireless on Robby Gordon’s car and Penske South had with Alltel on Ryan Newman’s
car were grandfathered in as part of the agreement.

But when AT&T, which was an associate sponsor on BAM Racing’s Ken Schrader-driven
car, hinted that it might move to a full sponsorship next year, NASCAR put the
kibosh on it. AT&T can remain as a minor sponsor, but there will be no 200-mph
billboards with the company logo emblazoned on the hood.

It should be noted that Roush Racing was pursuing AT&T as a sponsor for next year,
which might explain some of Smith’s concerns.

But the upshot is that any other telecommunications companies that want to get
into NASCAR can’t.
“I personally don’t think it adds any material value to the economic equation,”
Smith said. “In America, all of these companies find a way to get to the consumer
in the face of competition. A negotiation to make something exclusive is a kind of
artificial way to shore up some weakness in your own marketing strategy.
“If your marketing strategy is right, you’re not afraid of anyone.”

IT’S A BUSINESS

Pyne said that it was necessary to grant Nextel those rights, just as it was
necessary in the early 1970s to assure the Winston folks that they wouldn’t see
Marlboro signs at the tracks. But Smith noted this week that the game has changed.

“RJR got exclusivity rights granted a long time ago when the marketing value of
what they were doing was questionable,” Smith said this week. “They (RJR) proved
that it was really worth something.

“I hoped that once it was proved, you wouldn’t have to go down that path.
Particularly when you’re taking an industry — the communications industry — that
has lots of marketing money that can come to bear.”

Pyne countered by saying that NASCAR grants exclusivity in only three areas and,
even at that, with a codicil: In the past, Union 76 (under a variety of names) was
the sole supplier of fuel, which simplified competition issues with the knowledge
that no one had hopped-up fuel from another supplier.

In the early years, Firestone also supplied tires, and it was more recently tried
by Bob Newton and his Hoosier Tire Company —remember the “Tire Wars”? — with
disastrous results for nearly everyone concerned. So maybe an exclusive tire
supplier was necessary, too.

And when NASCAR cut the big TV deal with NBC, Turner and Fox, no one boycotted on
ESPN’s behalf, because some of that money went into the team owners’ pockets.

But, he added, just because NASCAR has one fuel supplier it doesn’t forbid other
petroleum companies — Citgo, Pennzoil, Mobil, etc. — from using the sport as a
marketing vehicle. Any more than it shuts out Coca-Cola for Pepsi’s benefit.
Budweiser, Miller and Coors hawk their wares side by side on the track — no pun
intended. In fact, he said, NASCAR encourages the competition.

“NASCAR is a system of free enterprise, where the tracks can sell whatever they
have to sell, the teams can sell whatever they have to sell, and the drivers can
sell things,” Pyne said. “NASCAR sells the NASCAR logo. It’s a free enterprise
system — except for the tires, fuel and entitlement.”

On the other hand, the fact that NASCAR competes for some of those dollars is
rankling to some teams. For every dollar that goes to a company becoming an
“official this or that of NASCAR,” they say, there’s one dollar less in their
coffers.
Pyne’s defense is that, first, NASCAR doesn’t go after companies unless they are
involved with a team; that is, it doesn’t woo potential sponsors away from teams.
Second, the amount of money it costs to be an official sponsor is “10 to 15 times”
less than what a team sponsorship costs.

Third, he said, NASCAR is in business, too: “We’ve got 700 employees; we’ve got a
$10 million R&D center,” Pyne said.  “We’ve got expenses just like everybody else
does.”

CHILLING EFFECT
Smith said that he is not staying awake nights over the exclusivity deal. What
bothers him is that in the long run, it could have a chilling effect.

“I’m just raising my voice as an alert,” Smith said. “I’m hoping that people will
pause a little bit — whether you’re a track operator or NASCAR or a TV network.
It’s very easy to give exclusivity when it doesn’t affect you. It doesn’t affect a
track to say, ‘I’m going to lock out the other guy.’

“The only party that these exclusionary business transactions impact are the teams
and the team sponsors. I’m hoping that they’ll be careful.”

If they aren’t, Smith warned, it has the potential of shrinking the number of
sponsors willing to play.
“There becomes a growing perception that you can’t participate,” he said. “Not
just in that category, but you get the perception that NASCAR is not a free and
open marketing environment anymore.”
Reach McLaurin at (803) 240-3514 or [email-masked]

http://www.thestate.com/mld/thestate/sports/7090320.htm

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From: sparkie_rf <[email-masked]>
Date: Sat, 25 Oct 2003 18:54:03 -0000

> Nextel deal? Or was it merely the cost of doing business?

Those silly kids, when will people learn. Any deal with Nextel is a 
deal with the devil, and the price is always the same, its always 
your soul.

This problem is just the tip of the iceberg, not only in NASCAR, but 
in sports marketing in general. I think we'll see massive changes in 
the way sports marketing is conducted 3-5 yrs from now. The balance 
is power is just beginning to shift sides.

Marcel,

What do you hear from any of Dawson's crew, now that Ed Clark has 
said AMS wants a "Night" race. How eager is SoCo going to be in 
cutting a deal for all that electricity.

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From: [email-masked]
Date: Sat, 25 Oct 2003 16:10:08 -0400

I'm at AMS now. I got a message alert (your message) almost and hour ago. Could
not respond back because of RF Blocking. I got feed up and had to "Bogart" a time
slot through unconventional means. Wish I had a second Nam (SoCo) on this phone.
They say the band map is "supposedly" locked. I'm going to figure that out next
week. My beta phone has battery problems (I'm on my second for the day). The Moto
rep I'm with phone is dead i730b. I saw  some of the Soco people they had the nice
seats with all the amenities. Moto has us almost in the Pits it SUX.. I'm kissing
Soco's butt next time instead of Moto for seats.

I will try to see what Dawson people say about Night Racing.

I'm not coming back tomorrow. Too uncomfortable I never seen so many Bubba Trucks,
Budwiser and Scanners in my life.

They keep asking  how much does my scanner (XTS-3000) cost.