NASCAR Sues AT&T for $100 Million

[albionmoonlight]

http://sportsillustrated.cnn.com/2007/racing/06/17/bc.car.nascar.at.tlawsu.ap/index.html?eref=si_topstories

I am always suprised to learn about how much those logos on those cars are worth.

I'm not disputing it. Just noting that it gives me pause in all of its various manifestations.

[Deattribution]

When a company is paying ya 700 mil for exclusive rights, you tend to be willing to enforce company rules.

[General Mike]

Well I learned something new.

I don't think NASCAR will get any money from AT&T but AT&T won't be sponsoring anyone next year either.

[dervack]

Well I learned something new.

I don't think NASCAR will get any money from AT&T but AT&T won't be sponsoring anyone next year either.
Well, RCR hopes they will since the just extended their contract for 3 more years.

[RendeR]

Well, RCR hopes they will since the just extended their contract for 3 more years.

The problem for AT&T is that they've known ever since nextel took over top sponsorship of NASCAR that they were not going to be allowed to come in as a major sponsor on a car. They had deals with the #17 team (Kenseth) and were 1-2 race deals on their car which both NASCAR and NEXTEL allowed.

AT&T wanted in on the track to compete with nextel as best they could. The takeover of Cingular gave them what they thought was a loophole to convert the cingular car to AT&T, however NASCAR mandated years ago that Cingular and Alltel could remain as they were in place during the change-over, but that NO OTHER telecommunications companies would be allowed as primary or even secondary/associate sponsors on the cars as long as Nextel was the overall NASCAR title sponsor.

AT&T is gonna lose this one unless they come up with some serious evidence that NASCAR failed to inform them in any way.

Childress is the one who will get screwed as he will lose out on a big money sponsor next season, though they may find some way to re-brand things with cingular wireless under AT&T ownership...but who knows.

[KWhit]

I don't think it's that cut and dried. AT&T is Cingular now.

[clintl]

I think the fact that AT&T acquired Cingular (and even before the acquisition was one of the owners of Cingular) might make NASCAR's interpretation pretty shaky legally. It wouldn't surprise me at all if NASCAR loses this case.

[RendeR]

I don't think it's that cut and dried. AT&T is Cingular now.


No, that interpretation is wrong. AT&T is NOT cingular, Cingular technically no longer exists. AT&T Aquired it, when that happened Cingular ceased to exist as a company and as far as NASCAR is concerned so did its sponsorship package.

No matter the ownership situation, NASCAR and NEXTEL's contract for series naming rights was very specific that ONLY Cingular and ALLtel would be allowed to continue as comptetitor sponsorships in the series and that in no way would any other competitor to NEXTEL be allowed in. That was their agreement, Cingular and ALLtell were informed of this situation and told that even in a takover situation the logos and sponsorship packages would not be allowed to be changed to a new telecom sponsor.

AT&T is going to have to prove beyond doubt that both NASCAR and NEXTEL never did this, and since it became pub lic knowledge when NEXTEL came along, I can't see that happening.

[TroyF]

1) I have no idea who wins this legal battle. Won't even pretend to know.

2) I do know AT&T is going to win on this. Maybe not the legal battle, but the publicity they are going to get in this is going to be incredible. Everytime Nextel and Nascar open their mouths about the lawsuit, AT&T wins.

[flere-imsaho]

No, that interpretation is wrong. AT&T is NOT cingular, Cingular technically no longer exists. AT&T Aquired it, when that happened Cingular ceased to exist as a company and as far as NASCAR is concerned so did its sponsorship package.

No matter the ownership situation, NASCAR and NEXTEL's contract for series naming rights was very specific that ONLY Cingular and ALLtel would be allowed to continue as comptetitor sponsorships in the series and that in no way would any other competitor to NEXTEL be allowed in.

Unless the contract specifically states that if Cingular gets bought out or changes its name, that it is no longer entitled to be a sponsor, I'd say the case isn't very open-and-shut.

[Ryan S]

I suspect that this case will end with an out of court settlement. NASCAR does not want to lose the case and potentially open the floodgates, especially when an AT&T car is already racing on the circuit.

Speaking personally, I think that it is a very bad idea for any form of motorsport to close the door on potential sponsors.

[KWhit]

No, that interpretation is wrong. AT&T is NOT cingular, Cingular technically no longer exists. AT&T Aquired it, when that happened Cingular ceased to exist as a company and as far as NASCAR is concerned so did its sponsorship package.

