Sports Law Blog
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Thursday, August 12, 2004
 

The Sponsor Wars of NASCAR: Has the inundation of sponsorships in NASCAR finally driven the sport to absurdity? Sponsor conflicts are not new to the sport -- how could they be when every inch of driver, car and wall is covered with the name of a product, brand or corporation? But this NASCAR season has brought with it a new level of competition, and at some point, an armistice must be reached.

For those unfamiliar with the saga, a common trend earlier this season was for the winning driver, once entering Victory Lane, to knock over the giant bottle of PowerAde placed on top of their car. The drivers that would do this were the ones sponsored by Pepsi, the makers of that "other" sports beverage, Gatorade. NASCAR, worried that Coca-Cola, the maker of PowerAde and a huge sponsor of NASCAR series, would be upset, ordered its drivers to stop knocking over the bottle.

Fine, said Jimmie Johnson. When he won the next week, he did not knock over the bottle. Instead, he placed a large sign in front of it that advertised Lowe's, the primary sponsor of his car. NASCAR was not amused, fining the driver $10,000.

Knowing this, Jeff Gordon improvised the next week in Indianapolis. After winning the Brickyard 400, Gordon just avoided Victory Lane all together -- celebrating instead on the track with his crew. Gordon claimed that he got caught up in the moment and "forgot" to go to Victory Lane. If you believe that, then I have a bridge to sell you in Brooklyn. There is no way that Gordon, a veteran driver who is no stranger to winning, "forgot" to go to Victory Lane, which is established NASCAR protocol after every race. He purposefully avoided the ceremony, and thus avoided having the PowerAde bottle placed on his car. Oh yeah, and one of Gordon's main sponsors is Pepsi.

Strangely enough, NASCAR accepted Gordon's apology and did not fine the driver. This could be due to the fact that Gordon is a popular driver and has a good record with NASCAR. Or perhaps NASCAR is just dumb and bought Gordon's excuse. Most likely, though, NASCAR realizes it has a problem and must do something about it.

Victory Lane has always been a "made-for-TV" event, with the driver sitting in the car until the television cameras are live. This allows a great shot for TV and gives NASCAR a chance to spotlight its sponsors. But this is the first season that PowerAde has been the official sponsor of the celebration, causing numerous drivers to be photographed with a main sponsor's rival product. NASCAR is looking at changing its rules pertaining to victory celebrations, but the drivers are in a precarious position. On the one hand, their financial backers do not appreciate their drivers being seen with a rival product. But, on the other side, NASCAR is not forgiving to those that do not play nice with the series sponsors.

I do not think there are any sort of breach of contract issues at stake here. I am not familiar with NASCAR sponsorship language, but I would imagine there is a provision that protects the driver in the event that they have no choice but to be photographed with a competitor's product. The real issue is business and the amount of sponsorship money a driver can earn. If a company knows that it will not have exclusivity with a driver, the market value of the sponsorship decreases. If this happens enough, then certain drivers could have difficulty meeting their financial needs, which could hurt the entire sport. The deal with PowerAde likely will not drive any drivers out of business, but NASCAR should be wary before selling more sponsorships that create such direct conflicts. Sponsorship money fuels the sport, but a deluge of brands and advertising will dilute the message, and ultimately the price. NASCAR would be better served to place limits on sponsorships, thereby ensuring the exclusivity that will result in a higher price.





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