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jlw1980
12-06-03, 01:46 AM
http://msn.espn.go.com/rpm/wc/2003/1205/1678951.html?partnersite=espn

Friday, December 5

Nextel hopes 75 million fans embrace it
By Darren Rovell
ESPN.com


NEW YORK -- When NASCAR president Mike Helton stepped up to the microphone Thursday in Manhattan to give his state of the sport address, it came as no surprise that he began his speech by thanking sponsors.

That's one reason why 900 companies, many of them found in the Fortune 500, pay hundreds of millions of dollars to plaster their logos all over their drivers and cars each year.

Because of mentions from the president, the drivers, the media and a fan base of 75 million that spends $2 billion annually buying the products that sponsor their favorite drivers, NASCAR often is called the best bang-for-the-buck when it comes to corporate America investing in sports properties.


Starting in January, Nextel will have 1,000 signs to replace at racetracks across the country.


But the value of aligning with NASCAR will be tested on its grandest scale yet in the sport's 55-year history as Nextel begins its 10-year series sponsorship that will reportedly cost about $700 million, including rights fees and advertising buys.

Executives with the cell phone company -- which had never invested in the sport before signing what is believed to be the largest sponsorship deal in U.S. sports history -- have crunched the numbers over and over again. The bottom line: There's a lot of cell phone service to sell.

"Looking at this proposition over 10 years, we're very comfortable we can drive return," said Mark Schweitzer, Nextel's senior vice president of marketing.

While it's not clear if NASCAR fans will be as loyal to Nextel as they are to their favorite driver's products, at least the company is guaranteed plenty of exposure for their money.

Not only will the championship be called the Nextel Cup, but Nextel receives the rights to use the names and likenesses of all NASCAR drivers and NASCAR tracks in their advertising and licensing.

"You can always be an Olympics sponsor, you can always be a sponsor of the NFL, the New York Giants will become available and NASCAR teams will become available, but a package like this has not been available for 33 years and we hope it's not available for another 33 years," said George Pyne, NASCAR's chief operating officer.

So far, little is known about how Nextel, the nation's fifth-largest wireless carrier, will endear itself to gearheads.

In the six months since announcing the partnership, Nextel officials have been virtually silent. One of the reasons is because Nextel's competitor, AT&T, has locked up official sponsor status until year's end. NASCAR officials also wanted to make sure that R.J. Reynolds, whose Winston brand was the sport's primary contributor and beneficiary for the last 33 years, received a grand hurrah in its final year.

Replacing the Winston Cup name will be one of Nextel's first challenges. Aside from the physical task of changing more than 1,000 signs from Winston to Nextel in the coming months, company executives will have to be patient with those that still utter the Winston name come Jan. 1. Even millions of dollars don't eradicate more than three decades of habit.

"We're not going to put a timetable on it," said Michael Robichaud, Nextel's senior director of sports and entertainment marketing. "The reality is that (Winston Cup) is the name and we don't want to get hung up about it or look like we are going to force it down people's throats. It needs to kind of happen naturally because if you force it, that's when you'll have problems with your relationship with fans."

Nextel's investment in NASCAR comes at a pivotal time in the wireless communications industry, as the fight for customers has intensified. Two weeks ago, the Federal Communications Commission (FCC) began allowing customers to transfer their cell phone number to other wireless companies. Nextel was the first to debut a push-to-talk service, which essentially turns a cell phone into a walkie-talkie. But by the first half of 2004, four of its competitors are expected to have a similar feature.

"I think that it will take a little bit of time to embrace Nextel," said Bobby Labonte, who finished the season eighth in the point standings. "But it's not the 1970s anymore. NASCAR fans have seen a lot more (sponsorship) changes in the past five years than in the 10 or 15 years before that."

Hopefully the Nextel name will roll off the tongue better when fans see driver cell phone covers. Or maybe it will spring from appreciation of the company's $25 million engineering project, which will ensure that cell phones work at tracks across the country, even during the Daytona 500 or Brickyard 400 when thousands are trying to make a call at the same time.

Some have speculated that Nextel might attempt to make the frequency on scanners, which allow those at the track to listen to driver-pit crew communications during the race, available to customers across the country via cell phone.

