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November 10, 2004

Mike Helton

JIM HUNTER: Good morning, everyone. Appreciate everybody joining us this morning for some pretty exciting news. At this time I'm going to turn it over to the president of NASCAR, Mike Helton.

MIKE HELTON: Thank you, Jim. As all of you know, NASCAR has been conducting a review of our sponsorship policies with regard to distilled spirits for some time this year. After completing an extensive review and researching trends and attitudes, we're announcing today that our decision to permit spirits sponsorships under certain guidelines as a new category for sponsorships in the sport, beginning with the 2005 season. We feel the time is right to allow distilled spirits companies into NASCAR. I think that the biggest thing is that the spirits companies have proven themselves as leaders and responsibility and are encouraging adults who choose to drink to do so responsibly. Any spirits company involved in NASCAR will have marketing campaigns strongly grounded in responsibility and will follow advertising and marketing guidelines set by NASCAR that are consistent with the Distilled Spirits Council's advertising code. We're confident that the spirits companies involved in NASCAR will communicate the same responsible marketing messages that others have exhibited in the sport for the past 25 years. This move we feel will provide numerous new sponsorship opportunities to our teams, and while the NASCAR industry will benefit across the board, teams certainly are the primary beneficiaries of this decision. NASCAR's internal review included outreach to advocacy groups such as the National Commission Against Drunk Driving and other experts in the field of alcohol-related issues. Additionally, NASCAR reached out to industry groups such as the Distilled Spirits Council of the United States, also known as DSCUS, and the Century Council. NASCAR based its guidelines on the input received from these groups. The distilled spirits companies participating in NASCAR must agree to comply with the Distilled Spirits Council's Code of Responsible Practices For Beverage Alcohol Advertising and messaging and abide by the Code Review Board's decisions. Each company's marketing activities will be grounded in a responsible behavior message, a dedicated portion of advertising by spirits companies in NASCAR will be solely focused on encouraging responsible drinking decisions with all remaining advertising, including a responsible behavior tag. We put a lot of thought and research into this decision, including numerous discussions with many of the stakeholders who are as committed to the continuing success of NASCAR as we are. We've also researched with leaders outside the industry, as well, to come to this conclusion. With that, we'll open up the floor to any questions that you might have.

Q. In terms of people's attitudes, whether it's fans, networks or just Americans in general, what makes you think this sort of sponsorship will be more acceptable today than it was, say, 25 years ago?

MIKE HELTON: I think a lot of it has to do with the modern era that we're in with communication the way it is, the vastness of the world, more and more people are exposed to the worldly faults and philosophical as well as individual opinions. I think the feedback that we get is that the core fan of NASCAR, which we feel like represents Americana as much as any sport does, is okay with spirits whether they are here or not as sponsors. And we also feel like the American public in general understands and accepts the fact that that's part of everyday life. And the responsibility that goes around your participation with spirits is an individual issue and not a sanctioning body's decision as much as it is their own individual issue.

Q. Did you go out and do a poll of fans or were you just listening to e-mails?

MIKE HELTON: A little bit of everything. Polling that others independently had done. We did some due diligence of our own. A lot of conversations with industry elements that I've talked about already as to how this all works and their take on it, and we came with our conclusion.

Q. With NEXTEL replacing Winston, NASCAR maybe took a step back from some of the negative stereotypes. Some people may view this as taking a step back toward them. You sort of answered this already, but how much of that from an image standpoint is a concern and how do you address that?

MIKE HELTON: Well, I think that's certainly a concern, and has been for several years, of ours. Ultimately, though, the decision this -- this recent decision that we just made included a good deal of thought about the overall impact. I'd go back, though, to remind everybody that Winston came to us and said, "Look, we need to move on." We didn't ask Winston to leave. Once it did, though, certainly NEXTEL stepping in gave us a great opportunity to expand the overall series sponsor involvement in promoting the sport to a level that Winston could not do. We've been very fortunate that NEXTEL stepped in and has taken it to the level it has. It's been a good opportunity for us. What we're talking about here is allowing individual relationships with the car owners into a category that we had not opened up in the past. It's not a series sponsor or an official status company with NASCAR; it's us okaying the spirits companies to participate on the side of race cars, along with certainly the regulations or requirements, if you will, to activate their participation in the sport as sponsors with a concerted, reasonable, responsible message about the relationship between us individually and using spirits so that the big asset we think that comes with this decision is NASCAR being able to, along with the spirits company, promote responsibility when it comes to the use of spirits, and, quite frankly, promote responsibility in general across the board.

