Friday, May 18, 2007

NASCAR Exclusivity Clauses May Lose The Draft

NASCAR appears to have suffered a setback in the continuing AT&T lawsuit. While this deal may not be over yet, my suspicion is NASCAR won't win this battle, and that it may begin a process where exclusivity clauses in sponsor contracts may be out the window.

One should hope so, because such clauses have had a stifling effect on sponsorships. When Nextel signed on as series sponsor they got an exclusivity clause written in aimed at rival telecommunication companies such as Cingular and AT&T, who were nonetheless grandfathered in given they were already established car sponsors in the series. It became an issue recently with the merger of AT&T and Cingular and with Jeff Burton's team in particular.

This flap potentially can reach further than just the sponsors in question, though, for exclusivity clauses apply to numerous other sponsors and potential sponsors. The most prominent exclusivity deal in Winston Cup right now is in tires, and one can certainly imagine a scenario where rival tire companies may try to enter the NASCAR scene if NASCAR can't maintain an exclusivity clause in tire deals.

One really should hope for such a scenario, for there are plenty of teams, in Winston Cup but more so in BGN and other series, in need of sponsorships that are at least partly deterred by exclusivity clauses, and certainly with the technology advantage enjoyed by Hendrick Motorsports at the present time, if a tire deal becomes an area where exclusivity is eliminated, the sport's competitive dynamic can be changed as was the case in the past.

The AT&T deal may not be over yet, but one should hope it forces the end of exclusivity clauses and opens the door for more sponsors that rival existing sponsors - partiuclarly in tires - to enter and compete.

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