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March 27, 2007
AT&T files second lawsuit against NASCAR
AT&T filed a second lawsuit against NASCAR on Monday, calling for their logo (seen in this picture) to be able to be added to the car immediately.
See that small globe? That is what is being argued about. That's what NASCAR said no to.
According to the article I read, AT&T is going to argue that the contract does say that they can't change the size of the Cingular logo and that it can't be transferred to another team, but they say that the contract doesn't mention anything about preventing a logo change if Cingular is bought out by another company.
Not only are they asking for immediate permission to add the logo to the car, they are also seeking an undisclosed amount of money in damages for the "substantial harm" NASCAR is doing to their company.
Your thoughts?
Picture credit - rcrnews.com
March 27, 2007 in NASCAR | Permalink
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One thing to consider and that is AT&T is no mickey mouse company. Their attorneys must feel that they have a good case or they would not be pursuing so vigorously.
I'm happy that NASCAR and their dictatorship is finally being "taken on" by a creditable corporation. Go for it AT&T!
Posted by: Greg | Apr 24, 2007 4:23:39 PM
I just wanted to add this tiny bit of information to this list of theories. I know for a fact that Cingular didn't merge with anyone. They have been privately owned by Bell South and SBC/AT&T. Two years ago SBC purchased AT&T and kept the logo. In December Bell South and AT&T merged into the NEW AT&T. Now that they are one company (the same pieces the government broke up in the 80's) they want their bred and butter to carry the same brand... AT&T. The part I find amusing about this is that Nextel/Sprint thinks that they can fight AT&T in this; they lost several million in the first quarter this year when AT&T made billions. Ok even if money has nothing to do with this, there is one important point I would like to make, they are the same company under the Cingular brand or the AT&T brand and they are going to kill Sprextel!! Date has been set for the 26th so we will wait to see.
Posted by: Brandon Grander | Apr 22, 2007 6:51:52 PM
Charles...
I appreciate your comments and having been a subcontractor to the U.S. military. I agree with you. NASCAR has long avoided addressing the issue of defining the racing teams as "independents". In business, it is how IRS defines an independent contractor that really matters. If you meet a certain
criteria then IRS will declare you a legimate independent or sub-contractor, if not then you are an employee or contractor.
One of the rules is that you cannot offer your services exclusively to a single company and continue to hold your status as a sub-contractor or independent. I realize there are different IRS interpretations on specific cases. I predict this is going to get real ugly before it is resolved. Some expensive legal minds will work on this case for an extended period of time before it ever gets to the court room. I'm betting it is decided outside the court room at NASCAR's request.
Posted by: jim | Mar 30, 2007 8:13:13 AM
I studied some contract law in college,now our company does a lot of medium sized jobs for large contractors,,we work as subcontractors..The rules are much different for employees than subs..I bet it will be decided ,on a conflict off intrest ruling..Nascar says each team is independant (sub contractors), coming together each weekend for a project(The Race).In construction,as long as the sub follows all safty,material,schedule and quality rules,,and preforms up to standards,,the General Contractor has to let him do his job without henderance........Just a thought.
Posted by: charles | Mar 30, 2007 1:05:56 AM
I would love to hear from someone that know anything about contract law, because to me I don't see how NASCAR can apply a provision in a contract they signed to independent contractors (the 43 teams). I could see Nextel keeping NASCAR from having other cellphone service providers as NASCAR sponsors but not telling teams that they cannot have those types of sponsors for their independent businesses and if they try than they would violate anti- competition laws. This is why I believe AT&T will prevail in its lawsuit against NASCAR.
