Contract with Nextel one that matters in AT&T suit

Sports leagues and events have come under fire for vigorously protecting the exclusivity of their corporate partners. The NFL fined Chicago Bears linebacker Brian Urlacher $100,000 for wearing a hat with an unauthorized company logo during Super Bowl media day. Unauthorized drink bottles have been confiscated at Wimbledon and the Olympics, again drawing the ire of some critics.

In the case of NASCAR, currently being sued in federal court by AT&T, the sanctioning body is not only protecting its most important sponsor, Sprint Nextel, it is protecting the entire industry.

A federal judge will soon rule on a request for an injunction that would allow AT&T to replace Cingular's logo on the No. 31 car in the Nextel Cup Series in a case that has far-reaching implications for NASCAR and the sports industry as a whole. At stake are not only who controls terms of sponsorships in the country's second most-watched sport, but also the overall way NASCAR does business.

Nextel signed on as title sponsor to NASCAR's top series in June,2003, in a landmark sponsorship deal that included exclusivity in the series in the telecom category. At the time, Cingular sponsored the No. 31 car and was "grandfathered" the right to continue its sponsorship.

AT&T has a history of involvement in NASCAR, too. Prior to RJR's exit as title sponsor, AT&T was the exclusive telecommunications sponsor of NASCAR. Ironically, its decision to discontinue that sponsorship early opened the door for Nextel to become the title sponsor of the series. In addition, AT&T's 1-800-CALL-ATT division sponsored the No. 49 and could have remained in NASCAR under the terms of the "grandfather" clause. However, AT&T chose to depart the sport in both instances and thus surrendered its participation.

The series of mergers and acquisitions in which Cingular landed with AT&T is hard to follow. Cingular merged with AT&T Wireless in 2004; SBC (Cingular's parent company) acquired AT&T and then re-branded as AT&T; AT&T merged with BellSouth and decided to re-brand Cingular as "the new AT&T."

The end result is that AT&T, as Cingular's parent company, is trying to figure out how to use Cingular's contract with Richard Childress Racing to re-brand the No. 31 car with the AT&T mark and globe. According to documents filed in court, AT&T understood that it was "generally accepted as fact across the sport" that Cingular would not be allowed to change the sponsorship in any way.

However, legal wrangling over Cingular's contract with RCR is not the central issue. NASCAR's contract with Nextel is the only one that matters, and it clearly states that Cingular cannot re-brand. AT&T is attempting a classic "bait and switch" ploy by trying to switch AT&T for Cingular.

NASCAR fans are legendary for their loyalty to sponsors, a fact that has been confirmed by my research on thousands of fans. But that didn't happen by accident. As an organization, NASCAR has worked hard to ensure that it delivers value to its corporate partners.

AT&T claims it will suffer irreparable harm if the company is not allowed to place its globe logo on the No. 31 car. That is a stretch for a megabrand such as AT&T with an impressive portfolio of sponsorships including the U.S. Olympic team, the Masters, the NCAA Final Four, and American Idol. This raises another point, which is that AT&T knows a thing or two about exclusive sponsorships. Interestingly, breaking the "Golden Rule" in this case could come back to haunt AT&T down the road in a profound and fateful manner.

A spokesperson for AT&T said that the company wants to, "get back on the track and out of the courtroom." I'm convinced that NASCAR, Nextel and Richard Childress Racing all sincerely want what's best for the sport. The question is how we get there?

If AT&T wants to do the best thing, it should respect the agreements that are in place and look for opportunities to activate in NASCAR in a way that does not disrupt the foundation of the sport.

Dr. Larry DeGaris is an associate professor of marketing at the University of Indianapolis. He is also president of Sponsorship Research & Strategy. The opinions expressed are solely of the writer.