Settlement won't end sponsorship

Tobacco agreement might limit tobacco involvement


The latest tobacco settlement likely will curtail, but not eliminate, tobacco sponsorships of motorsports, marketing experts predicted Monday. Tobacco is the largest corporate supporter of auto racing with $220 million in racing sponsorships in 1998, about 20 percent of the total, according to IEG Inc., a Chicago-based consulting company.

Over the weekend, the four largest cigarette makers agreed to pay $206 billion over 25 years to settle lawsuits by eight states. Other states have until Friday to join the settlement. The companies say a final agreement depends on enough states accepting the proposal.

Among other provisions, the settlement would limit each company to one brand-name sports sponsorship. A company would be unable to be a sponsor in both motorsports and professional tennis, for example. The companies would also have to focus that sponsorship on one brand, such as Winston or Marlboro, rather than using the sponsorship to promote a range of brands, said Scott Williams, a spokesman for the tobacco companies.

Lance Helgeson, managing editor of the IEG Sponsorship Report, said the pact will allow tobacco companies to stick with auto racing, but with a lower profile. "Tobacco will have less of a presence than it currently does. It is going to put some constraints on them."

A tobacco agreement struck last year would have banned sports sponsorships. That agreement was subject to approval by Congress and died amid political bickering. The latest agreement does not require congressional approval. The four tobacco companies involved in the settlement are Philip Morris, R.J. Reynolds Tobacco Co., Brown and Williamson Tobacco Corp. and Lorillard Tobacco Co.

N.W. "Bert" Kremer, manager of sponsorships for Brown and Williamson, said the company has to analyze the pact before making decisions. But he said "it would certainly be our intention" to continue motorsports sponsorships if possible. The company sponsors two CART race cars owned by Indianapolis-based Team Kool Green.

Tobacco logos are easy to find in auto racing. R.J. Reynolds is the title sponsor of the Winston Cup, NASCAR's biggest series and the NHRA Winston Drag Racing Series. In fact, Reynolds money was instrumental in transforming NASCAR from a regional circuit that raced in rural locations into a national series.

Besides Team Kool Green, several other CART teams rely on tobacco sponsorship for funding. Among them are Marlboro Team Penske, owned by Roger Penske, PacWest Racing, where one of the two cars is sponsored by Hollywood, a Brazilian cigarette brand; and Player's/Forsythe Racing Team.

Ron Richards, a vice president of CART, said the organization couldn't comment in detail about the tobacco settlement. "They've been great supporters and we hope they can continue."


by Bill Koenig
November 17, 1998
© Indianapolis Star News 1998


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