NASCAR Media Conference
Topics: NASCAR, Nextel Cup
BILL FRANCE: Thank you for coming and sharing a very special and exciting day, a day where the best-kept secret in sports is being announced. 30 years ago, my father Bill France, Sr. stood before a much smaller group of media that is gathered here today and announced a new association with the RJ Reynolds tobacco company and its Winston brand. Back then, our company and the sport were young and growing, but still regionalize. My dad believed RJR's commitment to NASCAR would take us to new heights and make us a national sport. Today NASCAR takes another giant step for the future of the sport. On behalf of NASCAR's drivers, teams, tracks, sponsors and 75 million fans, it's an honor for me to welcome NEXTEL as the new title sponsor of our premium series, the NASCAR Nextel Cup, beginning with the 2004 season. Nextel's 10-year commitment to our sport is -- word I have a tough time pronouncing, I'm going to skip it - it is truly an historic moment. This announcement is a fitting tribute to the hard work and dedication of everyone within the NASCAR industry for the past 53 years. All of us are thrilled to welcome Nextel to the NASCAR family. Nextel is a perfect fit for NASCAR because technology is an untapped growth area for our sport. It is an area of significant interest among all consumers everywhere. Nextel is innovative, fast-growing and one of the best-run companies in this industry. Nextel will be able to promote our drivers, our teams and tracks in all forms of media and to all NASCAR fans. These efforts will help propel NASCAR to new audiences and new markets. Nextel's participation will definitely benefit every member of the NASCAR community. My father would definitely be proud. We've come a long way toward fulfilling his vision, and we've come a long way toward making NASCAR racing a national sport with fans spread across America. We still have miles to go to achieve our goals, but we are confident we are well on our way, with Nextel as our new partner. Just as RJR helped us get where we are today, Nextel's commitment to NASCAR is important for the following reasons: Nextel is an excellent addition to our family of premiere brands already associated with NASCAR. It validates our growth strategy, and there is no better investment in the sport marketing world than NASCAR. Nextel sees NASCAR's breadth and strength as the key to growing the brand and business results for the next 10 years. You get to be 70, trifocals are a tough deal. Nextel's ability to market its association with NASCAR will enhance our industry's already successful marketing efforts, enabling us to reach new markets and create new generations of NASCAR fans. As we look ahead, we will always remember our past. Let me remind you of what my father said during the original NASCAR meeting held in December, December 14th, 1947. He said, and I quote, "I believe stock car racing can become a nationally recognized sport." And then he added, "We do not know how big it can be if it's handled properly." I'd like to think he'd be proud of how we have handled the sport so far. Tradition is part of who we are and what we do. Tradition is also a guiding principle of change. We are mindful of that. It's important to our fans and it's important to us. At NASCAR we will continue to explore new opportunities, new concepts and new horizons. Nextel offers is a fresh perspective and a world of new opportunities for our drivers, teams, car owners, tracks and fans. On behalf of everyone in our industry, it's my distinct pleasure to welcome Nextel to NASCAR, the NASCAR family. At this time it is my pleasure to introduce the president and CEO of Nextel, Mr. Tim Donohue, his wife Jane.