Q. I know for several years, we got away from the cigarette companies and tobacco. With that gone now, going into the distilleries, how do you think the majority of fans are going to embrace them? I know you did the pole and anything, but whenever we did the switch from Winston Cup to NEXTEL, there was and still is various fans that aren't exactly too happy with it, but they're slowly gaining. Do you think there's going to be any change in the distilleries coming in or not?

MIKE HELTON: I think that it is, with any decision that NASCAR has made in its 55-year history, there's pros and cons, there's support and then there's criticism. I think ultimately, though, that the decision that NASCAR has made to allow spirits is a founded decision. It's not one that we just chose randomly to do. We did it based on a lot of input that we had that we've already spoke of. I think it will be a matter of the race fans that you mentioned to decide whether they think it's okay or not okay. But I think what we've learned through history and certainly in the last few weeks in looking at information and talking with people is it's an element certainly that will, as we talk about it today, we'll have debate back and forth on whether it's okay or not okay, but our information shows us for the most part people say, "Okay, that's all right. It's part of our everyday normal life today, it just hasn't been on the side of a car because you guys have said no to it. Now that you're saying no to it, it's still part of our everyday life and we make decisions in our everyday life based on what our decisions are, not what you've said is okay and not okay." I think that continues to be that way, and I think it's a matter of all of us individually being responsible to our own decision-making process as much as it is NASCAR saying this is okay.

Q. This is the latest decision in a year that seems full of big decisions for NASCAR. Can you put into context overall what kind of transition year this has been for NASCAR, maybe some of the things you think went well with all these decisions, some of the things you think need improvement.

MIKE HELTON: I think when the history books are written about the 2004 season, there will be a lot of examples to be pointed to, you're right, starting with NEXTEL's inaugural's season in the Cup, Sonoco coming on as the second official fuel supplier we've had in the whole history of the sport, the Chase for the NEXTEL Cup Championship, its inaugural season, and now the decision for starting '05 allowing spirits to participate in the sport. It has been a year of big decisions, big changes. To follow up on the last part of your question, I don't know that we would have done anything different. I think the things that have happened that will be headlines as we celebrate the conclusion of the 2004 season, I think they've all been positive. I think it's been a good year for us. I think we've been very fortunate to have the level of interest in corporate America from NEXTEL to Sonoco to the spirits companies to want to be a participant of the sport. I think we also can point to our decision-making process as it comes to the Chase for the NEXTEL Cup, and I think this decision will prove out to be a sound decision, as well.

Q. What is the difference between the guidelines that you are going to use for the spirits and the ones that you already have in place for beer? Certainly I know both of them you can get pretty schnookered on.

MIKE HELTON: The difference between the two is that the beer companies have been part of the sport and have a proven track record of their responsibleness, their style and method of handling their involvement in the sport. So there is a 20-plus year history there of the malt beverage companies. The spirits are brand-new, and so we use a new guideline with them as we bring them into the sport.

Q. Is there much difference between the two?

MIKE HELTON: Yes. Again, I go back and point to the fact that the beer companies, as they evolved with the growth of the sport, have a track record of doing things very responsibly. We believe the spirit companies have that same attitude and professionalism. But as we okay them as a new category, we have these requirements of them that don't exist for the beer companies because the beer companies have proven themselves over the last couple of decades.

Q. You stated a moment ago that the entire NASCAR industry will benefit from this across the board, but teams will be the primary beneficiaries. Can you elaborate on how you feel this will affect the overall industry financially, and will we see an influx of dollars overall to many teams, not just one or two?

