Nextel in Times Square: Kurt Busch celebrates his 2004 Nextel Cup Series championship. Credit: Autostock

Nextel reaps benefits of first year in NASCAR

As the first season of the NASCAR Nextel Cup goes into the history books, one thing that likely will be noted is Nextel's quick success in the sport.

As the sponsor taking over for longtime backer Winston, Nextel faced a huge public relations gap at the beginning of the year. It also had to orient itself to the behemoth of NASCAR and the potential in the sport.

ALSO •   June 2003: Nextel to sponsor NASCAR's top division •   Nextel: Fans top priority with series sponsorship •   NASCAR, Nextel paint the Big Apple yellow

By all accounts, Nextel succeeded beyond its wildest expectations, and in the process managed to expand its market share in the crowded communications industry.

At the recent NASCAR awards banquet in New York, Nextel was given the NASCAR Marketing Achievement Award, which is a way of saying, "Good show!" to the series sponsor.

"NASCAR has called this a partnership and I totally agree," said Nextel President and CEO Tim Donohue said. "It was a fantastic year and this partnership is going to keep growing and getting stronger for a long time to come."

There is some truth to that, beyond the usual hyperbole of an awards ceremony. At the end of the third quarter, Nextel was up around 7 percent in total sales, and the market share numbers were up as well.

With Cingular (which also sponsors a race car) and AT&T Wireless merging and the fact that another car carries Alltel sponsorship, NASCAR is a good place for the cellular industry. Anyone who has tried to call out from the race track in the hours leading up to a race knows about that.

Nextel President and CEO Tim Donohue speaks at the 2004 Nextel Cup Awards Ceremony Credit: Autostock

Third-quarter numbers for the communications company show that its sponsorship of the NASCAR Nextel Cup Series is adding to its core business. Revenues were up 18 percent to a record $3.4 billion, third-quarter income was $586 million and earnings per share were $0.53, compared to $0.33 in the third quarter a year ago. Operating income before depreciation and amortization was a record $1.32 billion.

Perhaps the biggest indicator of success, especially viewed through the prism of today's financial climate, is the fact that in the third quarter, Nextel added 745,000 total subscribers, 550,000 from Nextel and another 195,000 from Boost Mobile.

"Nextel is experiencing strong demand for its wireless services across all sectors and especially higher growth in government, high-end individuals and our Boost Mobile business," said Tim Donahue, Nextel's president and CEO in the company's third-quarter statement to investors. "Nextel continues to take more than its proportionate share of high quality subscribers, revenue and most importantly cash flow. Nextel will continue to focus on profitable growth and is well-positioned for the future."

Much of that growth can be linked to the company's NASCAR sponsorship, although the exact numbers are difficult to ascertain. The first half of the season was spent saying goodbye to Winston and establishing Nextel as the series sponsor. The second half of the season, which culminated with the successful Chase for the Nextel Cup, was used to hammered home the deal.

Combined with a series of well-received advertisements depicting the history of the sport, Nextel introduced home fan-friendly options like PitCommand for cellular phones. PitCommand, introduced in July as part of the NASCAR.COM To Go wireless program, enabled subscribers to watch race telemetry via a wireless Java application.

Credit: Autostock

"Since before the season started, Nextel has been dedicated to delivering greater excitement and enjoyment to NASCAR fans by leveraging our wireless technology expertise to make fans part of the action," said Mark Schweitzer, senior vice president of marketing for Nextel.

It is that sort of commitment to NASCAR that made Nextel's first season as series sponsor one to remember. Not only was the competition for the Cup a race for the ages, Nextel's nearly seamless integration into a sport was beneficial to both parties involved.

The third-quarter numbers show that Nextel's money -- $700 million over 10 years, according to reports -- has been well spent. The fourth-quarter numbers will likely be even better. Record revenues, a 20-cent increase in per-share dividends and all the marketing opportunity one could ever want spell success in just about anybody's book.

The reason Nextel came on board was to capitalize on the rapid growth of NASCAR racing in the past 10 years. The company has realized that and more, contributing as much as anything to that success this year.

One can only wonder how much better things will look for both Nextel and NASCAR at this time next year.