I disagree. AT&T is the original SBC. SBC owned Cingular. SBC signed the original contracts with Nascar and were grandfathered in. I don't know how this is going to turn out, but it's not nearly as simple as you make it out to be.

[Mr. Wednesday]

It's going to depend on what the contracts actually say, the exact nature of the change of control with Cingular, and any controlling case law. I doubt any of us can even begin to comment authoritatively on it — even any lawyers here who are familiar with relevant law probably have not seen the contracts.

[flere-imsaho]

One thing we know for certain, though, is that this case is going to be a real cash cow for the participating law firms. :D

[RendeR]

Unless the contract specifically states that if Cingular gets bought out or changes its name, that it is no longer entitled to be a sponsor, I'd say the case isn't very open-and-shut.


NASCAR was very clear with the teams that got grandfathered through, If they get bought out, transferred, co-opted, whatever you want to call the joining with another company, they were strictly forbidden to change the logos and paint schemes on the car to the NEW company. They were allowed to stay Cingular and Alltel, but could not reskin the cars under any other company logo/sponsorship.

Now the clincher is going to be wether Mike helton (NASCAR President) was a bright enough boy to make sure this was documented and signed on all sides. NASCAR's penchant for handshake negotiations could bite them right in the ass on this.

But it is true, AT&T is gonna win huge amounts of free advertising just for being in the middle of this.

I don't see this as limiting bigtime sponsors so much as NASCAR protecting a 700 MILLION dollar income from NEXTEL.

[RendeR]

One thing we know for certain, though, is that this case is going to be a real cash cow for the participating law firms. :D


A shining beacon of truth amidst the murky fog of litigation reality.

[JonInMiddleGA]

http://www.nascar.com/2007/news/headlines/cup/09/07/jburton.att.logo.richmond/index.html

RICHMOND, Va. -- The title sponsor of NASCAR's Nextel Cup Series has reached an agreement with Richard Childress Racing that will allow the No. 31 car of Jeff Burton to compete while bearing the logos of primary sponsor AT&T.

Under the terms of the agreement, RCR will be able to compete with AT&T logos through the end of next season, but Burton's car must have a new sponsor by 2009. RCR employees began applying AT&T decals to the No. 31 car and transporter early Friday afternoon at Richmond International Raceway.

"We're ready to move forward," NASCAR vice president Jim Hunter said. "I think it's really good, because no one likes litigation."

Added Dean Kessel, director of Nextel Cup marketing for Sprint Nextel: "We are giving RCR and Jeff Burton an appropriate amount of time to transition to a new sponsor while remaining focused on winning the championship. That is the best solution for RCR, NASCAR, Sprint and racing fans."

Burton's car sponsor, previously known as Cingular, was grandfathered into the sport after Nextel assumed title sponsorship and rights as the sport's exclusive wireless carrier. When the name of the company changed to AT&T because of a merger, NASCAR barred the Childress team from competing in its new colors. Childress won a temporary reprieve in May, when the injunction allowed AT&T to return to the car.

But on Aug. 14, the 11th Circuit Court of Appeals overruled the injunction, and AT&T logos were again removed from the car. The case, which included a $100 million countersuit against AT&T by NASCAR, was scheduled to go to trial until the agreement was reached. Kessel said all parties have signed the deal.

"This agreement represents compromise from all sides that ultimately serves the sport well," NASCAR chairman Brian France said in a statement. "No one likes litigation, most of all the NASCAR fans, and it was time to find a mutually agreeable solution."

That solution allows NASCAR to avoid the uncertainty of a trial. "The uncertainty of the courts, you just don't know," Hunter said. "So we've reached an agreement and a compromise that all parties have signed off on."

Asked if any financial transactions had been made as part of the agreement, Hunter declined comment. Childress declined comment in the Richmond garage, but said later in a statement that AT&T "will continue to be a big part of what we do. Now we can move forward and concentrate on winning races and competing for the championship."

Burton is seventh in the championship standings and guaranteed a berth in the 12-man, season-ending Chase for the Nextel Cup, which begins next week.

[Draft Dodger]

I think the part I enjoyed the most was that during all this they continued to run the AT&T polls during the race. they feature a graphic of Burton's AT&T car (with the logo) zooming across the screen. meanwhile, his car on the track has no logo.