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NASCAR set to sign sponsorship deal with communications giant Nextel

Posted: Wednesday, June 18, 2003

CHARLOTTE, N.C. NASCAR is trading cigarettes for cell phones.

Wireless communications giant Nextel has reached a deal to replace R.J. Reynolds Tobacco Co. as the title sponsor of NASCAR's premier series, the Winston Cup.

Two NASCAR sources, speaking on condition of anonymity, said Nextel will be introduced Thursday at a news conference in New York's Times Square. NASCAR scheduled what it called a ''major news announcement'' there Thursday, with chairman Bill France Jr. and top drivers Dale Earnhardt Jr. and Jeff Gordon to attend. It did not disclose the subject.

Two Winston Cup team sources, also speaking on condition of anonymity, said NASCAR officials called them Monday to tell them a deal with Nextel was complete.

When Nextel connects with NASCAR starting next season, it will be reaching out to the estimated 75 million fans in more than 100 different countries that follow the sport. It will also be a sponsor capable of advertising and reaching the youthful demographic NASCAR has long pursued.

RJR has been limited in marketing its NASCAR sponsorship by the 1998 master settlement of state lawsuits against the tobacco industry. RJR cannot advertise Winston, its top cigarette brand, on radio or television and is expressly forbidden to market to people under 18.

Those limitations and the uncertain business climate in the tobacco industry led RJR in February to give NASCAR permission to look for another title sponsor, despite a five-year contract extension RJR had signed last year.

RJR has been with NASCAR for 31 years, signing in 1972 to take over what was then called the Grand National Series. The company teamed with NASCAR to build the Winston Cup Series into the nation's hottest sports property.

Marc Ganis, a sports finance expert who heads Chicago's Sportscorp Limited, said the Nextel deal is good for both sides.

''I think it's an excellent fit for Nextel and in many ways should work well for NASCAR,'' Ganis said. ''Look how quickly they were able to go out and replace the sponsor. In this (economic) environment, that's extraordinary. Plus, they substitute a controversial product like cigarettes for a universal, non-controversial product like cell phones.''

RJR spends anywhere from $30 million to $60 million annually marketing Winston through NASCAR. It's not clear what Nextel, based in Reston, Va., will spend, or what the series will now be called.

One NASCAR source, speaking on the condition of anonymity, said Nextel's presence will prevent other wireless companies from coming into the sport. Companies with sponsors already on the side of a car, such as Alltel and Cingular Wireless, can continue to be involved, the source said.

Alltel sponsors Ryan Newman's No. 12 Dodge for Penske Racing South and Cingular sponsors Robby Gordon's No. 31 Chevrolet for Richard Childress Racing.

Worried there might be conflicts, Childress went to NASCAR officials after hearing of Nextel's impending entrance.

''There didn't seem to be a great concern,'' he said Tuesday. ''There's not going to be a problem with Cingular and the other wireless company that's in there now because I think they would be grandfathered in.''

Penske Racing president Don Miller also has said he and Alltel officials do not foresee problems.

It is not clear how the decision would affect AT&T, which is NASCAR's official telecommunications company. AT&T has its own wireless communications division.

It's also not clear what will happen to The Winston, the annual all-star race held each May. The rights to that event have always been included with the title sponsorship agreement.

Nextel is known among cell phone providers for its ''push-to-talk'' feature, which allows people to use their cell phones like walkie-talkies within a local area.

Ganis said that feature is used heavily in cities and by companies that keep lots of workers out in the field on a daily basis.

In that sense, he said, the Nextel signing fits well with NASCAR's ongoing effort to gain popularity in larger markets for the sport, which has long been associated with the South. Last week, NASCAR said it will shift a Labor Day race from South Carolina to Fontana, Calif., outside Los Angeles.

Ganis said the tie to NASCAR, whose fans are famously loyal to sponsors, may also help Nextel in one of the few remaining growth demographics for wireless companies.



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