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NASCAR MEDIA CONFERENCE
October 3, 2007
THE MODERATOR: Good afternoon, everyone. Thank you for taking the time to participate in this important announcement. I'm joined today by NASCAR chairman and CEO Brian France and Nationwide Insurance chief marketing officer Jim Lyski. Both will begin with an opening statement and then we'll open it up to questions from the media. Brian, the floor is yours.
BRIAN FRANCE: Thank you, everybody, for being on the call today. We obviously have some pretty special news to announce, and that's that Nationwide of course will be joining us as a title sponsor of the No. 2 motorsport series in this country. After a very thorough process of trying to find the right partner, adding up what we think is important for the series, all the things that you would expect us to be thinking about, ultimately ending up where we did.
I know everybody at NASCAR feels very excited to have a company in their industry that is a leader. They have some entitlement experience with their PGA relationship. That will serve them well with us. So for lots of reasons which we'll discuss on the Q&A later on, I can tell you that we're excited and we know this is going to propel the Busch Series even further.
It does remain the No. 2 motorsport in the U.S. We're real proud of that. It's also been our catalyst for international growth here in North America of course with successful events in Mexico City and Montréal in August.
But before I conclude, I did want to make mention and give a special thank you to Anheuser-Busch for 20 plus years of believing in this series, being an excellent partner. We wish them well with the things they're going to do in the future. Right now we're looking to our own future and we're very excited about getting to the end of the road with Nationwide.
THE MODERATOR: I'll now turn it over to Jim Lyski.
JAMES LYSKI: Good afternoon, everyone. We just wanted to say that Nationwide Insurance is very excited and honored to embark on this long-term partnership with NASCAR, the most loyal and dedicated fan base in sports. We plan to put a lot of resources into supporting the sponsorship and advancing the profile of the NASCAR Nationwide Series.
Nationwide is a company that helps customers plan for their future so they can achieve their dreams. The NASCAR Nationwide Series provides a real unique experience or environment for Nationwide to extend its On Your Side brand promise, not only to the race fans but also to the next generation of outstanding NASCAR drivers who are pursuing their dreams and competing at the highest level.
As we say in our advertising, life comes at you fast. No one knows that better than the NASCAR fans. We look forward to growing our relationship with these fans and really demonstrating we are truly on your side. So thank you.
THE MODERATOR: Also joining Brian is NASCAR president Mike Helton, NASCAR chief marketing officer Steve Phelps, vice president of competition Robin Pemberton, and series director Joe Balash. They'll be on standby. We've sent out a release with this announcement and in the near future, if it hasn't already been done, the 2008 NASCAR Nationwide Series schedule is also being sent out.
We'll now open it up to questions from the media.
Q. Can you tell us, what are we going to be calling this series now? It's the Nationwide Series. We've referred for years and years to the Busch cars. Are we going to call them the Nationwide cars now?
BRIAN FRANCE: That's correct. We hope you will.
Q. No cute little nickname or anything that you have come up with at this point?
BRIAN FRANCE: No, not at all. The cute little nickname is Nationwide.
Q. I'm curious whether you could offer an elaboration of what this means in terms of a relationship between Nationwide and ISC? Is Nationwide now the official insurance provider or how will that work?
BRIAN FRANCE: They're not. But they will have some rights that are customary for an entitlement sponsor that will transfer on into the tracks. They'll have their own relationship overtime with tracks that represent the series. Those are the kind of things we'll be working on here in the future. But they will have a relationship and position at every venue because that's where the series competes.
Q. Are there any cans that you need to kind of worry about in terms of overlapping sponsorships? You've kind of dealt with it to some degree in the NEXTEL Cup circuit. Are there any other sponsors you need to keep happy here?
BRIAN FRANCE: We've taken that into consideration and we'll be working on a plan that gives the appropriate rights to Nationwide and their category. I think it's fair to say both companies are comfortable with that. We'll be working with our team owners that have a conflict, and there are a couple. They're minimal in relation to what other potential sponsors might have meant to the series. But we'll be working through that and working with our team owners to handle that correctly.
