Published on May 20th, 2010 | by Michael J Smith3
Red Man, Longhorn Could Remain As Sponsors
The Food and Drug Administration recently issued a rule titled Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect Children and Adolescents that contains a set of federal requirements aimed at making cigarettes and smokeless tobacco products less attractive to children and adolescents in the United States.
Section 1140.34, paragraph (c) of the rule states:
No manufacturer, distributor, or retailer may sponsor or cause to be sponsored any athletic, musical, artistic, or other social or cultural event, or any entry or team in any event.
That means that Baker Curb Racing’s No. 27 Nationwide Series team sponsored by Red Man Moist Snuff, and Kevin Harvick Inc.’s No. 33 Camping World Truck Series team sponsored by Longhorn Moist Snuff will lose their sponsors when the rule goes into effect on June 22nd.
Under the rule, tobacco companies cannot use their “brand-name, logo, symbol, motto, selling message, recognizable pattern of colors, or any other indicia of product identification of cigarettes or smokeless tobacco” in advertising and labeling to which children are exposed. This includes NASCAR sponsorships.
This means that a company cannot simply remove or replace tobacco brand names and logos the way Penske Championship Racing replaced “Marlboro Penske” logos with “Team Penske” logos to comply with the Tobacco Master Settlement Agreement (MSA)* in 2005. When the logos were changed, the Penske cars kept the Marlboro colors and paint scheme until 2010, when Phillip Morris USA, Marlboro’s parent company, stopped sponsoring the team. This rule prohibits that because it expressly says that a recognizable pattern of colors cannot be used.
* The MSA is an agreement in which attorneys general from 46 states settled their Medicaid lawsuits against the four largest tobacco companies over tobacco-related health care costs and granted them an exemption from tort liability regarding harm caused by tobacco use in exchange for annual payments from the tobacco companies to the states to compensate them for tobacco related health care costs and a change in tobacco marketing practices.
If the teams did change the logos to something that complied with the rules, they could still find themselves in trouble. Around 2005, the European Union instituted a ban on tobacco sponsorships, which included Formula 1 races. Marlboro signed an extension with Scuderia Ferrari that runs until 2011 around the same time.
With the ban in place, Marlboro had to remove logos from the car depending on venues and national laws. In 2008, the Marlboro logos were removed from the car completely and replaced with a variety of barcodes. Health officials in Europe, however, called for an investigation into whether or not the barcodes were subliminal advertising. The barcodes were removed this year. So, it is likely that anything that appears on race cars with tobacco sponsorships, even if they were in compliance with all aspects of the rule, would be subjected to increased scrutiny.
But, per Sec. 1140.34 (c) of the rule:
Nothing in this paragraph prevents a manufacturer, distributor, or retailer from sponsoring or causing to be sponsored any athletic, musical, artistic, or other social or cultural event, or team or entry, in the name of the corporation which manufactures the tobacco product, provided that both the corporate name and the corporation were registered and in use in the United States prior to January 1, 1995.
Both Red Man and Longhorn are made by Pinkerton Tobacco, which is located in Owensboro, KY. Pinkerton was acquired by a Swedish company, Svenska Tobaks AB, in 1985, and eventually ended up under the umbrella of Swedish Match, where it currently resides.
With the acquisition of Pinkerton in 1985, and the fact that the name is still registered with Kentucky, one can assume it has been registered since 1995. Also, Swedish Match, in one form or another, has existed since 1992, and has conducted business in both Kentucky and Virginia, so one can assume they, too, have been registered since 1995.
If that is in fact the case, Red Man and Longhorn could remain as sponsors under the name Pinkerton or Swedish Match, so long as they do not use the Red Man or Longhorn brand names, logos, or pattern of colors, or any logos or pattern of colors that someone under the age of 18 could interpret as a tobacco product on the car. But this is not likely to happen.
The rule prohibits the sale or distribution of promotional, non-tobacco items, such as hats and t-shirts, with tobacco brands or logos. And it restricts the types of ads that are permissible. Audio ads cannot include music or sound effects, while TV ads cannot contain color and are limited to static black text on a white background. Any audio in a TV ad is limited to words only with no music or sound effects. Similarly, print ads must use black text on a white background, unless they appear in magazines that are targeted at adults or magazines with fewer than two million readers under the age of 18.
When asked whether or not fielding an all-white car with the tobacco brand name in black text would count as compliance under the advertising provision, the Department of Health and Human Services (HHS) confirmed that it would not, because the tobacco brand name was used. The brand name cannot be used in advertising to which children could be exposed, regardless of whether or not it is in color or black and white. But, what if the corporate name were used instead of the tobacco brand name? Would that be permissible? Yes.
But, would Pinkerton/Swedish Match field a car in their corporate name? Ardy Arani, Managing Director of Championship Group/Atlanta, a sports marketing consultancy, does not think we will find out.
[One] side of the equation concerns how far a tobacco company may be willing to test the ire of the FDA by coming up with clever workarounds. My bet is ‘not too far.’ For example, there was talk back in the original Master Settlement Agreement days of a company spinning off brands as separate corporations to enable them to continue sponsorship in the ‘corporate/brand’ name, but nothing came of it. … At some point, the sponsoring company decides it is not worth the hassle and simply removes the logo.
Without merchandise sales and the ability to promote the brand using the driver and car at venues that could be visited by children, a sponsoring company wouldn’t receive much in return for the money spent. Thus, the restrictions effectively ensure that it isn’t financially feasible for a tobacco company to remain as a sponsor.
Red Man Moist Snuff signed on with BCR for 12 races this season, with the last race being the June 12th Nationwide Series race at Kentucky — the last race before the rule takes effect. And it appears that the team is working on securing a sponsor when Red Man leaves.
Matt Crews, president of BCR, said:
As of today we do not have a sponsor lined up for the No. 27 after the FDA rule goes into effect. We are talking to several potential partners and are hopeful that something will come along to keep the No. 27 on the track for the remainder of the season. If we do not find a partner to keep the car on the track full time, we still plan to run the No. 27 on a limited basis.
Longhorn is signed to appear as primary sponsor for KHI’s No. 33 truck until the June 12th race at Michigan. KHI has inked a deal with Karl Chevrolet, the third-largest Chevy dealer in the U.S., for it to appear as primary sponsor on the No. 33 truck for the first Camping World Truck Series race after the ban, which is July 11th at Iowa Speedway.
Kevin Harvick Inc owner Kevin Harvick said that they knew that Longhorn would have to come off of the truck at the end of June. So far, he says, the No. 33 has sponsors for about half of the remaining races. They’re still working on sponsors for the other half.
He said that the truck will run every week, regardless of sponsorship.
RJ Reynolds Tobacco Company, former sponsor of the Cup series and the second largest tobacco company in the U.S., and Lorillard, the third largest tobacco company in the U.S., sued over the rule in Kentucky, arguing that some of the provisions in the rule violated their First Amendment rights.
Federal Judge Joseph McKinley struck down the provision that would restrict advertising to black text without graphics except in adult magazines and retail establishments open only to adults. McKinley in his ruling said that the tobacco companies could use imagery and colors to tell “what the product is and who makes it.” The FDA is currently appealing that ruling.
At this time, it is unclear whether or not the FDA will attempt to enforce the rule on imagery and color in tobacco advertisements while the appeal is still pending.