Posted by: Jon | Mar 29, 2007 7:24:23 PM
Generally, if you buy a business, you buy along with it all of its contracts. If I buy an apartment building, I buy the leases of all the tenants and have to honor them. Similarly, if AT&T buys Cingular, then AT&T buys Cingular's contracts, just as Sprint buys Nextel's contracts. What arises now is that AT&T CANNOT perform the contract Cingular had with RCR. Cingular's deal was simple: we'll give money to RCR in exchange for RCR putting our logo on the 31 car. But NASCAR has a contract with Sprint that allows ONLY Cingular to be on the 31 car. Therefore, RCR can no longer live up to its bargain: to provide a billboard.
If I knew contract law better, I'd make a better guess, but I still say AT&T loses, and if AT&T loses, then the issue is whether it has to honor its contract to give money to RCR, when the other half of that deal is the logo rights.
Posted by: Doug in CA | Mar 29, 2007 2:51:43 PM
Thank you all for the great info. All this drama going on here has wore my brain out.
Thanks Again! Stay tuned, Comcast may come knocking on the door.
Posted by: Deb | Mar 29, 2007 9:36:03 AM
It seems to me from everything I've read that we are talking about 2 different contracts - the one btw. NASCAR and Nextel/Sprint and the contract btw. RCR and ATT. According to ATT folks, their contract states that they can't increase the size of their logo or move to another team, but nothing about a name change. According to NASCAR, their contract with Nextel states that 2 cell phone companies are "grandfathered" in and no changes can be made. Now what I question is how NASCAR can force ATT/Cingular to honor NASCAR's contract with Nextel, when presumably ATT/Cinguar had no input in that contract and didn't sign that contract. I would think that ATT is bound only by the contract that they signed
with RCR.
Posted by: Tiff | Mar 29, 2007 8:23:32 AM
......and in yesterdays headlines was this...."Comcast is looking to buy Sprint/Nextel"........once more the name will change for the series..........and they won't let AT&T put a Globe on Jeff's car????? Baloney!!!!! I'm not switching to Nextal/Sprint whatever they name the series just because and I will not buy anything with Nextal/sprint on it. JMHO.
Posted by: Fran | Mar 29, 2007 6:14:17 AM
I say Nextel wins due to the fact that they supposedly have a clause in the contract stating they can change the title of the series once during the contract period. Thereforth I don't think AT&T has a leg to stand on.
Posted by: bshown | Mar 29, 2007 1:29:53 AM
Just to clearup a little misinformation, SBC bought AT&T and not the other way around and SBC decided that AT&T's name recognition was the best name for the combined companies.
Posted by: Jon | Mar 28, 2007 10:37:53 PM
Thank you all for clearing this up for me. Sprint takes Nextel after the fact. AT&T takes Cingular after the fact, plus all the baby bells. Nascar is looking only at the $$$$$$$$. You are sooooo right. The federal court could care less about whose pocket the $75 mill is in. Does anyone have a shovel big enough for Nascar to dig out of the hole they are in?
Posted by: Deb | Mar 28, 2007 9:20:19 PM
AT&T wins. If Sprint hadn't bought Nextel, AT&T would probably lose. Deservedly so.
But the precedent has been set. $75 million persuaded NASCAR, but it won't budge the Federal court.
Posted by: JWSmoke | Mar 28, 2007 8:59:35 PM
canucken:
"Marc, I understand that when Nextel and Sprint merged in December of 2005 that Nextel was already the sponsor of Cup and had been for one full season. However, Sprint/Nextel are the same company now..."
You miss the point, NEXTEL signed as series sponsor. As part of that agreement it was agreed no other telcom would be allowed with the exception of alltel.
THEN the Sprint/NEXTEL merger occured.
THEN they announce NEXTEL will be no more and in 2008 NASCAR's series will assume some other related name.
NOW with a merger between AT&T and Cingular a done deal (as you say of NEXTEL/Sprint, "are the same company now") they attempt to do the same type of name change and are denied that right based on a restriction Sprint themselves has ignored.
Granted, it's "Sprints ballgame" in a contractual sense. Maybe, at the very least it's disingenious, at most a judge will rule in AT&T's favor and based on Sprints precedence of their name change.