TIM DONAHUE: Thank you, Bill. What an honor it is to be introduced by you personally. Your family is a legend in this sport, and your father not only founded NASCAR, but was the heart and soul of it, its early success. Of course, your leadership has helped NASCAR grow from a regional success, one of America's most popular sports, and now it is truly national and truly recognized as one of the great, great sporting series across the country. I'd also like to thank the rest of the France family, Brian, Jim, Lisa, and of course Mike and George, the rest of the NASCAR team. From the first day that the two companies got together and started the discussions, we knew that there was a chemistry between us that would make this work. In fact, here we are today, probably one of the most significant days in the history of Nextel. In addition to that, it's a thrill for me to stand up here next to some of the great, great NASCAR drivers. Of course, Dale Earnhardt, Jr., Driver of the 8 car, who has the amazing knack for scoring spectacular wins in emotionally charged times, and Jeff Gordon, the driver of the 24 car, a four-time Winston Cup champion and a great, great role model, who demonstrates how much can be accomplished by those who dedicate themselves to charitable causes. Nextel is revved up to write a new chapter in NASCAR history. It's like we're joining one of the largest, most passionate families in America, one we've admired for some time. It's no surprise why we at Nextel would be so interested in becoming part of the NASCAR team. Simply put, it is the most popular and exciting sport in America, and it has the most dedicated fans. I think our companies, Nextel and NASCAR, share certain similarities. Both of our organizations began as up-starts. And, to be candid, not a lot of people took us seriously. But look at us now. America's No. 1 spectator sport and America's most successful wireless company joining forces. One look under the hood and you'll see what fuels both NASCAR and Nextel to be performance leaders: a passion for winning, speed of execution, superior teamwork, and a commitment to excellence. As has been mentioned, RJ Reynolds has built an extraordinary foundation for the NASCAR Winston Cup series. We admire them greatly, and we accept the challenge and obligation of continuing that tradition in the future. We're looking forward to bringing our technology to NASCAR for the teams and, of course, for the fans. We know the communication is key to success at NASCAR and Nextel, whether it be team to driver, driver to driver, race officials to track operations, or fans listening to cars and pit conversations. In the 50 years since Bill France, Sr. started the organization, communications have come a long way, and we anticipate applying our wireless technology for the enhancement of the sport. We envision integrating Nextel Direct Connect and wireless data into the fabric of NASCAR. For those of you who are unfamiliar with Direct Connect, it's the digital walkie-talkie that is inside every Nextel phone. It allows you to instantly talk to a colleague, family member or friend at the push of a button from across the track or now from across the country. Nextel recently announced we have taken our Direct Connect product, and it is now nationwide. No other wireless technology has it in this country, and it is clearly a hallmark of our company, and we hope to put it to great use in the NASCAR family. On behalf of our 15,000 fellow employees at Nextel, let me thank everyone at NASCAR for so graciously welcoming us into your family. We can't wait to usher in the NASCAR Nextel Cup Series in January and we'll see you all in the winner's circle. I'd like to ask Jeff Gordon and Dale Earnhardt, Jr., To come up. I have a little thank you for them, for helping us get introduced to NASCAR. These are prototypes. This is a type of handset.
DALE EARNHARDT, JR.: Pleasure.
JEFF GORDON: Thank you very much. Welcome to the team.
TIM DONAHUE: Once again, our great thanks to NASCAR, the France family. We are so delighted to be part of the NASCAR organization, and we will do everything in our power to make sure that both sides, NASCAR and Nextel, will be great winners as the result of this combination. Thank you all very much.
MODERATOR: That ends the formal remark portion. We'll go to the question and answer section of our program.
Q. How long do you think it will take before NASCAR fans can stop calling it the Winston Cup?
TIM DONAHUE: I don't know. It's been a wonderful tradition. RJR has done a great job. We intend to get in there from the get go and put a lot of marketing dollars behind it. I hope in the very near future it will be the NASCAR Nextel Cup on everybody's list.
Q. Who had the idea? Who went to who? How fast did it come together?
BRIAN FRANCE: I can tell you we reached out to Nextel to share the opportunity, and as Tim said in his remarks, it became a very fast friendship. Both of us understood from the onset there was probably a new partnership if we could figure out the details, and that's what we went ahead and did.
Q. Can you speak at all to the terms of the deal?
SPEAKER: This is a 10-year exclusive agreement. It's an exciting opportunity where we will have the opportunity to use the drivers, the racetrack, the NASCAR logo and all the associated properties that go with it. We think it's going to be a fantastic opportunity for us, especially with the fit of NASCAR and Nextel on technology and frankly on culture and marketing opportunities. The other components of the deal will remain proprietary.
Q. Could you share with us your impressions of the geographical reach of NASCAR's current schedule, which is obviously concentrated in the southeast, speak about how ideally that might be reconfigured to reflect Nextel's marketing interests.
