National Tour, Inc. Files Chapter 11
National Tour, Inc. is continuing operations and plans to reorganize after filing for Chapter 11 bankruptcy protection earlier this month.
The Concord, NC-based agency filed on Oct. 7 in U.S. Bankruptcy Court in Santa Ana, CA. (National moved its headquarters from Rancho Santa Margarita, CA to Concord in 2004 to be close to NASCAR headquarters.) The mobile-marketing agency expects to reorganize over the next six to 36 months, according to court documents.
National Tour blames its financial problems on under-bidding Nextel’s NASCAR Nextel Cup Series tour in 2004. Shortly after National signed its April 2004 contract to handle the tour, National “realized that the cost that it had quoted for Sprint/Nextel was understated and that as a result, [National] incurred significant losses related to its relationship with Sprint/Nextel,” according to court documents.
But Nextel was a high-profile client that could open doors to other NASCAR-related business, so National stuck it out, hoping to turn the NASCAR Nextel Cup Series tour into a “loss leader” that brought in other business, per court documents. But the losses were too high, and in mid-2005, National’s primary debtor, California Bank & Trust, declared National to be in default on about $3.2 million. Agency representatives declined to comment and referred calls to the lawyer handling the case.
Nextel’s promotion agency, Octagon Group, helped Nextel handle the 2003-04 review for the NASCAR tour. It’s an unusual position for a promo shop to help review other agencies, but Octagon provides significant field staff support for Nextel at NASCAR events, so Nextel wanted to tap Octagon’s expertise, said Octagon exec VP Jeff Shifrin. Price wasn’t an overriding factor in the review, Shifrin recalled; National’s creative concept was the top factor. “Their concept was absolutely dead-on with Nextel’s objectives,” he said.
National has secured funding to continue operations and meet its payroll, according to court documents. National argued that it must keep its staff to handle ongoing tours, including Nextel’s elaborate “glass house”; National told the court that without its field staff, the agency couldn’t set up and take down the exhibit that tours NASCAR races.
A meeting of creditors is scheduled for Nov. 11 in Santa Ana. National’s President-CEO Johnny Capels is the sole shareholder of the agency.
National Tour, which ranked No. 22 in the 2005 PROMO 100, reporting 2004 net revenues of $17.5 million, up 40% from 2002. This year, National has added more business from existing clients (including long-term contracts with DeWalt, Irwin and BMW) and has been approached by potential new clients, according to court documents.
