Friday, May 18, 2007

AT&T wins injunction, but NASCAR is granted stay

In a ruling that could have broad implications in the realm of NASCAR sponsorships -- and in the realm of sports sponsorship in general -- U.S. District Court Senior Judge Marvin H. Shoob on Friday in Atlanta granted AT&T Mobility a preliminary injunction that will allow the placement of AT&T Wireless logos on the No. 31 Cingular Chevrolet owned by Richard Childress and driven in NASCAR Nextel Cup racing by Jeff Burton.

Unless NASCAR prevails at a hearing to stay the injunction order, scheduled for 11:30 a.m. Saturday, the AT&T paint scheme will debut in Saturday's Nextel All-Star Challenge at Lowe's Motor Speedway.

"I am just really happy for AT&T that we are going to be able to re-brand our car to AT&T and carry on," Childress said in a Friday afternoon news conference. "We want to get back to really trying to win this championship. It is just a great day for RCR and AT&T."

The suit stems from the recent merger between AT&T and Cingular Wireless and their desire to re-brand the Cingular name as AT&T. On March 16, 2007, AT&T filed suit against NASCAR after NASCAR denied the company's request to include the AT&T logos on the rear quarter panels of the No. 31 car.

Sprint/Nextel, a competitor of AT&T in the wireless communications arena, is the title sponsor of the Nextel Cup Series. The sponsorship agreement between Sprint/Nextel and NASCAR precludes any other wireless companies from sponsoring cars in the series. Cingular and Alltel (which sponsors the No. 12 Dodge of Ryan Newman) were grandfathered into the series because their agreements predated the title sponsorship of Sprint/Nextel.

To prevail in its request for a preliminary injunction, AT&T had to satisfy four criteria:

• A substantial likelihood of success on the merits in the lawsuit proper;

• A substantial threat of irreparable harm if the injunction were not granted;

• That the potential injury to AT&T outweighed the potential hardship to NASCAR;

• That the granting of the injunction would not be adverse to the public interest.

Judge Shoob's ruling indicates that, in his opinion, those criteria were met.

On Friday afternoon, NASCAR requested the stay hearing, which was granted by Judge Shoob. The sanctioning body also indicated that if a stay is not granted on Saturday, NASCAR would seek an emergency stay from the 11th Circuit Court of Appeals on Monday morning.

It has been AT&T's contention that nothing in its sponsorship contract prohibits a name change -- only that AT&T could not increase its brand position on the car (Cingular is the primary sponsor) or transfer the sponsorship to another car.

NASCAR contends that its exclusivity arrangement with Nextel Cup Series title sponsor Sprint/Nextel precludes another wireless company from entering the series as a sponsor and that the name change from Cingular to AT&T violates that exclusivity agreement.

The sanctioning body issued a statement expressing its disappointment with Friday's ruling: "NASCAR is disappointed with today's ruling but will continue to provide a sponsor friendly environment for the industry and its partners. NASCAR is currently weighing any and all options for appeal of today's decision. Meanwhile, NASCAR will continue to protect the industry from actions designed to interrupt a business model which has been beneficial to all.

"It is important to understand that Sprint/Nextel is a cornerstone sponsor that benefits the entire industry by way of its contribution to the championship points fund, technology bringing fans closer to the sport, and its massive marketing and advertising campaigns."

Understandably, Sprint/Nextel did not agree with Judge Shoob's decision.

"While we respect the court's decision, we disagree with this preliminary ruling," said Dean Kessel, director of NASCAR Nextel Cup Series marketing for Sprint/Nextel. "Sprint/Nextel has been committed to enhancing the NASCAR fan experience in many ways, including increasing the point funds payout and developing cutting-edge technology and services for the betterment of the fans, the teams and the sport.

"All of this was possible through the exclusivity granted to us as the series sponsor for the Nextel Cup, and that exclusivity from NASCAR also grants us protection from other telecommunications competitors infringing on our sponsorship rights. The merger that created the new AT&T means their brand now represents a much broader and more comprehensive company than the Cingular brand, which was allowed to retain its existing brand position with the racing team. We will continue to follow the case closely."

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