SPEAKER: I think from an overall perspective, we are extremely pleased with how NASCAR has expanded in terms of the series beyond just the southeast, frankly across the entire country now. We will be working with the NASCAR folks in the future to better understand if there are other opportunities for more expansion or change of venue. Right now I would tell you that's the expertise inside of NASCAR and not, frankly, our expertise. We look at the reach, we look at the breadth of our customer base, we take a look at the breadth of the NASCAR fan base, and they match extremely well. From a geographical perspective and venue perspective, we couldn't be more pleased with what NASCAR is running today.
Q. Lot of fans in the south are concerned that Nextel might bring a new generation that doesn't necessarily hold on to that southern racing tradition. What are the thoughts on that?
SPEAKER: If you think about where Nextel has begun, we began our opportunities in the wireless industry by going after business, but primarily small and medium-sized businesses. When you look at the composition of small and medium business, the characteristics of those people, you will find that they're the same whether they're in the south, west, midwest, et cetera. When we also look at the composition of them overlaid with the NASCAR fan base, we see a tremendous correlation. We don't think this is a southern issue, we think this is a national issue. When you also take a look at the fantastic broadcast contracts that NASCAR has been able to negotiate, and when you think about today they are I believe only behind the NFL in total viewership on TV, this is already a national sport with an opportunity to deepen that sport into minds and bodies of lots of people that extend beyond the 75 million today.
Q. To be what is certainly a lucrative partnership, seems to have come to fruition rather rapidly. How long were negotiations start to finish? Did you deliberate for a while?
SPEAKER: There was a great deal of speed, a great deal of teamwork. They were terrific people to work with. I think start to finish, we probably were 60 to 75 days. It was a terrific process for us. There was a great deal of interest in the property, probably four or five companies, came down to the final strokes. I think it says volumes about NASCAR as a sport and the health of the overall industry when you look that we're probably in the most challenging economy in the last 10 years, still in the middle of a war. The fact that we have major corporations in America that saw the value of the NASCAR franchise was a very flattering and speaks volumes about where the sport is today. Kim, Mark, Tom have been great to work with. It's been a very pleasant experience. Our experience tells us when that process is so pleasant, we have great expectations about the future.
SPEAKER: For Nextel, I would add opportunities like this come along once every 32 years and are not to be a protracted process. We're a very competitive company in a competitive industry. We determined early on that this is something to go after, and enjoyed the process with NASCAR. But the opportunity is so easy to comprehend here, that going after it made perfect sense for Nextel.
Q. Could you speak to the media component of the sponsorship. Are you going to be moving dollars from other sports properties? When do you sit down with the networks? What kind of support are you expecting from the networks?
SPEAKER: I would just start by saying we're very impressed with what the networks have done with their coverage of the sport, and that's all of the broadcast partners. We look forward to building a relationship with them. As to the dollar amounts or how it affects other things we have done in the past or will do in the future, we have the luxury of RJR and Winston doing a great job for this season, and we'll take our time to make the best decisions working with NASCAR and those broadcast partners.
Q. Dale Earnhardt, Jr., Jeff Gordon, your names are known nationwide. They're known in by this younger generation. What is it going to take for mom and dad in the New York City market to embrace NASCAR the way the?
JEFF GORDON: Check out the Meadowlands. I mean, I don't consider myself a New Yorker, but I've become very fond of this city and this area, and I've spent a lot of time here over the last couple years. I would love to see something, you know, happen up here. But I think by Nextel being a part of our sport now, it just broadens -- Mr. Donovan mentioned now he can go out and go to all the fans. I think that's really impressive about this team of Nextel and NASCAR being put together. I think, who knows where they can take it now going forward in the future. Unfortunately, RJ Reynolds has been limited in a lot of areas, and they've done a fantastic job, but I see there are very few limitations as to where Nextel can take it.
DALE EARNHARDT, JR.: I agree. Every time I step out of a car in New York, I see a few moms and dads asking for autographs. I'm really excited about the new relationship with Nextel. Aside from being a Nextel customer for two years, I've been really excited about the new announcement here, just looking forward to it. It opens up a lot of doors and a lot of opportunities. I've been around the sport for many, many years. We appreciate what RJR has done. It's been a huge, huge catalyst for where we are now, but a lot of things change and you have to be mindful and willing to accept that. We're looking forward to the new steps we're taking. As a young driver, this solidifies a lot of the future for myself, and Jeff included, and a lot of the drivers coming into the sport in the future. So real excited about it.
