Chapter 13

By Frank Tursi, Susan E. White and Steve McQuilkin
JOURNAL REPORTERS
© Winston-Salem Journal

It is a rainy Sunday morning at Lowe's Motor Speedway in Concord as race fans make their way to the track for a soggy day of waiting for the UAW-GM Quality 500 to start.

Crowding the entrance are the souvenir trucks, each one for a different sponsor: Interstate Batteries, Cheerios, McDonald's, and Budweiser, to name a few. There are few bargains: A ball cap goes for $22; a two-inch plastic car is $15.

Richard Petty said that Reynolds' support was a 'God-send thing' for racing, which had begun to decline in popularity. (Journal File Photo)

And every hundred yards or so are the Winston Real Deal booths run by the R.J. Reynolds Tobacco Co. Smokers who are 21 or older merely show an ID and a pack of cigarettes, answer a few questions about the brands they smoke and then line up for their haul: a carton of Winstons (worth about $25), a slick video and a ticket to a Steppenwolf concert in Charlotte.

The rain never stops, and at 3:30 the race is officially delayed until Monday. Disappointed fans begin the slog back to the parking lots and traffic jams for the ride home.

The race was a washout, but Reynolds was a winner. It gave out tens of thousands of packs of cigarettes, added more customers and potential customers to its database, and reinforced Winston's image as the cigarette of NASCAR. Not a bad day's work.

The R.J. Reynolds Tobacco Co. was once the largest cigarette company in the United States with a powerhouse of best-selling brands: Winston, Salem and Camel. But times changed, and as the case against smoking became more pronounced in the 1960s, RJR failed to adapt to the marketplace. Its rivals would eventually rush past it, and RJR's efforts to catch up would have a profound impact on the company and the cigarette industry.

Reynolds has been involved in stock-car racing for nearly 29 years, and its money and marketing smarts have helped build the sport into a $2-billion-a-year business whose best-known event is the Winston Cup Series, a 34-race season that combines two of America's favorite passions -- driving fast and making money. (Hagstrom footnote) (Fortune Magazine footnote; NASCAR financial information.)

Along with the deafening roar on the track, there are luxury skyboxes, lucrative television contracts and sponsors willing to plunk down $750,000 to get their logo on the rear quarter panel of a Ford. ''RJR made a very interesting investment in 1971 that has paid off for all of us -- them and us,'' said H.A. ''Humpy'' Wheeler, the president of Speedway Motorsports Inc., which owns the Lowe's track as well as racetracks in Atlanta and Fort Worth, Texas, Bristol, Tenn. and Sears Point, Calif.

A Natural Fit

The investment started in November 1970 with a request from Junior Johnson, a driver on what was then known as the Grand National circuit. He wasn't just any good-old boy with a fast car and a lead foot. He was a national legend, immortalized in Esquire magazine a few years earlier as the ''Last American Hero.''

Johnson had a problem. His sponsor -- an auto-parts dealer from Detroit -- had died in a plane crash. He made the trip from his home in Wilkes County to Winston-Salem and asked the top brass at Reynolds Tobacco to sponsor his race car for a year, at a cost of about $100,000.

His figuring was that Reynolds and the other cigarette companies would have lots of extra money around because they were being chased off television and radio on New Year's Day in 1971.

Reynolds turned him down.

It wasn't that Johnson was asking for too much money. It was too little. The company was looking for something much bigger to do with the windfall from the TV ban.

Richard Petty, shown here on his way to winning a race at the North Wilkesboro Speedway in April 1975, won five Winston Cup championships. (Journal File Photo)

''Well, hell, why don't you just sponsor the whole show then?'' Johnson asked. (Hemphill footnote; Junior Johnson's pitch to Reynolds.)

A month later, the company did. It established a $100,000 award, the Winston Cup, for NASCAR's top Grand National driver during the 1971 season, and also began promoting the heck out of the sport. In May 1971, the first Winston 500 would be run at the speedway in Talladega, Ala. Reynolds wasn't the first tobacco company to start spreading its money around in racing. It just backed the best horse. Philip Morris had begun sponsoring the USAC championship series and Liggett & Myers was helping promote the Sports Car Club of America's Formula 5000 series.

