Posted on 08/13/2007 4:27:30 PM PDT by Captain Jack Aubrey
A federal appeals court on Monday gave NASCAR a huge victory in the racing organization's ongoing battle with AT&T.
In a reversal of a lower court's decision, the 11th U.S. Circuit Court of Appeals in Atlanta ruled that AT&T doesn't have the right to sue NASCAR over a sponsorship disagreement.
The upshot: NASCAR is close to being able to require that AT&T logos be stripped from the No. 31 car, which is driven by Jeff Burton. That finding is a big switch from May, when Judge Marvin Shoob of U.S. District Court in Atlanta granted AT&T a preliminary injunction that allowed the company's logos to appear on the car.
The whole controversy centers around AT&T's attempt to drop the former Cingular Wireless brand.
Cingular, based in Atlanta, has been a NASCAR sponsor since 2001, thanks to a deal with the owner of the No. 31 car, Richard Childress Racing.
When Sprint Nextel became the top sponsor of NASCAR's highest level of racing, the organization agreed to give Sprint exclusive sponsorship rights as a telecommunications provider. Cingular was "grandfathered" in, and thus allowed to remain as a car sponsor.
In late December, San Antonio-based AT&T took full ownership of Cingular, which formerly was a joint venture of AT&T and BellSouth. As part of the change, AT&T decided to drop the Cingular name, whether on stores or in advertising or through sponsorships.
The company soon asked NASCAR to approve a switch in logos on the No. 31 car. The organization balked, citing its deal with Sprint for the Nextel Cup.
The dispute set off a legal fight, starting with an AT&T suit against NASCAR in March. When Shoob later ruled in AT&T's favor, the No. 31 car was quickly redecorated with AT&T's globe logo. AT&T also renewed its sponsorship deal with Richard Childress Racing to run through at least 2010.
Mark Siegel, a spokesman for AT&T's wireless unit, said the company was weighing its options in the wake of Monday's ruling. "We're continuing to pursue our right to put the AT&T name on the car," he said.
NASCAR spokesman Ramsey Poston said AT&T has five days to decide what to do, so the racing organization is unlikely to request immediate changes to the No. 31 car. Nonetheless, he hailed the ruling.
"NASCAR is obviously pleased," Poston said. "It is a victory for the industry and every driver, team and NASCAR partner."
The next Nextel Cup race is Sunday, with the 3M Performance 400 at Michigan International Speedway in Brooklyn, Mich.
AT&T could ask the entire 12-member appeals court to reconsider Monday's ruling, which was issued by a three-judge panel. In an order also released Monday, the 11th Circuit said it would continue to expedite consideration of the case.
If the full court declines to hear an appeal, AT&T's last recourse is the U.S. Supreme Court.
The 11th Circuit panel ruled AT&T had no legal standing to bring the lawsuit in the first place and, for this reason, can no longer try and interpret Richard Childress Racing's agreement with NASCAR to its advantage.
The court noted that AT&T was not a party to the sponsorship contract signed by NASCAR and Richard Childress Racing. Moreover, the court said, AT&T was not the intended beneficiary of RCR's agreement and any benefit AT&T gained from it was merely "incidental."
AT&T's NASCAR sponsorship is among many things the company uses to market itself. Racing is considered a prime venue for advertising because it reaches a large group of intensely loyal fans.
Staff Writer Bill Rankin contributed to this report
I should mention, that I like Cingular, and Bell South and AT&T and don’t like Sprint/Nextel but I’m talking about what is fair to NASCAR and what will keep NASCAR safe.
Frankly, as retaliation, I would love to see Ryan Newman sport a Sextel Sucks logo in one of the next races.
“Gee, I like NASCAR just for the racing. Personally, I pay no attention to the advertising.”
Without the advertising, there can be no racing.
Just more proof that NASCAR is no longer about racing. It has become The Parade of Sponsors’ Logos.
I bet the depositions are more exciting than the races.
Do you think the judge called a recess every time someone dropped a pen?
Yes...but Perrier and Pepsi are different products.
Cingular and AT&T are both wireless carriers.
If I recall correctly, NASCAR forced Winston to give up its sponsorship of the Cup, correct, because of the “connotation” of having a cigarette sponsor NASCAR? Does anyone know how much Winston paid NASCAR a year?
Maybe, just maybe, that's what the judge did.
Cingular was specifically grandfathered. It was an exception to the exclusivity arrangement that NEXTEL negotiated with NASCAR. As I understand it Cingular was not even allowed to drop back to a secondary-sponsorship. Once they gave up on the 31-Car they were out. That shows you how tightly NEXTEL negotiated the exclusivity arrangement. And you can bet NASCAR was paid a premium for it as well.
“Why is that. NASCAR needs to be able to sell exclusive sponsorships. If another company can buy out a sponsor and force NASCAR to violate their own exclusive sponsorship rules then NASCAR sponsorships will be worth a lot less money and NASCAR will suffer.”
Cingular and Alltell were team sponsors before Nextel arrived. The teams they sponsor depend on their money, $15 to $20 million, a year to cover costs. NASCAR wants to kick Alltell and Cingular out of the sport. NASCAR will not lift a finger to replace their money for those affected teams.
>>They paid for cup sponsorship, not driver sponsorship. Drivers and Owners had no say in the cup sponsorship agreement.
Frankly, as retaliation, I would love to see Ryan Newman sport a Sextel Sucks logo in one of the next races.<<
I don’t know how that works — there is TV revenue and Cup sponsorship revenue. I would guess teams agree to certain terms in order to participate.
>>Cingular and Alltell were team sponsors before Nextel arrived. The teams they sponsor depend on their money, $15 to $20 million, a year to cover costs. NASCAR wants to kick Alltell and Cingular out of the sport. NASCAR will not lift a finger to replace their money for those affected teams.<<
That’s a reasonable point - when they change the cup sponsor it would cost certain teams money.
i guess that’s why they grandfathered Cingular and Alltell.
But its really ATT’s responsibility to do due diligence before they bought Cingular’s parent - they should not have counted on the NASCAR relationship because it was only grandfathered for Cingular.
Cingular is Latin for “This sucks as much as Celluar One.”
Not true. Cingular was ONLY a wireless carrier. In addition to wireless, AT&T offers long distance and local telephone services, DSL and other Internet services, etc.
Thanks for the FYI
Big money is at play and lawyers are not yet done.
It will be interesting to see how far up the court system this issue continues, if at all.
Even if AT&T does not prevail, RCR will undoubtedly find another sponsor for the 31 car. Jeff Burton is a stand up driver that should draw the attention of many corporations.
JMHO
Ah...good point. They should have kept “X” guy on the car. Simply can’t figure out why NASCAR dumped Winston - like what? NASCAR fans shouldn’t smoke and a tobacco company is not a good cup sponsor?
I hope Jeff gets a good sponsor for the 31 ride to replace Cingular/ATT. He’s one cool dude.
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