Starting in 2004, Nextel will replace tobacco company R.J. Reynolds as the title sponsor of The Winston Cup after more than 30 years. Under the agreement, Nextel will pay NASCAR $40 million per year in rights fees and spend another $30 million on promotion for the next 10 years.
In February, RJR announced it would drop its sponsorship. Although it spends an estimated $60 million per year through the Winston Cup, the tobacco giant has had its hands tied in recent years when it came to marketing. In April, a California appeals court ruled that RJR violated the terms of the 1998 Master Settlement Agreement with plans for a year-long nationwide billboard campaign with The Winston Cup series.
Nextel’s NASCAR sponsorship could raise questions for the racing organization’s relationships with other wireless companies. AT&T is NASCAR’s official telecom company and Alltel and Cingular Wireless already have existing sponsorships of individual cars.
“NASCAR has been taking the sport mainstream and while they didn’t initiate it, moving away from a tobacco company isn’t a bad idea,” says Kelly O’Keefe, CEO of Emergence Brand Labs, Richmond, VA. “And while we usually don’t recommend big broad strokes like this, it’s a good move for Nextel … spending $40 million for title sponsorship is a lot more effective than dropping $8 to $10 million for your name on the side of a car.”
In other racing news, Oak Brook, IL-based McDonald’s will sponsor a car in the CART series. The fast food chain joins Eli Lilly as sponsor of the Newman Haas car. Elsewhere, Europe’s Formula One racing series backed away from statements that it will eliminate tobacco advertising, instead saying it will “suggest” dropping tobacco ads and sponsors by 2007.
Home Depot has signed on as the presenting sponsor of ESPN’s College GameDay, replacing Discover Card, which had held the position for the last two years. The three-year agreement, which begins this fall, calls for the home-improvement retailer to help design and build a new set for the event. The agreement includes commercial spots, a series of Home Depot sponsored features during programming and a special seating area on the set. The deal also extends to other ESPN properties ESPN.com, ESPN Radio and ESPN The Magazine. Terms of the deal were not disclosed. Home Depot also receives marketing and advertising rights within ABC’s Bowl Championship Series and the opportunity to run special promotions around the games, including the Sugar Bowl in New Orleans. Discover Card declined to comment.
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