Stock-car racing was a natural fit for Reynolds. The sport had deep roots in the South, then as now, RJR's best territory. And for a company concerned about the growing potency of the macho Marlboro man, fast cars could help bridge the gap as RJR marketers pushed Winston from a unisex brand to a more masculine one.

As Bob Odear, then the Winston product manager, said at the time, ''We wouldn't be doing this thing if we didn't think we were going to make a buck.''

Racing's Royal Ralph

The spark may have come from Junior Johnson, but most of the credit for building the relationship between Reynolds and NASCAR goes to Ralph Seagraves. Seagraves came up through RJR sales and was a district manager for the Washington area in the 1960s. Well-connected and persistent, Seagraves was, for example, instrumental in getting specially marked Camel and Winston packs onto Air Force One. With television on the way out, Reynolds scouted about for new ways to keep its brands in the public eye. It created a new division, called Special Events, and put Seagraves in charge.

By most accounts, Reynolds couldn't have made a better choice. Seagraves was affable, smooth-talking and street smart. He was also imposing, standing 6-foot-3 with a strong build. He wore a suit but preferred overalls and a cowboy hat. At races, he was sometimes found under a car with a wrench in his hand. He could talk easily with business and political leaders one minute, pit-crew workers the next.

''He never met a guy he didn't know,'' said Yancey Ford, a former vice president of sales at Reynolds Tobacco.

One of Seagraves' first employees was a young apprentice named T. Wayne Robertson. His job was to take a cheesy-looking show car to various events, mainly at shopping centers across the South. The show car looked more like a hay wagon. It had no body. Instead it carried a three-sided sign on it that told spectators who the point leaders were in the Grand National circuit and where the next race was.

Seagraves went to some of his bosses and said: ''Hey, nobody cares about looking at that car. What they really want to see is what a stock car looks like. Why don't we go out and build a regular stock car and then we'll haul it around to these shopping malls and show people what it's all about.''

The company agreed. Soon the special events staff was displaying three real race cars at shopping centers within 150 miles of the next race, bringing in crowds and building good will for NASCAR and Reynolds.

Wheeler said that Seagraves, who died in September 1998, understood NASCAR's simple but powerful appeal. ''It's a return to the county fair that we don't have anymore,'' he said. ''It's Ringling Brothers Barnum & Bailey, it's pro football on wheels, it's in Technicolor, it's grass roots America, it's good old guys who behave themselves, throwbacks to athletes back in the '40s and '50s like DiMaggio, Stan Musial, Rocky Marciano, et cetera, who were great role models for kids.''

Gold and Change

The National Association of Stock Car Automobile Racing's Grand National series started in 1949. And it grew steadily through the 1950s and early 1960s, helped along by money from such automotive sponsors as Ford, Chrysler, Firestone and Goodyear. ''A lot of money was going around,'' Wheeler said. ''The teams were flowing in money and equipment like they had never been before. Then we hit a huge wall in '69.'' (Golenbock footnote; early history of NASCAR.)

Firestone announced that year that it was withdrawing from racing. Ford and Chrysler followed in 1970. The remaining big tire company, Goodyear, didn't have to do much because there was no competition, Wheeler recalled.

The sport's image didn't help. The drivers fought. The tracks were often run-down. The danger factor tended to keep major sponsors away. Local governments didn't support race tracks. By the time Reynolds came along, many tracks were in financial trouble; some had declared bankruptcy.

''In the early days, none of us had any money at these tracks,'' Wheeler said.

Reynolds' donations came at a critical time for the sport and took other forms besides cash. It would give tracks gallons of red and white paint to spruce up their grandstands and track walls. Seagraves told the owners to alternate the red and white on the walls to give the illusion of greater speed. ''Even though it looked like a Winston package it looked a heck of a lot better than old, gray, rotten timbers,'' Wheeler said.And the company was a stickler for getting the color right. Wheeler once traded some of the red paint for more white and some brown. He mixed the paint together to get a nice subdued beige color, with which he painted the entire track complex. Seagraves was not pleased.