Q. Jim, obviously insurance plays a big role in drivers' lives, but can you talk about, did you waiver at all about sponsoring a racing series at all because of the potential of injury?
JAMES LYSKI: No. I think we looked long and hard at this, and we
thought that NASCAR really demonstrated to us their commitment to safety. Maybe Brian can comment better than I. But we took a look at their safety research center and were very impressed with the innovations that they've driven that have not only helped safety at the track but also translated that into passenger vehicles today.
The prevention of injury is far more important to us than insuring somebody after an accident. It felt like an excellent fit to us.
UNIDENTIFIED SPEAKER: Our situation here at the R&D center, we have projects and initiatives that are ongoing. I think the marriage between Nationwide and the R&D center here, the use of this facility moving forward, I think it's a great relationship. We've got some things we're working on that we have been working on that we'll be rolling out over the course of the next year and two years.
BRIAN FRANCE: Including the Car of Tomorrow which is built in with lots of safety, new initiatives. Like Jim said, we have an inherent risk of danger, but I think our commitment to doing everything we can is second to none in the world. They I think recognize that.
Q. Brian, you were talking about sponsor conflicts. This is only insurance category, correct? It doesn't deal with banking or anything else that Nationwide is involved in?
BRIAN FRANCE: Correct.
Q. Jim, you extended your title sponsorship with the PGA TOUR's Nationwide Tour last year through 2012. This is a seven-year deal from what I understand. Is there any sort of idea there may be some cross promotion between your two title sponsorships?
JAMES LYSKI: That's a great question. We haven't really got that deep into it yet. If you have some great ideas, we're all open for it. But both of the fan bases truly are fanatics of their chosen sport. We think there could be something there. But this is very early in the relationship and haven't really looked at all opportunities yet.
Q. It's been reported in some media outlets so far that the annual sponsorship is $12 million. Is that accurate?
BRIAN FRANCE: We have never commented on the values of sponsorships. We never have. We won't today. But, listen, the most important thing is we've got the right partner, we've got the -- they're going to make the right investment in all the things that are important to our teams, our tracks, network partners. They're going to activate this sponsorship in some very interesting and terrific ways. We're very comfortable with the entire package as it stands today.
Q. In terms of working through the insurance category, are we talking about potentially a grandfather type situation or something completely different?
BRIAN FRANCE: I'll let Steve Phelps, our chief marketing officer.
STEVE PHELPS: We are going to have a sunset provision. It really is only affecting one outlet, and that -- one company, and that would be GEICO. They will have a two-year provision, a two-year sunset, which we think will give those involved an opportunity to go elsewhere, and GEICO potentially to migrate up to what will become the Sprint Cup or the Craftsman Truck Series.
Q. Steve or Brian, in terms of the other suitors that you had out there, title sponsors, is there anything you can put your finger on that made Nationwide the better option?
STEVE PHELPS: Michael, it's a good question. We did have a lot of interested parties and the process went on for a while. And candidly we're glad it did because it led us to Nationwide. The combination of them as an organization, what they wanted, what they've done with the PGA TOUR, the Nationwide Tour, their enthusiasm for this sport that they've shown through their SMI relationships, and really how they are interested in going to activate this, really all those things combined to make them the right choice for us.
Q. Brian, how comfortable are you with what the Busch Series is today? It's supposed to be a ladder series. We see more of the Cup guys getting into it. Is this what you'd like it to be right now or would you like to see it be more of a true developmental ladder series?
BRIAN FRANCE: We love the numbers. We love the enthusiasm with our fan base that either watches or goes to the event, making it the No. 2 motorsport. We're all excited about that.
Do we think we can do some things down the road to distinguish it within the three national series that we have? You bet. We have been candidly waiting for our partner, and now we know obviously it's Nationwide. We'll be working on those things together to highlight the series, to promote and position the series differently than it is today.
