Everyone has heard about the ongoing mess between NASCAR, Childress Racing, Sprint, and AT&T. As primary sponsor of the NASCAR Nextel Cup Series, Sprint was guaranteed a non competition arrangement that “grandfathered” in sponsorships that previously existed with participating race teams, but did not allow new names to enter as sponsors. So when Cingular and AT&T combined to change to AT&T, a problem was created.
According to the rules as NASCAR and Sprint saw it, The 31 car could run the old Cingular logos as long as they wished, but the name change to AT&T voids the right to run any logos on the car. Thus the 31 was running races without any logos, and all logos were removed from the pit boxes, team clothing, haulers, and other equipment.
According to Jayski.com, Childress Racing was in danger of losing the sponsorship on the 31 car over this, and looking at what companies pay for primary sponsorship rights on a racing team it is easy to see why. AT&T has quite a large amount of cash invested, and the return for them is having their logos and name out there on the track.
If they are not getting that, then they are not getting what they paid for. In the meantime, Childress Racing has to fund the car alone if sponsorship is lost, and it was entirely possible that the team could end up disbanded unless alternate sponsorship was found, or some sort of compromise was reached. Thankfully that compromise came to pass and all is well in the land of the 31 car, at least for now.
Some would argue that thanks to the dispute that AT&T is getting far more than it’s money bought in exposure, but AT&T and Childress Racing do not share that view. At California Speedway Jeff Burton ran the 31 car up front for a good portion of the race, and AT&T’s logos were not there for the TV audience to see. But for now the issue has been settled and the AT&T logos have returned to the 31 team, and while this is a victory for AT&T and Childress Racing, it is a hollow victory at best.
The settlement only allows the AT&T logos to run for the remainder of the season and for next year as well. After that Childress must find a new sponsor for the car. So did Childress and AT&T really win? It depends on who you ask. Some people think that they won simply because the AT&T logos are back on the race car. Others feel that Sprint offered an olive branch when public attitudes toward the situation made them look like a bully.
Many people seem to be under the impression that all of this is something new, but it is not. These same sort of sponsorship issues have arisen over and over in many sports and in other venues as well. I recall a situation involving two car dealerships and sponsorship of a charity event, where one dealership pulled out because another was allowed to participate. Whether that was a good business move or not is arguable, especially since the event was a charity fundraiser, but it goes to show how picky some sponsors can be when it comes to exposure that they receive or that others receive.
And in this case, it made news when the pullout happened, thus causing a negative reflection on the business that pulled their money and walked away. The public saw it as a disgruntled business owner who didn’t get his way, and so he cheated a charity as a result. They in no way saw that he believed his money was enough that he should not have to share the spotlight with his chief competition.
So how far can this go? It can go as far as sponsors and the businesses who sell those sponsorships want it to go, even down to a local speedway out in the middle of nowhere. Let’s look at a hypothetical situation. Imagine that a local speedway is selling track sponsorships for the upcoming season, and approaches Joe’s RV Center as a potential sponsor.
In order to close the deal, they tell Joe that they will not seek sponsorship from any other RV dealer at the track during the season and not allow ads from other RV dealers on the premises, thus giving Joe an exclusive deal barring any other RV center from advertising there. Joe likes that deal and pays a couple thousand dollars for a sponsorship. So the season gets started and a racer shows up with a car sponsored by Jim’s RV World, which is Joe’s major competition located just up the highway. In this situation there are several ways that this could play itself out, and almost none of them are good.
So now the track has some choices to make. If they allow the car to race they take the risk of angering Joe. Joe could demand his money back and pull his sponsorship. The track could allow the car to race but not before the decals for Jim’s RV World are removed. Chances are that is not going to set well with the driver, and since he is racing with money he got from his sponsor he is obligated to run his sponsor’s logos on the car regardless.
He will probably end up leaving unhappy. Or the track could tell the driver that he cannot race, period. Again, that creates an unhappy driver that is probably going to not hide his opinions about the track and the situation from others, and may even go to the internet with his displeasure.
The problem as I see it is in these guarantees of no directly competing businesses being allowed to advertise. If a speedway or racing series does not make such guarantees, then there is no problem to begin with. And if you manage to sell an expensive sponsorship to one auto repair shop in town, why cut yourself off from selling three or four more such sponsorships to other car repair businesses? If the object is to make money, then it seems foolish to limit yourself from doing so when there are potential buyers all over the place. Still, sometimes these issues can arise, and I personally would leave a sponsorship unsold if it potentially kept me from selling more sponsorships down the road.
It is not uncommon to walk into a racing facility and see signage for competing businesses, and yet there are some businesses that strictly refuse to advertise next to their competition. Hopefully the speedway owners have better sense than to place the Ford dealership sign directly next to the Chevy dealership sign, but then again stranger things have happened. So how often to these sort of disputes arise? According to information that I have been able to find, not that often. But when these things do happen they can have expensive complications and end up in the courts. Business owners pay their money for something and they expect to get it in return. After all, they did not become successful business owners by allowing others to walk over them.
One complication that tends to be overlooked is customer and public opinions and attitudes. The public tends to see things differently than the corporate big wigs in their ivory palaces, and it would do some of these high paid big shots some good to step down to ground level and get a different perspective. In talking with several people recently I found that the majority got a very bad impression of NASCAR and Sprint from all of the hoopla over the 31 car. OK, so NASCAR guaranteed Sprint that no other competing companies would be allowed to advertise. But is AT&T really a different company, or just a different name? There is a difference you know, and that difference makes sense to the majority of the public.
According to what I understand, this could have become a public relations fiasco for Sprint depending on how it played out and how the media handled the story. NASCAR and Sprint did themselves much good by carefully monitoring the public attitudes toward their actions, and sentiment seemed to be swinging toward Childress Racing and Jeff Burton as innocent victims of corporate bullies. Sprint and NASCAR relented, but only to keep from looking selfish in the public eye. With the settlement allowing AT&T back on the 31 car, I have to think that the public sentiment toward Sprint and NASCAR had a lot to do with the fact that they allowed Childress Racing to at least have some sense of victory, all be it a year and half worth.
And when it comes to that little speedway out in the middle of nowhere, the track and it’s sponsors should be asking themselves the same sort of questions. If Joe paid big bucks for his sponsorship he might believe that no one else, especially a direct competitor, should get a piece of the action as well. Well, that is Joe’s opinion. Others probably see it differently, and if Joe pushes the issue he takes the risk of making his business look bad in the process. And by enforcing Joe’s wishes, the speedway also risks creating a negative perception as well. Again, by making certain promises to sponsors the people selling these sponsorships create their own problems, so why do it? Is that one sponsorship worth it? Whether we are discussing millions of dollars or just a few hundred, public perception means everything.
Sometimes it is impossible to avoid a public perception problem, but usually with some thought and a little give and take, such problems can be avoided. The whole Sprint versus AT&T fight begs us to ask ourselves where all of this is going in the end, and should make us wonder if all of the fuss is really worth it? Why is it that AT&T cannot be on a race car if Sprint sponsors the series? The fans and the teams are pondering that question and forming opinions, and those of us at the local level should be learning some things from watching it play itself out.
-BJ CAVIN currently announces and writes for Ocala Speedway in Florida. His personal blog is on MySpace.
His Column, “A Closer Look with BJ Cavin†appears on Real Racin USA each Tuesday.