''Where's the red and white paint?'' Seagraves roared.

''Well, Ralph, I hate to tell you, but I traded it in,'' Wheeler told him.

''You shouldn't have done that,'' Seagraves said, and he went on to reprimand the young race promoter.

Wheeler ended up placating Seagraves by putting some more Winston signs around the track.

With Reynolds' help, NASCAR took off in the 1970s. Leading the charge was Richard Petty, the charismatic and folksy driver of the No. 43 STP Dodge. He was King Richard, with a cowboy hat instead of a crown. Petty would win five Winston Cup titles in the 1970s and his battles with the other hot drivers -- Cale Yarborough, Bobby Allison and Buddy Baker -- would take the sport to a national audience.

Petty knew his manners and who to thank. ''When R.J. Reynolds Tobacco Co. stepped in, it was a God-sent thing for racing,'' he said in 1977. ''The Winston Cup point fund has brought out more fans by making the competition more intense, and attendance grows every year.''

As NASCAR grew, the stakes got higher for sponsors. Suddenly, Reynolds was no longer the only tobacco company interested in stock cars. It all started with Smokey and the Bandit, a 1977 movie starring Burt Reynolds and a black Trans Am. Executives at the U.S. Tobacco Co., which made dipping and chewing tobaccos, began sponsoring a car known as the Skoal Bandit.

That didn't sit well with Reynolds, which still made several brands of chewing tobacco.

''They were pretty aggressive in their entry into NASCAR,'' Wheeler said. ''Quite a hue and cry was made about this because it was seen as competition for RJR. But that caused RJR to adjust how they looked at racing.'' Soon, at the urging of Seagraves, the company started to broaden its scope, such as paying for signs at tracks. But the company played hardball as well. It withdrew $100,000 in advertising for the World 600 at Charlotte Motor Speedway in 1981 after Wheeler signed a deal with U.S. Tobacco under which the company would pay $20,000 to the driver who led for the most laps. Bill France Sr., NASCAR's founder, was furious with Wheeler. ''I've got to appreciate what R.J. Reynolds has done and don't appreciate what Humpy's done," France said. "He's fooling with my livelihood, by tinkering with Reynolds' sponsorship of the whole series.''

And NASCAR would reward Reynolds for its loyalty and money. In 1986, the organization stunned the racing world by renaming the Grand National series Winston Cup racing. Reynolds officials insisted they never asked for the change. They didn't have to. As Driver David Pearson said, ''As much money has Winston puts into it, they ought to call it something that uses their name.''

Wheeler and Reynolds also made up long ago. The Lowe's speedway -- only a few miles from Philip Morris' largest cigarette factory -- has three Winston Cup dates, the Winston banner is everywhere at the track and the only smokes for sale are made by RJR.

Getting a Facelift

NASCAR's climb into prosperity has brought other changes. Gradually, racing lost its dirt-under-the-fingernails image. Part of that makeover was because of Reynolds.

Company executives had been bringing guests to the track since the early days. At first, it was mainly purchasing managers from chain stores and other big accounts. But over time, Reynolds' first-class approach to entertaining helped NASCAR win broad support outside the automotive industry.

Racing was also becoming more of a family event. In 1975, women made up about 15 percent of a Winston Cup crowd. Today it's about 38 percent. The sponsors reflect that shift. The new generation includes long-distance phone companies, the Cartoon Network and Big Kmart.

Television came to NASCAR in 1979, when the Daytona 500 was first broadcast live. It was a victory for Reynolds. It couldn't advertise cigarettes on TV, but the Winston logo could be seen throughout the race, from the banners along the track to the ball caps of the winning drivers.

As network coverage increased and more races were televised, tobacco's critics started griping. Dr. Alan Blum, the editor of the New York State Journal of Medicine, said that Reynolds was flaunting the ban on television advertising through its Winston Cup sponsorship. RJR claimed innocence, arguing that it didn't ask for the events to be televised.