But we start in a great place. We start with a lot of interest, an interesting dynamic with older drivers, younger drivers, and a very consistent television property that consistently ranks very high. We have a great partner as well with ESPN. We have all the foundational things to do, but we couldn't do that in advance of choosing our partner, a brand that you're going to recognize. That will all come and we're in a good place to do it from.
Q. Jim, the fact that so many high-profile name Cup drivers regularly compete in this series, did that make it more appealing to you?
JAMES LYSKI: You know what, that wasn't really a criteria of ours. What really was appealing was the competitive nature of the series, the fact that it was an important component to NASCAR overall, and also the fact that, as alluded to, we really think we can extend the experience overall on this. We think there's something that we can help take this to the next level. Those were the most appealing aspects of it, in addition to, as already mentioned, a very strong and loyal fan base.
Q. Brian, will there be any changes accompanying the name change, changes on the track, away from the track, things that the fans will notice?
BRIAN FRANCE: Obviously a new name and a new logo that will identify the series to wherever we're racing or however we're going to market or promote the series. Then there will be lots of activation differences that Nationwide is going to sort out, how they want to take advantage of the series, doing things for the fans that might be in the form of promotions, advertising, whatever. They're pretty clever anyway. They have a property now. They have a lot of rights to come with this. I don't want to speak for Jim, but I know they'll have a lot of opportunities to do a lot of things that people will notice.
Q. I happen to be a Nationwide customers, boats, car, house. I say that because when I think of Busch, I think of entertainment, having a beer. When I think of Nationwide, I know you like to step it up a level, which I believe Nationwide would do, it's not an entertainment type of sponsor. I wonder, Jim, what sorts of things it will mean for the customers of Nationwide and also how you integrate the insurance into the entertainment?
JAMES LYSKI: Let me say you are now my new favorite reporter on the beat here.
We really think we were able to demonstrate that we can tie in our brand to entertainment vehicles. We've done a great job I think on the Nationwide Tour over the last since, what, 2003 I guess. We really think that we can leverage entertainment in a way that can really drive our points of differentiation home. We've done that in our commercials that life comes at you fast, and how to take kind of a serious topic and be able to break through the clutter leveraging entertainment. I think it's going to be a very good fit for us.
Q. There's also the feeling that while Busch was a great sponsor, perhaps they didn't do enough with the series. You have obviously presented plans that will show you can do more.
JAMES LYSKI: My team is telling me absolutely they can do more. We think it is a very good series that has the potential to really take it up another level. We don't know exactly what all those elements are going to be, but we feel very confident that this isn't a case where you get a tired or tapped-out series. This is one where the sky is the limit.
Q. Brian, I know you don't disclose the numbers of the sponsorship, but it did seem like this was a pretty long and protracted search. Did you get what you were looking for at the end of it all? Should we take that length of time at all to mean the series maybe was overvalued a bit at the beginning?
BRIAN FRANCE: We think we ended up in a great place. A big part of what we try to do, it had nothing to do with money. Really didn't. This is a marriage as much as it is a partnership. As we have with NEXTEL and Craftsman, we know a little bit about that. Getting the chemistry right with both companies where our interests are completely aligned, and all facets of an organization as they have to work together. This will be from a marketing perspective a very important property for Nationwide. For us it's our No. 2 brand. Getting all those pieces right is not simple.
Again, a lot of it didn't have anything to do with economics. The good news is we ended up in a great place all the way around. We feel pretty good about that.
Q. Jim, the so-called Busch whackers, the Cup guys who drive pretty regularly in the series, when you were discussing this amongst your people, were you at all concerned with the possibility this would change down the road? This series is supposedly a steppingstone series into the Cup, yet we have a lot of these established guys there every week. Down the road this may change. Is that in your thoughts at all?
JAMES LYSKI: Once again, it just wasn't a major consideration for us. We really looked to say, is this a competitive series. Is it one that excites the fans. Is it one that holds true to our core values around safety and delivering an On Your Side experience. All those things really resonated for us. Whether the Cup guys come down and race or don't, I think this is all about the drivers that are racing in the Nationwide Series demonstrating they're some of the best in the world and having very competitive and exciting races. That's what we really cared about.
