call_me_andrew
12th October 2007, 04:48
From autoextremist:
FUMES by Peter M. De Lorenzo
Will NASCAR be forced to look for another title sponsor again?
Detroit Now that the growth phase of NASCAR has stopped and it has begun its downward spiral of declining television ratings, noticeable gaps in attendance and other problems associated with an enterprise that is displaying all the signs of passing from being "what's now" to "what used to be" - NASCAR has new darkening clouds to contend with on the horizon. Namely, their title sponsor, Sprint, which merged with Nextel (the Nextel Cup becomes the Sprint Cup in 2008), is in trouble. Big trouble.
After spending $1.78 billion on advertising this year (including $70 million from the 10-year, $700 million deal to sponsor NASCAR signed in 2004), Sprint is losing customers at a prodigious rate. Over the just-completed third quarter Sprint lost 340,000 "postpaid" wireless customers (people who pay a monthly bill), which is a stunning number. So stunning, as a matter of fact, that Gary Forsee, the chairman and president-CEO of Sprint, resigned yesterday. Forsee, who had been the Sprint chief since 2003, engineered the merger with Nextel with dreams of spending $5 billion on advanced but unproven new technologies - and it has proven to be a major disappointment. The merger itself has been slow to add value to the unified companies - which is obviously a concern to the financial community - but the erosion of paying customers is another alarming trend altogether. If you can't keep individual paying customers from abandoning your brand, it doesn't matter how good the corporate "synergies" sound on paper, does it?
Forsee blew up his marketing and advertising departments in an attempt to jump start the company's media presence, even hiring Goodby, Silverstein & Partners, one of the ad industry's "hot" agencies of-the-moment. But it's far too early to tell if that will make enough difference to matter.
The bottom line in this situation is that if Sprint's fortunes continue trending downward, everything in that company will come under scrutiny. And yes, that means that the NASCAR title sponsorship deal will be high on the list of "involvements" that will come under review. Sprint is not only spending $70 million annually for the "privilege" of being NASCAR's title sponsor, it is spending another huge chunk of change (running into the millions) on promoting its NASCAR involvement. And if things keep going south for Sprint, it's easy to see how that NASCAR sponsorship deal will become a big fat target when the discussion turns to cutting expenses.
All of this adds up to a big bowl of Not Good for the Lords of Daytona Beach.
In the good old days, NASCAR had Winston, and things were good for more than 25 years. Then, Nextel came along, which was supposed to be the new-tech sponsor that would help propel NASCAR into the marketing stratosphere in the twenty-first century, but yet three years later they're changing the name of the series again to reflect a newly-merged company, but one that finds itself in deep trouble.
Don't be surprised if the next move made by Sprint is to craft an exit strategy - right out of NASCAR.
FUMES by Peter M. De Lorenzo
Will NASCAR be forced to look for another title sponsor again?
Detroit Now that the growth phase of NASCAR has stopped and it has begun its downward spiral of declining television ratings, noticeable gaps in attendance and other problems associated with an enterprise that is displaying all the signs of passing from being "what's now" to "what used to be" - NASCAR has new darkening clouds to contend with on the horizon. Namely, their title sponsor, Sprint, which merged with Nextel (the Nextel Cup becomes the Sprint Cup in 2008), is in trouble. Big trouble.
After spending $1.78 billion on advertising this year (including $70 million from the 10-year, $700 million deal to sponsor NASCAR signed in 2004), Sprint is losing customers at a prodigious rate. Over the just-completed third quarter Sprint lost 340,000 "postpaid" wireless customers (people who pay a monthly bill), which is a stunning number. So stunning, as a matter of fact, that Gary Forsee, the chairman and president-CEO of Sprint, resigned yesterday. Forsee, who had been the Sprint chief since 2003, engineered the merger with Nextel with dreams of spending $5 billion on advanced but unproven new technologies - and it has proven to be a major disappointment. The merger itself has been slow to add value to the unified companies - which is obviously a concern to the financial community - but the erosion of paying customers is another alarming trend altogether. If you can't keep individual paying customers from abandoning your brand, it doesn't matter how good the corporate "synergies" sound on paper, does it?
Forsee blew up his marketing and advertising departments in an attempt to jump start the company's media presence, even hiring Goodby, Silverstein & Partners, one of the ad industry's "hot" agencies of-the-moment. But it's far too early to tell if that will make enough difference to matter.
The bottom line in this situation is that if Sprint's fortunes continue trending downward, everything in that company will come under scrutiny. And yes, that means that the NASCAR title sponsorship deal will be high on the list of "involvements" that will come under review. Sprint is not only spending $70 million annually for the "privilege" of being NASCAR's title sponsor, it is spending another huge chunk of change (running into the millions) on promoting its NASCAR involvement. And if things keep going south for Sprint, it's easy to see how that NASCAR sponsorship deal will become a big fat target when the discussion turns to cutting expenses.
All of this adds up to a big bowl of Not Good for the Lords of Daytona Beach.
In the good old days, NASCAR had Winston, and things were good for more than 25 years. Then, Nextel came along, which was supposed to be the new-tech sponsor that would help propel NASCAR into the marketing stratosphere in the twenty-first century, but yet three years later they're changing the name of the series again to reflect a newly-merged company, but one that finds itself in deep trouble.
Don't be surprised if the next move made by Sprint is to craft an exit strategy - right out of NASCAR.