Congress took notice. Two of tobacco's biggest foes, Rep. Henry Waxman, D-Calif., and Rep. Mike Synar, D-Okla., introduced legislation banning sports promotion by tobacco companies. NASCAR and Reynolds fought back, and the bill died.

But the issue didn't go away. In 1991, Louis V. Sullivan, the U.S. secretary of Health and Human Services, called for a boycott of NASCAR to send a message to tobacco companies ''in the only language they appear to understand -- the language of money.'' Sullivan's office estimated that RJR was spending $40 million a year on all forms of sports marketing at the time, from Winston Cup racing to the Vantage golf tournament. Philip Morris was spending $100 million.From the start, Reynolds has said that it was not using NASCAR to market to kids or nonsmokers. ''That's not only the bottom line, it's the only line,'' Seagraves said in 1978. ''We don't want to influence anyone to smoke. We want to influence the ones who do smoke to smoke our brand. We want Winston to be the cigarette of motor racing.''

As Robertson, who died last year, put it in 1991: ''Our involvement in sports is plain and simple. It's a marketing tool that we use to promote our products. We're not in the golf business, we're not in the racing business, we're not into motorcycle racing or drag racing. We sell cigarettes. And we utilize sports to market our products.''

And NASCAR fans appear to be loyal to the companies that help support their favorite sport. Take the parking lot outside Lowe's Motor Speedway. Among the thousands of cars, there are only a handful of foreign cars or Chryslers. It's all Ford, Chevrolet and Pontiac, the three brands of racing (Chrysler will return next year).People close to the sport estimate that Reynolds is still spending about $35 million a year on NASCAR. IEG Sponsorship Report, a newsletter published in Chicago that covers sports marketing, estimates that RJR spends $50 million annually on all types of sports promotion. Philip Morris spends $125 million annually, although none of its events approach Winston Cup racing in popularity.

So was Reynolds smart or just lucky back in 1970? Some racing executives say it has more to do with luck. There was no way to know then that stock-car racing would become so big and widespread.

''I think in 1971, if anyone would tell you the truth, is that this was just a place to put money and see what would happen,'' Wheeler said. ''And they had so much money -- or the ability to spend so much money -- taken away from them that this wasn't even a bold experiment.''

But there's a more fundamental, less certain question to the NASCAR-Reynolds tie. What has Reynolds gotten for all its money? When the partnership began, Winston was the best-selling brand in America, with a 15 percent market share and an annual volume of 82 billion cigarettes. It would peak in 1975, at 89.5 billion cigarettes and then begin a long, slow descent. Today, it has 5.2 percent of the market, and in 1998 an annual volume of 23.8 billion cigarettes. Seagraves used to respond to the naysayers in the company this way: What would our share be if we didn't have NASCAR?

Ford puts it another way. ''The thing about that stuff is trying to say which tooth in the saw cut,'' he said. ''Everything works together. You have NASCAR out there which is reinforcing the brands, whatever image they had at the time.''

Even in its diminished role, Winston is still a $1 billion brand that generates hundreds of millions of dollars in profit for Reynolds each year.

Speaking at a sports-marketing conference in 1983, Greg Novak, a group director of marketing services at RJR, said: ''Fans appreciate the support we lend to their favorite sport, and it is only natural that they tend to adopt a more positive attitude toward the sponsoring brand. This positive attitude leads to trial and conversion to our brands.''

Other company research from the mid-1970s, before Winston began its slow slide, noted that Winston's market share was two-thirds higher among NASCAR fans than among non-racing smokers.

That allegiance is still present today. If the company didn't believe NASCAR worked, it wouldn't spend millions of dollars on the sport, said Peter Hoult, a former executive vice president of marketing. Hoult believes that Winston has been hurt by deeper problems, such as a lack of identity and the past stigma of being regarded by young people as an older person's brand.

Winston had probably 20 different advertising campaigns since 1971, and not one of them stopped the fall of the brand, he said. Why? Because the fundamental positioning of Winston never changed. ''It was looked at as a Middle America, rather boring, rather bland, blue-collar brand,'' Hoult said. ''There was nothing to it in terms of the excitement.''