MIKE HELTON: I think that remains to be seen as it relates to how many sponsorships there will be on race teams. I think we're aware of some very serious conversations with a couple of spirits companies right now, but that can change as we go down the road. The comment I made about the entire industry benefitting had more to do with the non-economic factors as it did the economic factors. And those are the fact that with the seriousness of a concerted, well-participated message of responsibleness, certainly it focuses around being responsible when it comes to drinking, but it also I think benefits the entire NASCAR community to have a concerted message of being responsible that's driven around the spirits, but it also speaks to just in general participating in your daily decisions in a responsible manner, I think benefits the NASCAR community greatly. I think it helps promote the sport in a light and manner that we will all be proud of. I think the activity around the additional sponsorships in the garage will enhance the competition of the sport by funding more opportunities to be competitive. So those are the things I think that we're looking forward to as much as the economics. The economics are the health of the teams. They need to be healthy to do what we do. This gives a new category and opportunity to help that out.

Q. What will you not allow for sponsors? Is there current something else? We're seeing a lingerie subsponsor kind of thing. Where is the lie in general now as we stand after this announcement?

MIKE HELTON: The line has always been in sponsors or even current sponsors doing things that we may feel like are detrimental. I think the line is either broad or very narrow depending on how you want to look at it. But the two categories that come to mind right now that we are not opening up would be pornography certainly and on-line gaming, which on-line gaming has a good deal of federal and state laws monitoring and policing it which prohibits it in different areas we go. And pornography, I think speaks for itself.

Q. There was also a rumor from the fans that one of the reasons you didn't have the alcohol sponsors before is because of the Busch sponsorship, The Bud pole, beer was in it, so alcohol was not allowed in. Did that have any basis in fact?

MIKE HELTON: No, it didn't. I think we for a long period of time, 20 some years, have taken the position that the general consensus was that there was a good deal of difference between spirits and malt beverages. It goes back to the Prohibition days when they were delineated. I think also today in your normal everyday life, you walk into a convenience store, grocery store, you're able to buy malt beverage and wine, where spirits were more controlled by state laws. That was our positioning for a long time. The acceptance of all of that, though, that has evolved overtime, and generation after generation, has also come with an attitude, if you will, or an opinion of the general public, which our fan basis certainly a part of, "Hey, look, spirits are a part of our normal, everyday life. We see it as we drive up and down the highway on billboards, and make it part of our lives based on our own decisions. You saying it's okay or not okay is not going to change our opinion." I think that's the biggest thing that led us to say, "Okay, if this is something that can benefit the sport by the economics for car owners and helping them be competitive, also benefit the sport by creating a major national message of being responsible, then the good outweighs the bad."

Q. What is your understanding on how the TV networks will handle this? They'll obviously be able to show the car. Will they be able to talk about it?

MIKE HELTON: That's up to them. We certainly had conversations with them and let them know what we were thinking. But the decision as to how they handle it will be up to them. You'd have to ask them that.

Q. Does NASCAR, when one of these companies comes in, do you have the right to reject some sort of ad that they're going to put together, NASCAR-themed ad? Will you review that before it goes on the air?


Q. Is that true with every other sponsor?

MIKE HELTON: For the most part. Even current sponsors that have been involved for a long time, when we run into something that's not tasteful or doesn't fit right or has a different motive behind it, we'll take exception to it.

Q. In the course of your due diligence, did you speak to any organizations you might expect would not be in favor of this decision to kind of hear them out on what they had to say? I'm thinking of organizations like public citizens, Mothers Against Drunk Driving?

MIKE HELTON: Yes, we did. Certainly I don't think our due diligence would have been fair or complete had we not done that. A lot of it, I think the conversations went very well, us explaining our position, what our intentions were, our regulations or requirements that went along with it doesn't mean it was completely a hundred percent accepted by these groups. But I think the conversations were very professional and very tasteful.

Q. Which of those organizations did you speak with?

MIKE HELTON: Well, I mentioned some of them already. But certainly Mothers Against Drunk Driving was another group we talked to to explain our thought process.