"The advancement of technology is a great benefit to all sporting events," Helton said. "That process would have taken longer if Nextel did not become the series sponsor. Now we have a vehicle that will enable advances to happen sooner and a desire from their part to push things along."

While NASCAR fans have consistently demonstrated over the years that they support the companies that support their favorite driver, it's not as clear whether NASCAR fans feel compelled to buy the products of a NASCAR sponsor not aligned to a particular driver.

"No one is really a fan of an organization in the same way they are a fan of a particular athlete or team," said Vassilis Dalakas, a professor at Berry College's Campbell School of Business, who has studied the relationship between NASCAR fans and their driver's sponsors. "Nextel can use the drivers in their advertising, but the reason why there is an affinity for the primary sponsors of drivers is because fans know that it is the support of that company that keeps the team going. With Nextel, you don't get the sense that they are keeping the team alive in the same way Tide, Pepsi and M&M's are doing it, so fans might not care as much."

Before sponsoring Dale Jarrett's car, United Parcel Service (UPS) became a NASCAR sponsor.

"There wasn't really interest from fans that we were just a NASCAR partner," said Laura Kouns, motorsports marketing manager for UPS.

NASCAR officials counter with their research that reveals that Winston's market share with NASCAR fans was five times greater than its market share with non-fans.

Dalakas, in a soon-to-be-published paper, found evidence to support his theory that fans support only the brands that sponsor their favorite driver, and steer away from brands that support their least favorite driver. Given his study, Dalakas reasons that Nextel is playing it safe by sponsoring the series instead of a particular driver, but that the payoff might not be as great.

"What is unique about the series sponsorship is that you have a small piece of every driver and you cover your bases that way," said Eric Wright of Joyce Julius & Associates, a sponsorship evaluation firm that calculated that the Winston brand received $164 million in equivalent television advertising time in its primary sponsor capacity this past year thanks to on-air mentions and shots of signage.

Nextel officials acknowledge that neutrality is part of their business strategy.

"The goal is always to try to be consistently supportive of everyone," Robichaud said. "We have a relationship with all 43 drivers and we don't want to get into a position where we start picking and choosing to support some and not others."

"They won't have as much upside with every victory, but they won't face the pressure of having to win each week," said Geoff Smith, president of Roush Racing, whose driver Matt Kenseth will collect a $4.25 million check at Friday night's awards banquet thanks to winning the title this season. "And after every driver wins, they can put him in a Nextel hat and use it in their advertising."

Two of the drivers might not be as appealing to Nextel.

Nextel's competitors, Alltel and Cingular Wireless, are allowed to retain their primary sponsorship of Ryan Newman and Robby Gordon's cars, respectively, because their deals were active when Nextel bought in.

That's why each race won by Newman or Gordon could become awkward moments from a sponsorship standpoint. The ultimate laugher would be if Newman, who won more races than anyone in 2003 (eight) or Gordon, who won two races this past season, won the Nextel Cup.

"From a marketing standpoint, it's going to be complicated," Newman said. "I know from a racetrack standpoint, we won't be able to do all the things we've done. But I don't think that's necessarily going to hurt us. I'll do whatever I can to satisfy everybody. I respect Nextel's position as far as sponsoring the series and I obviously respect Alltel's position for sponsoring the team. It's putting me in a kind of uncomfortable position."

With all the marketing dollars being put behind the effort, the Nextel name is sure to become a NASCAR fixture fairly quickly.

As NASCAR's growth has skyrocketed over the past five years, the value of its title sponsorship has been untapped since R.J. Reynolds was restricted from advertising Winston on radio and television ads as a result of a settlement with 46 states in 1998.

"We now have a sponsor that doesn't have the government regulating their marketing and advertising," said Jimmie Johnson, who had 20 top-10 finishes in 2003. "We didn't really see them coming, but Nextel's sponsorship is going to help our sport get to the next level."

How Nextel will convert NASCAR's fans into Nextel users over the next decade is the $700 million question.

"While (the fans) don't want to be sold to every minute of their track experience, they understand that we're in it to get our name out there," Schweitzer said.

Darren Rovell, who covers sports business for ESPN.com, can be reached at darren.rovell@espn3.com.