Posted by: marc | Mar 28, 2007 6:17:09 PM
The way that companies operate today by merging together, selling, buying and changing names, is just part of the beast. Everyone needs to be flexible in these areas for everything to workout. What is the big deal about a name change. They were a competitor before and will be one after the name change. Maybe NEXTEL,Sprint, or whoever they are next week will step up and sponsor the #31 car. Aren't these grownups running these companies. They sound like little kids. " I'll just take my ball and go home".
Posted by: jeff | Mar 28, 2007 5:06:25 PM
Thank You Joeracer. I thank you for clearing all this up for me. Another question? What was the deal with Nascar and Motorola at Atlanta? Didn't Nascar approve Motorola a long time ago? Then Nascar comes back and says no, then ok's Motorola. Nascar says yes, then no, then yes. Has there ever been anyone big enough to challenge the France and Nascar Impire?
Posted by: Deb | Mar 28, 2007 3:59:56 PM
IF NASCAR Disallows a legit sponsorship deal due to Conflict of intrest,Nascar should Pay THE RACE TEAM what they loose!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Posted by: charles | Mar 28, 2007 2:39:01 PM
Tuesday, March 27, 2007
AT&T files motion asking to put its logo on Jeff Burton's Cup car
NASCAR and Nextel have refused permission to make switch
THE ASSOCIATED PRESS
AT&T filed a motion yesterday asking that its logo be immediately added to Jeff Burton's race car.
The motion was filed in U.S. District Court in Atlanta, where the company also filed its lawsuit against NASCAR. A hearing on the motion has not been scheduled.
Burton is sponsored by Cingular, a cell-phone service provider. AT&T recently took full ownership of Cingular as part of its recent merger with BellSouth and intends to eliminate the brand name.
AT&T sued NASCAR on March 16 after racing series officials refused to allow AT&T to put its logo on Burton's car because of NASCAR's deal with Nextel, which sponsors NASCAR's top series - the Nextel Cup.
"We must bring this issue to resolution," John Burbank, vice president of marketing for AT&T, said in a statement. "The season is well under way, and so are our re-branding efforts. This filing is a logical next step for us in the process, and one we must pursue so that we can simply move forward with our paint scheme - something our agreement with NASCAR allows us to do."
NASCAR's Nextel deal forbids teams that race in the series from signing new sponsorship agreements with competing telecom companies. The deal does contain a provision that allows teams with existing telecom sponsorships - such as Richard Childress Racing, the team for which Burton drives - to keep their sponsors.
AT&T officials acknowledge that they agreed to a contract with the Childress' team that contains provisions saying that Cingular can't increase the size or placement of its logo on the car and can't switch its sponsorship to another team. But they say that the contract does not contain language preventing a logo change in the case of another company buying out Cingular.
NASCAR and Nextel officials declined comment when the lawsuit was filed.
The lawsuit seeks permission to make the logo switch and damages for the "substantial harm" that NASCAR has caused to the company.
The lawsuit calls altering the design of the No. 31 car an "integral part" of the company's brand-name switch and says that NASCAR's refusal to allow it inhibits the company's ability to "attract new customers and retain existing ones."
Posted by: joeracer | Mar 28, 2007 12:48:57 PM
If I owned a McDonalds I would not want a BurgerKing billboard on my roof. And if I leased the building I would have a clause with my landlord prohibiting one.
Posted by: Peter | Mar 28, 2007 12:25:13 PM
Just how big is Srint/Nextel? Do they and Nascar have the money to fight a giant like AT&T who has taken over the baby bells. They bought my baby bell. If Nascar has any dirt under their fingernails then you know AT&T will bring it out. Wow, what a mess for RCR and Burton. Nascar has always had the say so, but now that corporate america is in there, I'm not so sure anymore. I also remember a long time ago something about Comcast looking into taking Sprint. If Nascar wants corporate america in there then they better get used to the cutthroat of corporate america and start saving their money for all the fights they are heading into.
