CUP: Sprint Happy With NASCAR Sponsorship

Sprint Cup

CUP: Sprint Happy With NASCAR Sponsorship

Discussions have already begun about a contract extension between Sprint and NASCAR...

SceneDaily.com | Posted June 29, 2011 Charlotte, NC

Sprint is in talks with NASCAR about a contract extension. (Photo: LAT Photographic)

Article by Erik Spanberg, SceneDaily.com

Many in NASCAR breathed a sigh of relief this month when Dan Hesse left no doubt about how Sprint views racing.

Hesse, the CEO of Sprint, made it clear in an interview with The Kansas City Star that the company wants to keep its name on NASCAR’s top series. Discussions about a contract extension have already begun, he said.

In other words, dialing for dollars on a new sponsorship deal may not take long.

“From the sport’s perspective, it’s great news,” says David Jessey, partner at Fuel Sports Management and a veteran sports sponsorship sales executive. “The continuity is a really good thing for racing.”

The Sprint Cup Series, of course, is the successor to the Winston Cup Series. Two years remain on the current contract.

The Kansas City-based wireless phone company, then known as Nextel, signed a 10-year, $750 million agreement in 2004 to rename NASCAR’s top series. Those rights include naming the season series and championship, as well as the annual all-star race.

As part of the sponsorship, Sprint has spent millions more creating a traveling fan experience display that goes to all of the races.

In addition, a number of NASCAR-themed features are standard for Sprint’s 51 million wireless subscribers. For example, the Sprint Cup mobile app turns phones into race scanners, with all 43 drivers’ in-car audio available, as well as the radio broadcasts from each race.

“They’ve done a very good job over all,” says Zak Brown, CEO at Just Marketing International, a consultant to numerous companies involved in racing.

NASCAR ranks as Sprint’s largest sports sponsorship. Last year, Verizon replaced Sprint as the official wireless company of the NFL, making Sprint’s relationship with racing even more important.

“We look at a sponsorship as an opportunity to have an extended conversation with the fan base,” says Tim Considine, Sprint director of sports sponsorships. “I think what we’re seeing now is the fruit of eight years of commitment.”

The most visible aspects of the sponsorship involve consumer campaigns: ads on TV, the name on the series and so forth.

At the same time, Sprint, like many companies in racing, uses its access to drivers and races to entertain current and prospective business customers. In 2010, Sprint hosted 8,000 people from 1,200 companies at the various speedways on the circuit.

Taking a customer out for golf is one thing, but giving them behind-the-scenes pit and garage tours and entertaining them in the VIP areas during a NASCAR weekend is something else entirely, Considine says.

“Even for the jaded person who’s been to races before, the access we have due to our relationship with the track and with NASCAR set a tremendous backdrop for those conversations,” he says.

Sprint bought Nextel in 2005. Since it turned a profit in 2006 on $41 billion in sales, the company has posted losses each year since. Sprint generated revenue of $32.6 billion last year.

Rumors have circulated of late that Sprint may add the iPhone later this year, a move that could generate more awareness and promotion for NASCAR through increased interest and demand at Sprint.

Considine cites customer loyalty, subscriber numbers and revenue per customer as the main measurements not just for overall performance in the industry, but also for gauging the success of the NASCAR sponsorship. Among avid race fans, the incremental value for Sprint is significant, he says.

“It’s largely due to the fact that these fans value wireless service,” Considine says. “Our experience has been that wireless service is important to them. Not just the ability to make a phone call, but also the ability to stay in touch. They’re very social.”

In that vein, Sprint research shows that NASCAR fans, like many customers, gravitate toward smartphones so they can text, surf the web, tweet and so forth. Those expanded data plans and features mean more revenue for the company.

The Sprint Cup Series is the successor to the Winston Cup Series. Two years remain on the current contract. (Photo: LAT Photographic)

Sprint says the NASCAR connection can help attract and keep customers, which is why it believes the relationship is worth the hefty investment.

NASCAR has been protective of its top sponsor throughout the relationship. Two rivals grandfathered in when Sprint took over — team backers Cingular and Alltel — later left the sport after being acquired by AT&T and Verizon. The reason: Binding contracts preventing multiple name changes for existing wireless sponsors and firm backing of Sprint from NASCAR when confronted with those situations.

For other teams in NASCAR, Sprint’s broad promotion of racing has been a boon.

Sprint’s desire to stay in the sport, along with Hendrick Motorsports’ recent deal with Farmers Insurance, may signal the sport is done losing ground. To be sure, sponsor activity remains moribund in many corners, but the defections of recent years may have finally leveled off. (Think Allstate, Jack Daniel’s and DeWalt, among others.)

“We’ve always tried to identify ways that we can not just mail in the check and hang up the sign but engage in a way that embeds us into the sport and allows us to add significant value,” Considine says. “Not every opportunity we see is a match of those criteria [in sports]. NASCAR’s clearly unique.

“There are Sprint Cup drivers, they’re running for the Sprint Cup. It’s a level of integration that is unmatched.”

Should negotiations between Sprint and NASCAR fall apart, industry experts say the sport remains an attractive property despite recent declines in attendance and TV ratings, as well as falling sponsorship rates for many race teams.

“It’s really the only major sport you can put your name on and own it,” Brown says. “I don’t think they’d have a problem selling it.”

SceneDaily.com • Carl Edwards mum on contract talks, vows not to let negotiations become distraction