Q. Considering the vast news coverage in the past couple years of the volatility in the telecom market, sector, the sort of shake-out in the wireless industry, do each of you feel a need to sort of reassure the public that Nextel is as solid and as stable in its market as RJR was in its market at the time that agreement started?
TIM DONAHUE: If you take a look at Nextel's performance today, it is clearly the best performing wireless company among the six national carriers. If you look at almost any network. In terms of our business, it has never been stronger. Our balance sheet continues to strengthen day over day, month over month, quarter over quarter. I think the future of wireless is clear that it's going to be the No. 1 area in telecommunications, and we are going to be No. 1 in that area if it's up to this management team, and it will be. So we feel very, very good about our future. We feel very good about the industry itself. We intend to continue to play a leadership role in this industry, both from a customer perspective and from a financial perspective.
SPEAKER: I might also add that Nextel has the highest profit margin in the category, very strong balance sheet, as Tim said. It was recognized this week by BusinessWeek as the No. 1 technology company out of 101 technology companies in America. When you look at this, as we assess the opportunities out there, there are a number of opportunities in consumer package goods, but we have a very strong presence because of a lot of the great partnerships that we have. What we're excited about today is this a strategic decision to go into the technology category. We think that Nextel in partner with us can bring our content, the world's greatest drivers, to our fans, our hard core fans through many creative and exciting ways. As Dale and Jeff said earlier, they'll be able to use print, radio and be able to market to children and families in a category that's untapped for us. So we see this much like the broadcast deal where we're able to grow the sport. We see this as another vehicle basically because they have the assets at their disposal and they're in a category that, quite frankly, the opportunity for both of us is limitless, and that combined with the outstanding financial performance and management give us a lot of confidence moving forward.
Q. Mr. Donahue, you mentioned Nextel's desire to continue some of the traditions and commitment that Winston has done over the years. Can you be more specific about that in terms of the series championship and also in terms of what you guys may do for fans as far as interactive programs?
TIM DONAHUE: Let me ask Tom to address all the plans that we're looking at in terms of the fan base, then we'll come back to the championship series.
SPEAKER: When you take a look at Nextel's technology, I'll back up to the youth market. The youth market is one of the most aggressive adapters of new technology. 16- to 20-year-olds, they don't remember a time when there was not wireless phones. That's a change in the fabric of this country that shows that wireless is becoming a pervasive technology, you couldn't kill it if you tried. In terms of how we look at our technology integrating with NASCAR, we have an opportunity to integrate at almost every level, whether or not it's helping the drivers communicate with their pits, whether or not it's helping the track operations people communicate better, or frankly how we take the action that's on the racetrack and make that available to people both at the race, whether it's on a phone, a laptop or whatever, or to fans who are not attending the race. It allows us for viewers watching TV to use their wireless devices to interact with the sport on a number of levels, it can be in casting votes for who they think is the best-performing driver, it could be providing opportunities about various aspects of the race, it could give them the opportunity to track a particular driver just uniquely in terms of information specific to them or potentially listening in to pit and drivers talking to each other. All of those things are the realities of the possibilities. Obviously our friends at NASCAR are going to provide guidance to us in what makes true sense to them. When you take a look at how wireless works today, the possibilities to take information or activities and extend that to any customer anywhere in our coverage areas across this entire United States is really there. So we feel that we have an opportunity to actually deepen the fan base as well as to expand it. We think that's attractive to NASCAR and it's attractive to us.
SPEAKER: In terms of the championship, all I can say is we will work with NASCAR to decide, develop what the best strategy is for that particular issue, and move on from there.
Q. I was interested to know if part of the deal is if Nextel will be the title sponsor for the annual all-star race.
SPEAKER: Yes, they will, that will continue on. They will be the proud sponsor of the all-star event.
Q. I wanted to ask if you could talk about your target demographic for your audience as far as expanding the Nextel community.