Posted by: Deb | Mar 28, 2007 11:31:20 AM
The key word in this whole issue will be "exclusive". I doubt that they will ever
get to the words "independent contractor"in this part of the litigation. Like it or not, the door of opportunity has opened and NASCAR may be forced to reveal more of their business dealings than they would like to reveal. AT&T will hope for a jury
trial...and NASCAR will opt for judge to decide this case. At any rate, sponsorship of racing will probably suffer as a result of the court's decision.
Posted by: jim | Mar 28, 2007 8:38:42 AM
The only difference of Nextel changing their name to Sprint and Cingular changing to AT&T is about $75 million dollars.
Posted by: jeff | Mar 27, 2007 10:58:39 PM
nascar might be begging for att sponsorship 15 years from now, if they follow the same road their on.
Posted by: mac | Mar 27, 2007 10:33:09 PM
The real losers in this case could be the employees at RCR if this thing gets really ugly. Both Childress and Burton are financialy stable, but what about the guy that sweeps the 31 team floor. I hope the legal problems are soon resolved
Posted by: Chris | Mar 27, 2007 10:19:24 PM
I would be absoultely stunned if AT&T won anything. In the case they do win the injuction, it will be overturned on appeal without question.
This isn't about fairness. This is about who determines what in NASCAR. This isn't a government institution wher access to all must be granted. NASCAR is private, and it can decide what it wants on it's racetrack. NASCAR excluded liqour, but allowed beer, on the racetrack for years -- for one reason: NASCAR said liqour won't be on the racetrack. Does it have to make sense? No. If Bill France and Mike Helton decide Budweiser wont be on the track, then that is the way it is. No reason necessary. Its their show, and if you want to play, you play be their rules.
NASCAR will be all over this... They can't explicitly have sponsors telling them what they can and can't do.
Posted by: Ken | Mar 27, 2007 9:57:26 PM
Does anybody care to dicuss anti-discrimination? Ever notice that the yellow stripe on the NEXTEL patch on both Jeff Burton's and Ryan Newman's uniforms are colored gray? Ever notice that the same two drivers wear a BLACK NEXTEL CUP hat, while all the other drivers wear yellow? Don't Burton and Newman drive in the same racing series? Because they are sponsored by a rival telecommunications company, these two drivers (and most likely they're teams) are forced to appear differently. In my opinion, that constitutes discrimination. With the rising costs of racing, big money sponsors are a necessity. Maybe NASCAR should re-think they're sponsorship contracts in the future. And as far as NEXTEL is concerned, I'll decribe their phone service in the same terms that Kyle Busch described the COT. It sucks. Well, that's my two cents worth.
Posted by: SmokeFan | Mar 27, 2007 9:39:56 PM
I wonder if AT&T has a hidden strategy here.
Consider - for most of the 80s and 90s, some European countries banned tobacco advertising. Most didn't. Many Formula One teams had tobacco advertising - Marlboro McLaren, Lucky Strike/British American Racing, Rothmans Williams, Mild Seven Renault, etc. etc. Whenever the teams went to a non-tobacco country, they would take the tobacco company name off, and just run with the same paint scheme without the words. (Penske did the same thing at Indy, 01-03, because of the Tobacco Settlement.)
Anyway, everyone knew it was the "Rothmans Williams" or "Marlboro McLaren" even if it didn't say so in the race.
Perhaps AT&T figures they get a few races with the logo on during the injunction, and even if they lose, RCR could still run a blue and white car without the logos afterwards.
I imagine NASCAR might not let them race with an AT&T "design" and if Burton kept saying "The AT&T car ran great today" he could be fined under the "conduct detrimental to stock car racing" clause.
So, I don't know. If this was about fairness, AT&T should get it logos on the car, but the law is not about fairness, esp. contract law, so we shall see...
