AT&T files response to NASCAR's appeal

Claiming that Sprint Nextel is trying to increase the value of its NASCAR series sponsorship by "booting" AT&T from the sport, AT&T filed its answer to NASCAR and Sprint Nextel's appeal of an injunction that allows the AT&T logos on the No. 31 Richard Childress Racing car.

AT&T's response was filed earlier this week in U.S. appeals court in Atlanta.

A U.S. district court judge ruled May 18 that NASCAR could not prohibit a change from Cingular to AT&T logos on the car driven by Jeff Burton. The judge concluded that the change was not prohibited by the grandfather clause that went into effect when Nextel began sponsoring NASCAR's premier series in 2004. The grandfather clause is part of RCR's annual licensing contract with NASCAR.

AT&T and Cingular were involved in a merger in December 2006, sparking the change in the Cingular name to AT&T.

A hearing on the appeal is scheduled for Aug. 2, and AT&T's brief argues that the appeal should be denied.

"Although NASCAR asserts without support that the court's injunction compromises its ability to govern the sport and attract sponsors, NASCAR in fact retains today the same rights over stock-car racing that it held before the district court acted, which includes the right to govern the sport and to contract with sponsors regarding promotional rights," AT&T argues in its court filing.

AT&T claims that because Nextel allowed NASCAR to grandfather in Cingular and Alltel, it already diluted the value of its sponsorship.

"Nextel not only agreed to grandfather competitors but also acknowledged [in its NASCAR contract] that this grandfathering would limit the value of its exclusivity," AT&T states in its filing. "Beyond that, although Sprint Nextel emphasizes that the 'AT&T' brand is used to sell more services than the 'Cingular' brand, Nextel is a wireless company; it does not even sell those other services (several of which are in any event excluded from Nextel's exclusivity)."

As far as NASCAR's argument that it can approve or deny sponsors as dictated in the rule book, AT&T said that the grandfather clause overrules the rule book.

"Because NASCAR grandfathered [AT&T's] and RCR's sponsorship relationship and thereby promised 'to preserve and protect' [AT&T's] sponsorship rights, ... it cannot in good faith exercise any discretion that it may have under the Rule Book in derogation of that promise," AT&T's claim states.

NASCAR had argued that if AT&T wanted to stay in the sport, it could do so but just not sponsor a car in the Nextel Cup Series. AT&T scoffs at that philosophy.

"The ability to advertise in, for example, the 'Busch Series' is no more a substitute for sponsoring the #31 car than the ability to advertise on the uniforms of the Durham Bulls could supplant the right to do so with the Atlanta Braves," AT&T states.

The AT&T brief does not mention the $100 million counterclaim NASCAR filed last Sunday against AT&T because that is not part of the appeal on the injunction.