First quarter review for Nextel sponsorship

When the NASCAR season opened in Daytona last February, there was sort of a watchful, wait-and-see atmosphere.

For the first time since 1972, there would be no Winston Cup trophy awaiting the season's champion. Instead, the inaugural Nextel Cup would grace the driver's trophy room.

	Nextel President and CEO Tim Donahue presents Dale Earnhardt Jr. with a No. 8 Nextel phone during Nextel's announcement.

The communications giant, sixth-largest wireless services provider in the world, signed on as the series sponsor last year, ponying up an estimated $700 million over 10 years for the privilege of bankrolling the booming NASCAR's top series.

Without going into too much detail over why the move was made -- Nextel can promote the sport in ways that Winston could not, etc. -- the fit between NASCAR and Nextel is apparently much more seamless than even the most hardcore analyst would ever have dreamed.

NASCAR got what it wanted -- a partner that could help the sport into areas it had found blocked due to Winston's status as a tobacco brand. Nextel got what it wanted -- a front-line sport that it could use as a vehicle to increase market share.

Should Nextel convert even 1 percent of NASCAR's estimated 75 million fans, it would be a huge boost to earnings and market share.

In the first quarter of fiscal '04, Nextel grew subscribers by roughly 475,000, same as it did a year ago, but the real interesting numbers are 31 percent, 33 percent and 184 percent.

The numbers represent, respectively, increases over 1st quarter 2003 in revenue (to $3.1 billion), operating income before depreciation and amortization ($1.2 billion) and income available to common stockholders ($591 million, 0.53 cents per share).

	Nextel driver phones

"Nextel is investing to expand our coverage, appeal to new high-value segments through our NASCAR partnership and the Boost Mobile brand, and to introduce new services such as International Direct Connect," said Nextel President and CEO Tim Donahue on the announcement of the first-quarter numbers.

"First-quarter trends give us confidence that these investments will build upon our momentum in the coming quarters."

The company posted its eighth straight quarter with at least 40-percent margins in OIBDA, which is corporate-speak for "hey, it's working!"

The combination of strong revenues plus a more manageable debt rating means that Nextel is performing well financially, having lopped off $2.6 billion in debt, mandatory redeemable preferred stock and capital leases over the last 12 months to stand at $10.4 billion as of March 31, 2004.

At Daytona, the biggest indicator that something was different was obviously the yellow and black signage replacing the traditional red and white of Winston. In fact, at Lowe's Motor Speedway in Charlotte, there was an auction earlier this year of all the Winston signage that was being replaced.

Despite the outward signs of a new sheriff in town, there was relatively little in the way of messaging for the first quarter.

The television commercials for Nextel paid close attention to the history and stature of NASCAR racing, effectively easing the company into position and paying tribute in a way to Winston's 33 years of sponsorship.

The second phase of the advertising campaign for Nextel debuted May 30 at Lowe's Motor Speedway with the addition of two commercials featuring Jeff Gordon and Matt Kenseth.

"We placed the stars of NASCAR in light-hearted situations where audiences can see that we have a sense of humor and that we are fans too," said Mark Schweitzer, Nextel's Senior Vice President of Marketing. "With these new spots, we continue to include the drivers and show how our technology can help NASCAR drivers and teams get things done."

Having a sense of humor in NASCAR is important. Gordon's spot, called "Highway Star," has him running out of gas along a deserted stretch of highway and using Nextel's digital walkie-talkie to contact the gas man for his DuPont team.

Kenseth's spot, however, is the funnier of the two, playing up Kenseth's more subdued personality to good effect.

Kenseth, a regular guy who doesn't seem to get too excited about a whole lot of things, is portrayed as a robot that short-circuits after champagne in Victory Lane soaks behind his faceplate.

His crew uses Nextel's Direct Connect feature to have a substitute Kenseth pulled from a trailer full of Kenseth robots and replaced in Victory Lane.

From the first-quarter financial success to the beginnings of what promises to be a long and colorful run as the series sponsor, Nextel has passed the first test in replacing Winston.

Many of those in the sport have never known any series sponsor other than Winston, and the first 90 days of Nextel's reign have gone a long way toward easing any concerns in that direction.

Nextel got into NASCAR to capture market share, increase profitability and make wise use of a hot property. NASCAR needed a sponsor that could actively promote the sport and take it to the next level.

If the first quarter results are any indication, both sides have what they wanted and needed.

The opinions expressed here are solely those of the writer.