Q. Does the choice of Nationwide indicate a desire by NASCAR to move away from the sort of sin categories for its sponsors? Obviously years ago the Winston Cup. Now going from Anheuser-Busch to Nationwide.
BRIAN FRANCE: It's a factor, sure. We would like to broaden up our relationships, insurance category, how many people they touch with their customers, all those things. Although the financial services in the last four or five years, there's been a lot of interest in NASCAR in one form or another.
I would just tell you we're happy with exactly where we landed.
Q. I'm curious about something I am not hearing here. Seems to be a little bit of a neutral position on the matter of Busch whackers, et cetera. I'll ask the question directly. Is it in the plan to eliminate Busch whacking? Is this part of the new package? Can you say whether it's something you change the series as soon as the brand name takes hold with keeping the Cup guys from dropping down, making it a totally developmental series?
JOE BALASH: This is Joe Balash. With the series going forward now as the NASCAR Nationwide Series, we have a large number of new drivers that have been working with the series and have been coming through there. We see that trend to continue.
I think if you look right now, we've probably had over 140 different drivers take starts so far this year in the series and we look into the future that we'll have a continuous flow of young new talent that will be heading our way. I think we have a very talented new Busch East Series driver that we just crowned this year that will move to NASCAR Nationwide Series.
We may have been heavy for a little bit with the double-duty drivers, but we see that's a trend that's kind of migrating the other way and we'll start seeking a more normal level.
Q. Will you depend strictly on the trending to take care of itself or is there a situation where the Cup guys dropping down to Busch whackers will no longer be welcome in the series? Can you say whether or not they will be allowed to compete in the series?
JOE BALASH: We're always looking at things to make the competition exciting and to make the playing field level. We don't want to restrict competition in any way, but we want to look at those ideas that make things exciting for us as we go into the future.
BRIAN FRANCE: It is cyclical. If you look over the last 10 or 15 years, it spikes up and down based on the marketplace, what's going on. Generally speaking, we like the fact it's a unique format where some of the veterans that people know by heart are competing with some upstarts. It helps people, like if you think about David Gilliland, when he beat the best that night in Kentucky, made it a little bit more. We like a fair amount of that. It's an interesting format.
Q. You mean, you like a fair amount of still having the Cup guys in the mix, is that what you mean?
BRIAN FRANCE: Yeah. We historically had that. Sometimes it's more than others. You can get on either side of that. But it's served us well.
Q. So there's no plan at this point to change that?
BRIAN FRANCE: No. We'll always be trying to reward the participants that compete in that series every week as opposed to somebody who doesn't. That's a fundamental value we have. There's ways we can do that, sure. That format has just served us well.
Q. We've seen such an influx of the insurance companies, a wave of it the last couple of years with Allstate, State Farm. Years ago we had the beer companies come in and realize NASCAR fans drank a lot of beer. Can you address the marketing studies or whatever has happened? Can you generally speak to this influx of insurance companies into NASCAR?
JAMES LYSKI: I think it's just indicative of an overall trend. We are in an extremely competitive industry. The advertising promotion expenses in our industry have outpaced those of all other industries over the last five years. We're all looking for those venues that best reach our target audiences in meaningful ways.
Our belief is that the NASCAR fan has demonstrated that they back their sponsors. Our commitment to them is we're going to make this as good of a series as it possibly can be, and our expectation is that they're going to reward us for that. So it just felt like a very good fit from our point of view.
Q. Brian and Joe, is there still any thought to eventually in the next couple of years switching to pony type cars like Mustangs, Camaros, and any thought to having a Busch only driver be the champion rather than a Cup driver?
JOE BALASH: The continuous evolution of the safety of the sport is something that we seriously look at with our cars, so we will continue to evaluate the evolution of our car in the safety initiatives. We've put as many of those safety initiatives as we have going forward, and we will continue to look at those things as we go forward.
THE MODERATOR: Thank you, everyone, for your time.
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