Thursday, June 11, 2009

Atlanta Motor Speedway sues Pep Boys

If times werent tough already, Pep Boys have backed out of a multimillion dollar sponsorship deal.

Charlotte Business Journal reports this morning that the track in Hampton, Ga., owned by Speedway Motorsports Inc. has sued Philadelphia-based Pep Boys, claiming the auto-parts and -services retailer backed out of a multimillion-dollar sponsorship deal and owes it $1.6 million.

Atlanta Motor Speedway inked the sponsorship deal in February 2008, giving Pep Boys the right to sponsor exclusively the fall NASCAR Sprint Cup series races at the track in 2008 and 2009. Pep Boys also got a large trackside billboard at the site and inclusion of “Pep Boys Auto 500” in ads and promotional materials on Atlanta Motor Speedway’s Web site and NASCAR.com.

In 2009, the track told Pep Boys it wanted to hold its fall 2009 NASCAR race events on Labor Day weekend. When Pep Boys failed to make its March 1 payment of $800,000, the track sent a default notice. Pep Boys then sent a purported notice of anticipatory breach of contract to Atlanta Motor Speedway, saying the track failed to comply with the sponsorship deal by scheduling its fall 2009 NASCAR race “during the summer.” Pep Boys also said it was terminating the sponsorship agreement.

The speedway argues the termination is wrongful because the agreement does not mandate that the race be held on a specific date.

Pep Boys says in its response it was looking for opportunities to boost sales in the fall, when it typically sees a decrease in business. The fall timing of the race was also attractive because it’s the “playoff season” for NASCAR, which attracts a big television audience.

“By moving the race from fall to summer, Speedway destroyed the important fall marketing boost for which Pep Boys had bargained,” the retailer alleges. “The date change was also significant because television viewership during the Labor Day weekend is, because of holiday travel and outdoor activities, typically substantially lower than the last Sunday in October in Pep Boys’ core markets. Indeed, that total viewership is often down as much as 20 percent.”

Pep Boys further claims it realized the 2007 race did not give it the benefits it wanted and told the speedway a year in advance to find another sponsor for 2009. Pep Boys alleges Atlanta Motor Speedway “did not devote its best efforts” to find a replacement sponsor.

This is an interesting article. First of all, doesn't Labor Day signify the END of the summer? Its also very hard to track the viewership for that weekend because this is the first year that the race is held in Atlanta....which is a great fun track to watch. Not to mention....um what do we do on Memorial Day?? We are so knee deep in racing on three circuits...its hard to see past the BBQ! Kudos to AMS, for taking this to the next level. Gosh, the Pep Boys in Daytona restricts parking in their lot when they are closed when we go to Carabaas and now this....see you at Auto Zone!

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