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'Significant investment' NASCAR wants potential sponsor to reach new marketsPosted: Saturday February 08, 2003 7:10 PMUpdated: Saturday February 08, 2003 9:29 PM
By Denise N. Maloof, SI.com DAYTONA BEACH, Fla. -- In a loud, hot hospitality tent this week, NASCAR executive George Pyne first grimaced, then grinned at some bystanders. "I'm ready to talk about cars on the track," he said. Small wonder. Wednesday's announcement that R.J. Reynolds has asked NASCAR to seek another title sponsor for its premier series rocked the stock-car community, or at least those who had no prior inkling. The tobacco giant, which has sponsored the Winston Cup Series since 1971, is hurting financially, meaning its 31-year-old racing marriage likely will be dissolved. "The best way to describe it is it's a much more competitive environment," said Ned Leary, president of Sports Marketing Enterprises, RJR's sports promotional unit. "It requires us to promote our brands perhaps a little more than we have, and those changes just provoked the conversation with NASCAR about the possibility of exploring a new sponsor some time in the future."
Odds are the Winston Cup name will remain intact for a few years, particularly since NASCAR and RJR signed a five-year contract extension last July. But unique financial stresses on the tobacco industry -- lawsuit settlements, restricted advertising and plummeting profits -- may quicken the divorce. On Thursday, during the hubbub of NASCAR's annual SpeedWeeks media day, Pyne and other NASCAR officials -- including patriarch Bill France, Jr., and vice president for corporate communications Jim Hunter -- spent a lot of time explaining and refuting the RJR dilemma, as did Sports Marketing Enterprises officials. The past decade's onslaughts of lawsuits, coupled with more federal restrictions on advertising, have pushed tobacco companies into a monetary corner. According to Leary, RJR's limited promotional options include in-store and print advertising, and direct mail to adult smokers. That means no television or billboard advertising, or marketing to children or anyone under the age of 21. Tobacco companies are allowed one brand-name sponsorship. But it's a whopper. RJR's Winston Cup outlay is rumored to fall somewhere between $20-50 million per year -- big bucks when viewed next to the company's reported fourth-quarter loss of $59 million. And the bottom line speaks like nothing else. Back in the early 1990s, when smokers' lawsuits and federal crackdowns surfaced, NASCAR vowed to remain faithful to an increasingly controversial ally. "The difference was back then, we told them, 'No, we'll ride this out with you because you've been such great partners,'" Hunter said. "But the business climate has changed so much today. They are virtually hog-tied in advertising their product." The fact that RJR has asked NASCAR to seek another title sponsor also spawns an enormous guessing game. At its center is Pyne, a 37-year-old Ivy Leaguer who played football at Brown University. As NASCAR's chief operating officer, Pyne also is responsible for, among other things, the sanctioning body's marketing and licensing programs. Literally. "I started it," Pyne said. "When we started, we had five people. Now we're in the hundreds." And millions of dollars. According to current figures released by NASCAR, the sanctioning body's licensing programs were projected to reap $1.4 billion in 2002. Pyne says there's no short list for RJR's replacement, although some companies have lobbied for it. "This is a really unique opportunity to reposition the sport in a different way," Pyne said. "We want to do that correctly, and take our time." It may not be easy. Yes, NASCAR ranks second only to the NFL in regular-season television audience and third among major sports in licensed sales. The sport is viewed as much more mainstream and much hipper than ever before, making it far more attractive to the coveted 18-34 demographic audience.
But amid a timid economy and war rumblings, it may not be easy to woo a corporation that will commit millions each year over the course of a 10-15 year contract. "You can't brand yourself to the NFL or the NBA or major league baseball," said Pyne, explaining the appeal. "So it's an unprecedented position in sports, and I think for some company out there who's looking to make a bold, innovative move, I'm pretty confident that it'll be an attractive property." He won't let the price tag slip. "We can't really talk about that," Pyne said. "I'd get terminated. It's a significant investment." What he can offer is criteria -- a sponsor that spends a lot of money on TV, radio, print and outdoor advertising, and one that can market to a wide demographic base. NASCAR executives also wouldn't mind building on tradition. Hunter said RJR was the first non-automotive-related company to approach with sponsorship overtures, and a similar partner would be preferred. "We want a partner just like Winston who is going to take our product to masses of people that we wouldn't necessarily interact with otherwise," Hunter said. "That's the biggest benefit of a series sponsor." Pyne said NASCAR would like a company that, "wants to break away from the clutter. They want to take a position that changes the dynamics in their own industry." NASCAR's self-trumpeted youth movement will be at the core. The fan base hasn't gone from gray to green overnight, but Pyne says it's much younger than even a few years ago. "Dramatically," he said, adding that when he was hired by NASCAR in 1996, "We did not really grid up too well from 18 from 34. And people who buy sports properties are more 18-34 [years old], than 18 to 49." Tobacco companies can't target children's markets or anyone under 21. A company with international reach would be an attractive series sponsor, too. One of NASCAR's recently announced desires is to expand its television reach overseas. Pyne said NASCAR has a lot to offer a new title sponsor. "Somebody that is looking for the characteristics of our audience -- young, affluent, national scope, and wants to change the game board in their business, too," Pyne said. "It happens all the time. Look at Lowe's and Home Depot. They've come in, in a big way, and changed the game board. And they've both done a terrific job."
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