Loss of Sprint sponsorship unlikely to impact NASCAR
Though in need of a new Cup Series sponsor, NASCAR has every reason to be selective.
Considering recent events, Sprint dissolving its entitlement sponsorship of NASCAR’s Cup Series after the 2016 season wasn’t unexpected nor all that surprising. Within the sport, industry insiders have anticipated such a move for months.
The telltale signs Sprint wasn’t capable of maintaining a multi-million dollar sponsorship package were obvious, with the wireless carrier’s once stable footing in the marketplace having eroded significantly.
For the third quarter alone, Sprint reported a loss of $765 million and announced it would eliminate 2,000 jobs and would continue efforts to reduce its annual costs by $1.5 billion, according to The Wall Street Journal. And coinciding with Tuesday’s announcement, reports surfaced of the Federal Communications Commission fining Sprint $105 million for illegal consumer practices.
Which is why it was a given that sometime before its contract expired, Sprint was going to declare an end date as the sponsor of NASCAR’s No. 1 division. The company’s economic situation made this course of action inevitable.
Even with the expected becoming reality, it doesn’t make the situation NASCAR now finds itself in any easier.
Just months after completing a deal with Comcast for its Xfinity brand to assume entitlement sponsorship of the Nationwide Series beginning next season, NASCAR executives will be tasked with finding Sprint’s replacement. Companies with the willingness, the capability to invest multimillions on advertising and a global reach aren’t in abundance — especially for a sport with an older demographic.
But while certainly a challenge, it won’t be as arduous as it would have been just a few years ago, because NASCAR enters its latest search with momentum.
Despite much consternation, the revised Chase for the Sprint Cup format proved successful, producing a captivating playoff and thrilling championship finale. Television ratings, which had been steadily decreasing in past years, showed an increase late in the season. That boost was aided not just by the new Chase structure, but the revitalization of Dale Earnhardt Jr. and Jeff Gordon, two of the sport’s most marketable drivers, who each won multiple races and were in title contention.
And in contrast to the murky outlook facing Sprint, NASCAR has a lot to be optimistic about going forward. A bevy of young stars have recently emerged and demonstrated great promise, led by Kyle Larson, 22, and Chase Elliott, 19.
More so, a record television contract unveiled last year showcases the stability NASCAR finds itself on. Beginning in 2015, Fox and NBC will pay a combined $8.2 billion to broadcast Cup and Xfinity Series races over the next 10 years.
The best-case scenario is what unfolded when Winston left NASCAR after a 33-year partnership. When Nextel, which was later absorbed by Sprint, took over in 2004, it ushered in a marketing push unlike any in NASCAR history.
No longer constrained by the federal restriction on cigarette companies advertising to kids, which included television and radio commercials, NASCAR boomed in part due to Nextel’s extensive marketing push.
Although there is uncertainty ahead, NASCAR’s future appears promising. That’s in spite of attendance woes and other maladies which need addressing. Sprint’s decision to leave isn’t because of NASCAR’s wrongdoing, it’s simply an indictment of a company in the midst of restructuring, one that’s bleeding money.
Ten years from now, NASCAR will be wrapping up TV deals with Fox and NBC and continuing to exist in some semblance of its current form. Can the same be said regarding Sprint’s solvency? The answer is obvious.