COAL TOWNSHIP, Pa.
The $100-million counterclaim litigation filed by NASCAR against AT&T Mobility/Cingular Wireless in United States District Court recently has those in the business end of motorsports scurrying to catch up on the latest news.
And now with the rumored name change from NASCAR Nextel Cup to NASCAR Sprint Cup Series in 2008, it’s taken primetime “water cooler chatter” away from, should I say the “late” Tony Soprano?
NASCAR’s countersuit charges AT&T with breach of contract, fraud, misrepresentation and conspiracy to aid and abet wrongful interference with Nextel’s exclusive sponsorship agreement with NASCAR’s Cup division.
Telecommunication companies and wireless concerns are similar to the banking industry, where letters informing consumers that “your bank has been purchased by Bank X and will now be called Bank Y, and your new credit card is in the mail” have become commonplace.
Yet, as normal as these takeovers are, if you happen to be NASCAR, Sprint Nextel, Richard Childress Racing or AT&T Mobility/Cingular, it’s far from commonplace.
NASCAR, in protecting its $700-million, 10-year, non-compete series sponsor contract agreement with Nextel, must litigate based on “saving face” aspects alone. Only Alltel and Cingular are grandfathered into the series thanks to being “Cup active” when Nextel signed its initial agreement beginning with the 2004 season.
Additionally, Alltel became a takeover company when TGP Capital, L.P., a private equity investment firm that focuses on management buyouts, turnarounds and leveraged recapitalizations, agreed to partner with Goldman Sachs and purchase Alltel Wireless earlier this year.
Here’s what some people may or may not know that could play big in the litigation. Cingular announced in February of 2004 that it would purchase AT&T Wireless Services, Inc., for $41 billion. Eventually, this story comes full circle to the formation of the “new” AT&T Mobility. This is where it all gets tricky, as according to our sources and some readily available corporate information, the “new” AT&T is the one and the same “old” Southwestern Bell Communications, which happened to be the majority owner of Cingular Wireless LLC, and the original firm that signed the contract with RCR before the grandfather clause took effect in 2002.
Then on Jan. 14, 2007, AT&T announced the changeover of the Cingular brand to AT&T in television advertising and customer communications by creating the “Cingular is now The New AT&T” logo.
Which leads us to the present-day drama. In the AT&T garage, you’ll hear words like “renaming,” “logo restructure” and “grandfathering” unsuccessfully trying to blend with NASCAR’s “breached agreements,” “tortuous interference” and “scheme of ambush marketing” sentences.
To complicate matters, AT&T Mobility and RCR recently inked a 10-year renewal to be the primary sponsor on the No. 31 RCR Jeff Burton-driven Chevrolet.
I am concerned for every race team out there that faces a similar plight. I’m also concerned for NASCAR, which is trying to protect one of its three major Cup sponsors (the other two being tires and fuel).
In Childress’s defense, it’s not his doing that SBC, AT&T, Cingular Wireless and now AT&T Mobility have been doing the name branding topsy-turvey all these years. Today, the new AT&T Mobility is the biggest wireless supplier in the U.S., with some estimated 65 million users.
In NASCAR’s defense, it writes the rulebook and specifies in its contract that Nextel receives exclusivity. Again, no one should blame NASCAR for trying to protect its biggest investor.
Thus, the bottom line is the cold fact that a ruling in NASCAR’s favor will harm one of its premier race teams. This happens while Sprint Nextel contemplates changing its 2008 Cup series “logo and name branding change” for the exact takeover/merger/name re-brand reasoning AT&T brings to the table.
An AT&T favorable ruling also raises the chance of Sprint Nextel presenting its No. 1 nemesis, AT&T, the “big money” Nextel or Sprint Cup championship in what would surely be a cold, dreary December in Manhattan, regardless of outside temperature, and hasten Sprint Nextel’s exodus from the series for obvious reasons.
This litigation brings to the forefront the cold, hard fact that big business, however nasty or offensive, indeed has the power through litigation where “company A” (NASCAR), through no fault of its own, could possibly stop a 10-year, big-money deal for “company B” (RCR) when the law defines exclusivity and grandfathering.
In ending, we all know AT&T’s grandfathering and NASCAR’s exclusivity are incompatible, and never the two shall meet. The court will decide for company A or company B, and, similar to “The Soprano’s” final episode, I’m not sure there is a comfortable ending to this episode, either.
This is where my screen goes blank, too.