Archive for Friday, June 27, 2003

Next step is right move for NASCAR

June 27, 2003


The NASCAR Nextel Cup? It's got a nice ring.

Last week, NASCAR announced that Nextel had signed a 10-year exclusive agreement to sponsor its premier series starting in 2004, replacing R.J. Reynolds Tobacco and its Winston brand. The naming rights also will include logos at the tracks, NASCAR's all-star event (currently The Winston) and access to drivers for promotional purposes.

Despite more than three decades of marketing and financial support from RJR, which was a major factor in expanding NASCAR's exposure and popularity outside its Southern roots, the time had come for racing to take the next step.

What does Nextel's presence mean for NASCAR?

  • The specific numbers weren't disclosed, but it's estimated that Nextel will pay $60 million to $90 million annually -- at least a third more than RJR. That should mean a larger points fund and better payoffs for teams at the end of the season.

Nextel will use part of that money for television advertising, which Reynolds couldn't do.

  • Second, but eventually most important, Nextel can market its products and services, and collaterally NASCAR, to age groups that have been off-limits to tobacco advertising. You can expect a big play for the younger demographic.

With Nextel, NASCAR can grow its 75 million fan base by introducing the sport to children. NASCAR could not put the Winston logo on toys or video games, but now the souvenir and collectibles market will change considerably.

  • NASCAR has not begun to scratch the surface on how Nextel's technological advances will improve communication for the teams and officials at the track and the fans' ability to access up-to-the-minute information through wireless technology. Everyone should benefit significantly.

According to Tom Kelly, Nextel's executive vice president and chief operating officer, the company wanted to get the agreement with NASCAR signed early "so we could use the time between now and 2004 to figure out not so much the technology but what kind of content will be available."

George Pyne, NASCAR's chief operating officer, doesn't expect any problems with the Nextel partnership, including possible infringement on the rights of the television partners to deliver information to the fans. Pyne says Fox and NBC will continue to control the content of the telecasts during the race, with Nextel transmitting information throughout the race weekend.

With Nextel's ability to stay at the cutting edge of technology, there's little doubt the company will be around to fulfill the 10-year term of this contract.

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