Posted by: Leonard | Mar 27, 2007 8:59:41 PM
anyone can register and see the facts of the case for .08 cents a page at:
https://ecf.gand.uscourts.gov/cgi-bin/login.pl
look for yourself
Posted by: joeracer | Mar 27, 2007 8:36:37 PM
Marc, I understand that when Nextel and Sprint merged in December of 2005 that Nextel was already the sponsor of Cup and had been for one full season. However, Sprint/Nextel are the same company now so it reasons that they can change the name. The contract for the stipulations and restrictions regarding telcom's was already in place for the cars at that time. AT&T bought out Southewest Bell (which owned Cingular) and now wants to reintroduce/launch the AT&T Wireless brand. That's clearly not allowed. I don't think any of us here need to see the actual contract to know that. At the time of Nextel title sponsorship deal that was made pretty clear by the media and Nascar officials.
Posted by: canucken | Mar 27, 2007 8:32:03 PM
canucken:
"Final point, everyone knew the rules going in to this."
Yea but... When NEXTEL signed to be a title sponsor and contractually excluded other telcoms the Sprint merger was not on the horizon.
On that point AT&T has an even chance to win in court.
Posted by: Marc | Mar 27, 2007 7:54:28 PM
First, we haven't seen the contracts, so arguing over precisely what they say is useless at this point. "They say that the contract doesn't mention anything about preventing a logo change if Cingular is bought out by another company." This is where lawyers earn their money, poring over the contract to find support for their interpretation.
If we assume, though, the plain meaning of what we have read, Nextel is the ONLY wireless sponsor allowed to advertise, with the 12 and 31 having certain very specific exceptions. If that's the case, then there's no AT&T logo on Burton's car. As several folks have said, Nextel paid gazillions and gets to make the rules.
I wonder how sponsorship works. Has Cingular paid its money for 2007? Is it monthly? Could this cut off a vital money source in a short time? I studied contracts in my first year of law school (hint: that year's Cup champ died recently)and don't remember much of it. Will AT&T refuse to honor Cingular's contract? When AT&T bought Cingular, certainly they knew of the arrangement.
This sucks especiallly because I'm a Jeff Burton fan, and one tiny reason is that it's really easy to spot his car on TV!
Posted by: Doug in CA | Mar 27, 2007 7:19:52 PM
"...but they (AT&T) say that the contract doesn't mention anything about preventing a logo change if Cingular is bought out by another company."
This is only the case if you were not previously excluded from running sponsorship, in which case AT&T was. It's not NASCAR's fault that AT&T changed Cingular. Unless they also buy a federal judge, I don't see where they have a legal leg here.
I feel sorry for Richard Childress. He's probably wondering if GM Goodwrench has changed their minds by now.
Posted by: buddynoel | Mar 27, 2007 6:41:31 PM
Sorry Honey, I don't keep up with who owns who anymore, I just remembered hearing something about Nextel changing their name to Sprint. How long will it be before Sprint is bought out by someone? My bank has changed so many times I can't keep up anymore. I just hate to see something happen to RCR and Jeff Burton. Way to much trouble trying to keep up with all the name changes.
Posted by: Deb | Mar 27, 2007 5:57:29 PM
Deb, are you serious with that question? Sprint owns Nextel, they therefore pay for the sponsorship out of their pot of money. As the TITLE sponsor they can change their name if they like to. They're the TITLE sponsor and are paying for it.
Marc is correct in pointing out that it won't remain just the small globe on the car, Cingular is done and it's AT&T. They want the whole car to be AT&T blue and white.
Final point, everyone knew the rules going in to this. It was clear, if you are sponsored by a telcom company you can keep that sponsorship on the car it is currently on. It can't change names and it can't move. The #12 is the only car that will have Alltell on it, ever, and Cingular is the only sponsor that is allowed on the #31.