Q. I don't want to put words in your mouth, but I'm sort of gleaning from all the things you said that the decision came down to with distilled spirits a lot of the bans and restrictions on how you can advertise spirits have been going by the wayside for the last six or seven years. It sounds like NASCAR kind of said, "Why are we going to be the lone holdout here, saying no to all the sponsorship money." Is that fair?

MIKE HELTON: I think certainly there's evidence in our history that we made decisions to modernize our thought process. The comment we made earlier about the consumers' attitude or our constituency attitude, quite frankly, being open-minded to the fact that why wouldn't spirits be okay, helped us make the decision. But I think a lot of it has to do with the social role that spirits companies play and the responsibleness that they have exhibited in that social role that helped us make this decision.

Q. Is it safe to say that the core is the attraction NASCAR has for underage drinking, sort of the reinforcement of drinking hard liquor with a large contingent of underage drinkers?

MIKE HELTON: I'm not sure if I understand your question.

Q. I wonder if the core of their objection, organizations like MADD, is that your sport attracts a great many underage, below-18 or 21, fans, and it would not be a good idea for the teams to be reinforcing spirits advertising with this audience. Is it fair to say that's been kind of the crux of the debate?

MIKE HELTON: I'm not sure that I agree with that. I guess my answer to you is no, it's not necessarily the crux of the debate. I think the debate is more philosophical on a bigger level. "Look, we have issues, and all of us do, and the groups that we talk to say we have issues with people being responsible when it comes to making decisions." That's the greatest concern I think every group had that we talked to, including ourselves internally. We always make our decisions based on weighing out the pros and the cons. We feel like the pros in this case outweigh the negatives. We can open up a category that benefits the garage area and the participants of the sport economically, but do it in a manner with requirements to promote responsibility. I think the groups that we discussed with that have issues, all agree. We all agree on there is great benefit from being able to promote responsibility. I think that's one of the great benefits of this decision.

Q. Can you tell me where this discussion started, who started this discussion to get the ball rolling?

MIKE HELTON: This conversation has been going on for the last 12 years that I know of. It's been an ongoing issue, as you well know. The most recent one, though, began as all others had with the question, "Where are we at with spirits?" It comes up routinely. By "routinely," I mean it comes up almost every other month. As the sport has grown and has the sport has different groups inside its organization that challenge past decisions and promotes new decisions, the topic came up multiple times this year. On a couple of occasions earlier this year, we said no, but it kept coming back up internally, to the point where we were sitting around and saying, "Why don't we take a hard look at it, let's talk to the industry, let's talk to the concerned groups, let's talk to our broadcast partners, let's talk to the stakeholders in the sport and see what they think." I can't point to a specific issue that made us change our opinion as much as the topic just reoccurring to the point where we said, "Look, what's wrong with this? Why would we not do this? Instead of, why we shouldn't do this, let's look as why we should do it and weigh out the pros and cons." There's been a lot of conversation this year about Roush Racing and the 99 car. We've had other car owners and other cars in the past that have asked, "How about taking a look at spirit sponsorships for us?" But we've also had internal conversations that bring it up among ourselves, too. I wouldn't give anybody credit for this decision being started as much as I would to simply tell you it's been an ongoing topic for us ever since I've been a part of this sport, and I'm sure it was before that.

Q. Do you have any idea how many companies are going to take advantage of this?


Q. I think you mentioned this before, but none of these companies are going to be part of the NASCAR corporate sponsors?

MIKE HELTON: That's correct.

Q. The fact that it's not going to be a corporate sponsor of NASCAR, why do you make that distinction and can you envision a day where that will change?

MIKE HELTON: The distinction comes from the initial decision today to open up the category for the participants in the sport, the car owners and the tracks. That's the decision we're making today. That does not include the decision for NASCAR to have an official status with spirits. Certainly that can change down the road. That's not the decision-making process today, though.

Q. In the near future, is that something you think will be taken under discussion?

MIKE HELTON: I'm sure it will be, but today's decision is about participating as car sponsors and not as a NASCAR sponsor, NASCAR official status.

JIM HUNTER: We thank you for joining us today.

End of FastScripts...

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