Charlotte – Recent losses in American and International financial markets have many companies looking at ways to stop the monetary bleeding. Apparently, NASCAR benefactor Sprint Nextel is one of them.
The wireless communication giant has announced that it will soon cut 4,000 jobs from its workforce of 60,000 employees. Other cost saving initiatives, such as cutting more than 4,000 third-party distributors and closing 125 company-owned retail locations nationwide, hammered the price of Sprint Nextel stock driving it down nearly 25 percent to just $8.70 per share at the close of business last Friday.
The news had to raise some eyebrows at NASCAR corporate headquarters.
While Sprint Nextel will receive a huge boost in public awareness thanks to its Sprint Cup branding in NASCAR?s top racing series this season, the initiative – along with the deep financial cuts – may be too late to save the third-largest wireless provider.
The company?s customer base has been hemorrhaging market share as well as more than 885,000 subscribers/customers abandoned their Sprint Nextel service in the final quarter of 2007 alone. In all, Sprint Nextel lost 2.1 million customers in 2007. Customer losses are predicted to be even higher in 2008.
Meanwhile, Sprint Nextel?s main competitors ? AT&T and Verizon Wireless ? have been adding new customers at a rate of 2 million per quarter.
None of this was on the horizon in 2004 when NASCAR ended its longtime association with R.J. Reynolds (Winston) in favor of a new top series title sponsorship deal with Nextel. Everything still seemed rosy in 2005 when Sprint and Nextel staged a mega $70 billion merger.
At that time, Sprint Nextel stock traded above the $26 per share mark. Since then, however, the company has struggled to expand much less retain market share thanks in large part to the incompatible technologies of the two wireless services.
The inability to move Nextel customers over to its Sprint service, along with failing to retain a large portion of its Sprint based customers, cost former Sprint CEO Gary Forsee his job. New Sprint Nextel CEO Dan Hesse now has the unenviable task of trying to reverse this trend through a number of job cuts, employee payroll deductions, and store closings.
It won?t be easy and some market analysts are saying it can?t be done.
With a possible economic recession on the horizon, NASCAR execs can?t be excited about this news. In just a matter of five short years, NASCAR has seen the defection of all three top-tier division sponsors ? Winston (2004), Anheuser Busch (2008), and Craftsman (2009). Should Spint Nextel be unable to recover from its financial tailspin, the impact on NASCAR and its associated businesses could be significant.
Saddled with a soft economy and sagging television ratings, rumors have been circulating for some time that NASCAR – which has also been quietly cutting costs internally recently – may be on the sales block as well.
Certainly, news like the Sprint Nextel freefall can?t be good for NASCAR and its other business initiatives, painting a dark cloud over the 2008 season that is scheduled to begin with a landmark event – the 50th-Annual Daytona 500 – on Sunday, February 17.
While that event is sure to draw millions of viewers, you can be sure that all eyes will be on the announcement of Sprint Nextel?s fourth quarter and 2007 annual financial results when they are reported on February 28.
Speaking Of Viewership…
Sunday’s National Football League playoff game between the Green Bay Packers and the New York Giants drew an astounding 31.7 rating and an even more incredible 46 share, the highest mark for an NFL championship game since 1996.
That means nearly a third of all television viewers and almost half of the televisions in use in the United States tuned in the game.
Meanwhile, the 2007 NASCAR 10 event ‘Chase for the Championship’ averaged between a 3.1 and a 4.6 rating – almost all of them posting lower rating and share numbers than in 2006.
Guess not all of television, or other sports entities, are suffering television viewership losses as suggested by NASCAR honcho Brian France when he publically assessed NASCAR’s dismal 2007 television performance numbers late last season.
When Hell Freezes Over…
While NASCAR fans are undoubtably among the most loyal and hearty in all of sport, it’s hard to imagine a more stout group than those who attended the game in Green Bay Sunday.
With the temperatures below zero and wind chills blasting through Lambeau Field at an estimated 20-25 below zero, a record crowd of more than 72,000 attended the game on a day when even Hell would freeze over.
It was an amazing scene and one this reporter was fortunate enough to witness firsthand courtesy of Packers Ticket Manager Mark Wagner.
Many thanks to Mark and the Packers for an experience of a lifetime.
John Close covered his first NASCAR race in 1986 at Bristol. Since then, Close – a former Associated Press newspaper sports editor – has written countless articles for numerous motorsports magazines, trade publications and Internet sites.
His Close Calls column appears each week on www.CloseFinishes.com, www.MotorsportsAmerica.com and www.RacingNation.com.
Close has also authored two books – Tony Stewart – From Indy Phenom To NASCAR Superstar and NASCAR Craftsman Truck Series – From Desert Dust To Superspeedways.
Close is a weekly guest every Thursday at 1 p.m. Eastern on Tradin’ Paint on NASCAR SIRIUS Channel 90.
You can follow John Close on Twitter @CloseFinishes and on Facebook at John Close.
Be sure to visit John’s website – www.closefinishes.com
Close CallsJohn CloseNASCAR