That's how title sponsorship works. Besides, the money that Nextel/Sprint pay for sponsoring Cup benefits all drivers and teams in the form of more prize money for them.
AT&T will not win this court battle.
Posted by: canucken | Mar 27, 2007 5:27:43 PM
KURT2
"Funny isnt it, a small globe causes such a mess. ATT is not looking to revamp the look of the car, add a "globe"."
Come on on guy, do you honestly believe the 31 will remain orange with a blue AT&T globe added to it?
Cingular is history, the entire paint scheme will be revised.
While I tend to agree NASCAR on occasion use the "independent contractor" line to their own advantage they are not doing anything that other sports haven't proceded them in doing.
The NFL has lowered the boom on certain players/teams for running afoul of sponsor contracts.
Having said that, I find it "odd" (to be kind) NEXTEL can morph into Sprint via a merger and Cingular can't morph into AT&T via the same means.
If for no other reason NASCAR/NEXTEL may lose this case in court.
Posted by: Marc | Mar 27, 2007 5:19:35 PM
Didn't I just read somewhere that Sprint is taking over Nextel? What is the difference?
Nextel is going to change their name.
Posted by: Deb | Mar 27, 2007 5:16:40 PM
A contract is a contract. AT&T needs to be careful because, while it has a contract with Jeff Burton and Sprint has one with NASCAR, I don't think Jeff Burton has a contact with NASCAR. The sponsor could wind up with a logo on a car that isn't allowed to run. I would hate to see Burton have to stay home because his sponsor couldn't tell the difference between sponsoring a car and sponsoring a driver.
Posted by: buddynoel | Mar 27, 2007 5:12:19 PM
Micheal,
Miller has run in the Busch series. I think it was the #22 car of Jason Keller. NASCAR will cut it's own throat, but what else are these guys going to do? They aren't going to walk away and go get a job for $25,000?year. If you want to race in NASCAR you go by thier rules. Personally, I'd like to see the stars go run in open-wheel. The money would be less, but they could call the shots.
Posted by: joe | Mar 27, 2007 4:07:03 PM
Tb, they only like to use that phrase when it benefits them, not the teams.
Posted by: Kathy | Mar 27, 2007 3:45:18 PM
Seeing how The France Family Mafia claim that race teams are "Independant Contractors"...I think each team should be able to have ANY sponsor that is willin' to pony up the cash!
Posted by: Tbfka#5 | Mar 27, 2007 3:22:07 PM
Funny isnt it, a small globe causes such a mess. ATT is not looking to revamp the look of the car, add a "globe".
Finally this is going to come to the forefront with the legal issues in court.
Posted by: KURT2 | Mar 27, 2007 2:07:14 PM
Well, Nextel did fork out $75 million dollars to be the title sponsor so I can see where they are coming from. When R.J. Reynolds sponsored the series, I don't think I saw any Philip Morris brands out on the track. I'm not sure about Anheuser Busch's deal with the Busch series, but I don't think Miller has run in that one.
I don't think AT&T's move with the immediate injunction is a wise, but I guess they figure if they can get the logo on the car, it's harder to take off.
It'll be interesting to see what happens. Nascar is playing in the big leagues now, so it's going to have to fight these battles. They asked for the spot light and now they are getting it. Once you go corporate you can't rule with an iron fist, you have to rule with the lawyers.
Posted by: Michael | Mar 27, 2007 1:32:27 PM
I say let AT&T put their current logo on the car. Everyone knows it is the NASCAR NEXTEL Cup Series, and I don't see what kind of tangible threat there is to Nextel if the AT&T globe is on the car. Fans aren't going to think it's become the AT&T Cup Series overnight. It's just a sponsor being allowed to display their logo. I really think it's ridiculous that Nextel takes the position they do with regrad to "other" cell phone proveiders. Live and let live!
Posted by: Zack Harmon | Mar 27, 2007 1:15:58 PM
The comments to this entry are closed.
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