SPEAKER: Let me start with the fact that primarily our focus has always been business. Over the years we have understood that people in their daily lives, they have a business life, they used to have a personal life. Today it seems that business lives and personal lives are completely intertwined 24 hours a day. When we looked at our business demographics, we see those as demographics that reflect everything in people's lives. Our high value individual segment, one of the fastest growing segments, is clearly an important new demographic for us. As many of you may know, we're testing a product targeted specifically to the youth today in California and Nevada, which is going extremely well. We're also expanding our opportunities, looking at ethnic markets, especially the Hispanic market, where we will be doing pilots this year. While our primary focus is on business, the reality is that businesses are composed of people who take our technology and use it in business and their personal lives and find the value to be driven all across that. We see lots of families using Nextel. In fact, when you think of Nextel and our Direct Connect product as being something that holds teams together, the next best thing to a great team that I can think of is a great family and their ability to communication each other.
Q. Did you set out to get a technology company? Was it a sector you were completely focused on or were you just waiting out for the highest bidder?
SPEAKER: We identified the technology category as an untapped market. Although we didn't want to limit ourselves, we looked at all kinds of different opportunities and companies that could help us grow the sport, grow the franchise. In the end, it became pretty clear to us that if we could find the right partnership with a technology company, it would be a home run. All the stars have to sort of line up. You have to have somebody that sees things the way you see them. Much has been said today about the cultural fit. That's got to be there. The passion's got to be there. All those things happened at once, and that's why we're sitting here today.
Q. Are there any specific markets that were previously not open to the NASCAR franchise that might be open now with the partnership with Nextel?
SPEAKER: I think certainly the youth market is going to be a market that we're going to go after more aggressively. Talked a lot today about families. I think just the nature of the platform of wireless technology, the word used is "unlimited". I don't want to throw a bunch of cliches out, you would sort of say we're sizing this up and we'd like everybody in this country to be a NASCAR fan. That's our goal. The Nextel team's going to help us gain object that proposition.
SPEAKER: I think when you look at the challenges RJR had with restrictions on advertising, in the future the ability to bring to life Jeff Gordon and Dale Earnhardt, Jr., Tell that story on national TV, national radio, outdoor signage, and as Tom said to children, 15 -, 16-year-olds put on their 24 car telephone, they're going to find out how Jeff qualified on Friday, what Dale has up his sleeve for him on Sunday. I think Nextel is going to be able to bring to life NASCAR in ways that have never been done before. It's a very exciting time for the sport. That would have happened with any company that didn't have the restrictions, but now it's even more exciting, the whole aspect of technology. It will invigorate our hard core fans, when we look back at our TV deal, 25 to 40 million, because people had better access to America's greatest athletes. What Nextel is going to do is continue to give the hard core fans more access to America's greatest athletes, and it's also going to expose our athletes and cars to new fans, and we think this is a great opportunity to grow the franchise.
SPEAKER: We're in great company as a company and a sport. The Fortune 1000 commitment to the sport, whether it be through partnerships or hospitality, we think it really balances targeting all the way up and down the spectrum, from the very high end to the Fortune 1000 all the way down to youth demographics that we discussed today. But from a Nextel perspective, in terms of breaking new ground from a segment perspective, this is just -- we're delighted to be able to join the parade, if you will, of a great many companies who understand where and how to find customers.
Q. With Nextel's presence in the Winston Cup, how will that affect other wireless companies coming into the NASCAR scene, companies that are already there, the Texas race has Samsung?
TIM DONAHUE: You're right. There are other telecommunications, and specifically wireless companies involved in NASCAR today. Those companies such as All-Tell and Cingular are grandfathered into the deal. We have the exclusive rights in terms of wireless and other pieces of telecommunications. Anyone trying to come in over the next 10 years, that won't happen because it will be our exclusive right. But in terms of the current players at NASCAR, we welcome them. We hope they stay in. They are a very, very important part of the success of NASCAR.
Q. Dale, even though you said you have to be willing to accept change, being from NASCAR's core demographic, the southeast, how willing or do you think the traditional fans will accept this change? Also moving races out of the southeast?
