NASCAR, AT&T ready to battle on sponsorship issue

	Cingular's decision to adopt the AT&T name and logo may leave Jeff Burton in need of a new sponsor next season. Chris Graythen/Getty Images for NASCAR
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On April 26, a hearing will be held in U.S. District Court in Atlanta, where NASCAR will represent itself against team sponsor AT&T in order to protect the rights of its series sponsor, Nextel. The case will determine if AT&T has the right to sponsor Jeff Burton's No. 31 Chevrolet in 2008 and beyond following the company's permanent name change from Cingular (the current sponsor of the No. 31) to AT&T. Depending on the outcome, Burton's team may need a new sponsor next season.

For now, the pending litigation has left NASCAR fans wondering how such a seemingly simple dispute can wind up in federal court. Further examination reveals issues of exclusivity, sponsor loyalty and marketing competition -- the latter as intense as the racing on the track. Here's a review of the key issues and developments leading up to the court date.

Nextel and the grandfather clause

Potential conflict wasn't on the minds of Nextel officials when they were negotiating to sponsor NASCAR in '03. At the time, they were merely seeking maximum exposure as a new company looking to wrap itself around the sport's top level.

The growing cell phone giant wanted a high degree of marketing control to sponsor the Cup series, and their request was reasonable, given that outgoing sponsor Winston had engineered a deal for 31 years that gave it exclusivity rights at every level in NASCAR. From 1972 to '03, no other tobacco companies were allowed to sponsor any teams, drivers, or tracks hosting any NASCAR series without Winston's approval. With a $70 million per year investment on the table, Nextel was looking to get a similar boost out of its marketing dollars, a position NASCAR understood.

"There are certain sponsors that have these larger commitments, and therefore certain assets and rights," NASCAR director of business communications Andrew Giangola told SI.com. "The series sponsor helps all of our teams and all of our drivers. And because of their unique position in the sport, they deserve special protection."

In Nextel's case, that protection was offered -- but getting it wasn't as easy as it was for Winston. Kicking existing cell phone sponsors out when Nextel signed on could have been a messy situation for everyone involved, especially when two of those companies sponsored prominent teams. At the time, Ryan Newman and Robby Gordon were combining to win 10 of the 36 races in the series, and each had a cell phone company prominently displayed on the side of their cars (Newman had Alltel on his Penske Racing Dodge, while Gordon's RCR Chevrolet was sponsored by Cingular Wireless).

Not wanting to be the bad guy, Nextel came up with a solution that would appear to solve the problem while still providing it the exclusive rights it sought. Through a "grandfather clause," cell phone sponsors already involved in the sport would be allowed to continue participating as they already were -- as long as they met certain future conditions. NASCAR agreed to the clause, and Nextel became the new series sponsor (unlike Winston, the exclusivity does not extend to other NASCAR series such as Busch or Trucks).

"The way to think about [the clause] is it's a snapshot in time," Nextel director of NASCAR marketing Dean Kessel said. "As long as sponsors stay the way they are from that point in time (back in '03), they can participate in the sport as long as they want to. If those parameters change -- logos, marks, ownerships, things of that nature -- it's very clear, not only in the contract or other correspondences from NASCAR over time, that's not allowed."