Case study
AT&T v. NASCAR (Contract Dispute)
Situation
In 2003 NASCAR signed an exclusive title sponsorship with Sprint-NEXTEL that benefited all drivers and teams competing in the NASCAR Sprint Cup Series. The agreement included a grandfather provision to protect the teams that had preexisting car sponsorships with competing telecommunications companies, specifically Cingular which sponsored the #31 car owned by Richard Childress Racing (RCR) driven by Jeff Burton and Alltel which sponsored the #12 car owned by Roger Penske driven by Ryan Newman. The grandfather clause was based on the agreement that the branding would remain only on those cars and could not be transferred under any circumstance including a name change or merger.
In 2007 Cingular merged with AT&T Wireless. AT&T announced that it would absorb the Cingular brand and its sponsorships including a rebranding of the #31 Car. However, NASCAR argued that rebranding the #31 car from Cingular logos to AT&T was a violation of the exiting agreements. In March 2007 RCR filed suit against NASCAR in U.S. District Court in Atlanta.
AT&T filed an injunction in U.S. District Court in Atlanta in March 2007 adding that its logo be allowed to be represented on the No. 31 car. In May 2007 Georgia District Judge Marvin H. Shoob granted AT&T a preliminary injunction giving AT&T the right to display its logo in NASCAR races.
Communication strategy
The sponsorship dispute was emotionally charged and played out in the media. The RCR team made public and sympathetic pleas that it was not violating any contract and that it needed the sponsorship for fan-favorite driver Jeff Burton to continue racing.
NASCAR argued in court and in public that the rebranding was a violation of the agreement. Tuckahoe Strategies’ president, Ramsey Poston, developed and successfully executed a communications plan to steer public opinion among the fans and key industry stakeholders to supports its side. Specifically, Poston, made the point that NASCAR was defending the entire industry including every driver and team that competes in the NASCAR Sprint Cup Series.
The execution of the plan is highlighted in a 2007 ESPN.com story “NASCAR Losing Patience with AT&T Court Battle”:
NASCAR has stated throughout this litigation that they’re defending the entire industry, not just Sprint/Nextel. Poston explained that reasoning.
“NASCAR doesn’t have the exclusivity with Sprint — the industry does,” Poston said. “More than defending ourselves or Sprint/Nextel, we are defending every driver and team in the garage.
“Sprint/Nextel essentially sponsors every driver. The funds they put into this sport go into the point fund, go to help each race winner and to help promote the entire sport through commercials and marketing.
“That’s all part of the [sponsorship] package. Sprint/Nextel are the ones that have devoted their company and resources to NASCAR, and they benefit every single driver in there. So that’s why we need to protect the exclusivity of that contract on behalf of the entire industry.”
Countersuit
In June of 2007 Poston worked with NASCAR General Counsel and its outside representation to further apply pressure in order to hasten a conclusion to the sponsorship battle. In doing so, NASCAR filed a $100 million countersuit against AT&T for wrongful interference with Sprint’s exclusivity agreement.
NASCAR Victorious in 11th Circuit Court
In August of 2007 a the 11th U.S. Circuit Court of Appeals ruled that AT&T doesn’t have the legal standing to sue NASCAR over a sponsorship disagreement. The ruling provided AT&T the option to appeal, which it did. However, AT&T also attempted to gain the high ground with the fans by playing the role of victim. In a move designed to turn public opinion against the sanctioning body, AT&T deciding to run a car stripped of any logos even though they had to right to compete with the approved Cingular logos.
In a story that appeared in USA Today, “Burton’s Team Drops Logos as AT&T – NASCAR Fight Escalates.”
AT&T says NASCAR vetoed all of its submitted designs, and its only option was to use a plain orange car in Saturday night’s race at Bristol Motor Speedway.
“NASCAR left us with no choice,” said AT&T spokesman Mark Siegel. “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.”
Poston fired right back undercutting AT&T’s arguments and pointing out its exaggeration:
AT&T has been dishonest with the fans and with NASCAR, and it’s time to stop,” said NASCAR spokesman Ramsey Poston. “NASCAR has approved several paint schemes. The choice to run the logo-less car is RCR’s decision.”
Poston also produced photographs of two Cingular stores located near the racetrack.
“Obviously, they still think the Cingular name is good enough for these stores,” Poston said. “AT&T knew what the rules were when they merged with Cingular. It’s time for them to do the right thing and honor the agreement.”
Settlement
Fresh off an important win by the 11th Circuit Court of Appeals NASCAR was in control of the case. However, it also recognized that an ongoing court battle over sponsorships was a loser with the fan base. AT&T, one of the world’s largest corporations, could have extended the suit indefinitely. In September 2007 the two sides came to a compromise to allow the AT&T logo for a limited time. This move allowed AT&T valuable branding through the 2008 season, and Richard Childress Racing time to sign a replacement sponsor for the No. 31 car.