DALE EARNHARDT, JR.: I think that they'll accept the new title sponsor rather well. I can't see anybody not getting excited about such a great opportunity, such a huge step forward for the sport. It solidifies a lot of credibility in the sport, so it's a grand move. I think a lot of even the core, core fans are going to accept and be excited about this. As far as the schedule change, I think the schedule change is probably most important to the drivers and NASCAR and sales. I was pretty excited about the new changes we've had or the past couple of weeks. I look forward to more changes. Look forward to a couple weekends off. We can all be wishful (laughter). You know, just as a young driver, I'm really excited about this time and this place for the sport and where it's -- everybody was commenting about where the peak was, whether we had reached that or whether there was more to have or more to do. And I think it's not even in sight yet. So, you know, there's so much. We're not spread evenly across the country, and I think that's an advance for us in the next couple years, is to try to move into new markets and to try to frequent the ones that we have now, you know, more often. So, you know, things are going to have to be sacrificed. Unfortunately, the sport was started corely in North Carolina, that area, the southeast. We'll have to sacrifice a little bit to see the sport move into new venues and move further up the chain. But, you know, not to toot my own horn, but Day in Demand thing, which is where fans can sign on, view like a camera on the roof of my car, had more viewers than possibly Game 6 of the NHL finals. I think that says a lot about where the sport's at and a lot about the decisions that Nextel has made and a lot about the future, so I'm excited.
Q. What new license product categories are opened up as a result of the partnership with Nextel that were not available with Winston?
SPEAKER: (Inaudible). Obviously any of the products that we try to move into the youth market, games, video games, different toys, all the restrictions that the RJR group always wanted to steer clear of, that won't be the case today. We'll be able to bring Nextel into our family of great licensees to make a lot of the merchandise that our race fans enjoy buying thankfully every year. You know, I would say primarily the youth market. George may have another view on that.
Q. I want to ask about the heritage of our sport, where you see Nextel going. How many years? You're taking something that's been around for a very long time and doing great things with it. I'm sure that means a great deal to you.
SPEAKER: It does. As we said earlier in the comments, it's a 10-year agreement. What we really hope and we think we can make this happen along with NASCAR. This is a long-term relationship, one that you've seen for the last I believe 31 or 32 years at RJR. As I said in my comments, and Brian has made note of it up on the podium here, we think of the chemistry between the two companies is just wonderful. We think the cultures match extremely well. We're both young, aggressive, we're committed, and that's the attitude that we come into the NASCAR family with. You know, I take a look at these arrangements and say it's a 10-year arrangement, that's terrific. But my view is I hope this is a lifetime arrangement with Nextel and NASCAR. We think we're going to be able to demonstrate to NASCAR and its fans that we're going to be a great partner.
Q. Becoming title sponsor of NASCAR, what does this do with your involvement in other sports and other ventures, sponsorships?
SPEAKER: We have always, always been on the forefront in terms of sports marketing and sports sponsorship. This to us is probably the most significant sports sponsorship that we have ever had. We will continue to be very active, as well, with the NHL as an example. We do some work with Major League Baseball. We do some work with the National Football League. In terms of sports sponsorship, this is going to be key to us. We have no intention, though, of not looking at other sponsorships as we move down the road, and we're going to give NASCAR an awful lot of attention.
Q. Can you talk in percentage times about how much of the money from this deal goes to the drivers, to NASCAR, to television, anybody else?
SPEAKER: We never get into specifics of a contract. I will tell you the investment is strong on all fronts. Our championship point run has been the largest in professional motorsports. We anticipate that growing. The tracks are going to be -- it's a big investment across the board. It's all going the right way, and it's very significant. We just don't disclose every detail.
Q. Reynolds sponsorship included not only a financial agreement with NASCAR but also with the speedways. Does your contract include direct payments to the speedways themselves?
SPEAKER: It absolutely does. Earlier this week I signed over 30 agreements, and we look forward to building a strong relationship with all of the venues and the folks who operate the sport so successfully. We understand you have to make investments at another level to make this work and we're prepared to do that.
MODERATOR: Thank you. That ends the formal Q&A session. We thank our panelists.
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