Monster Energy 'Highly Unlikely' To Sponsor Cup Series After 2019
Bob Pockress NASCAR
Monster Energy and NASCAR agreed Tuesday to an extension of their sponsorship agreement through the 2019 season, but NASCAR Chief Operating Officer Steve Phelps said it is "highly unlikely" that partnership would continue beyond that.
NASCAR is looking at bundling its top sponsorship packages with the sanctioning body to include the tracks and television partners and possibly will not include the series naming rights as have been used in the past.
"I wouldn't suggest that the entitlement is not working, but we want to make sure our sport is as easy or easier to do business with," Phelps said. "Our competitive advantage is that our fans understand the importance of sponsorship and they go out and support our sponsors. ... We just think this is a better model to be able to make sure that sponsors want to stay involved more broadly.
"We feel there is an opportunity to feel more invested in the sport -- and I'm not just talking financially and what they're paying different entities, but more invested in the sport so they will then turn around and do more activation and feel like this position is an ownership position that they have."
NASCAR has had three title sponsors for its premier series: Winston (1971-2003), Nextel/Sprint (2004-2016) and Monster Energy (2017-present).
Navigating a series sponsorship is not easy as there are deals with the tracks that need to be negotiated as well as working with teams that have competing brands as sponsors.
"I'm very interested in seeing the new model," Monster Energy Vice President of Sports Marketing Mitch Covington said. "We're just deep in supporting the sport. We definitely want a front-row seat to see the new model.
"I won't use the word 'difficult' [in its current form]. It's complex in the fact there are so many entities to deal with. ... We've been in it long enough, we feel like we're [navigating the sport] well."
The energy drink company had signed a two-year deal in December 2016 for the 2017 and 2018 seasons with an option to extend the deal, which they announced Tuesday.
The original deal with Monster Energy was estimated to be worth $20 million per year as NASCAR spent a full year finding the replacement for Sprint. The financials of the 2019 extension were not announced.
NASCAR had hoped its Monster Energy relationship would help attract younger fans, while Monster executives had hoped to tap into NASCAR's older fan base.
"We've been really pleased with how Monster has come in and engaged with our fans. ... In all markets, it's been fantastic," NASCAR chairman Brian France said in November. "Their young, edgy demo. They're motorsports-centric, and they always have been in their culture. We're really pleased.
"I've been out to their headquarters three different times to work with them, because this is also a complicated sport to make sure that they're getting all the value. But they're getting a lot of value, and we're very pleased with where that relationship is."
With its television ratings up in the 18-34 demographic last year, NASCAR says that could be attributable to Monster Energy but it does not have data to show a direct sponsorship impact on attracting a younger audience.
"It seems to be a happy marriage at this particular point between fans and Monster. ... The vast majority have really embraced it," Phelps said.
NASCAR said research it commissioned last year shows that 11 million NASCAR fans who were not previously Monster Energy drinkers said they had tried the beverage in the previous month. It said Monster Energy earned $500 million in television exposure.
"Monster is all about racing, and this is the biggest form of racing in motorsports in America, so it's been a great fit for us, for our brand image in doing what we do," Covington said. "We go racing.
"We want to associate ourselves with great racers and racing, and NASCAR affords us to be able to do that in a big way on a very large platform."
Monster chairman Rodney Sacks told financial analysts in January that the sponsorship helped expand awareness of the brand.
"We have gotten a lot more visibility, a lot more recognition for the brand through the NASCAR sponsorship," Sacks said. "It's very expansive. It's on TV, it's appearing on talk shows. We look at the metrics that the NASCAR folk give us, and it certainly does seem to have been enhanced.
"Now the degree is, to what degree? That we don't know. ... It took us a little bit of time [in 2017] to get up to speed, to get our activation going. We think we'll see a lot clearer benefits and more benefits coming from that relationship this year."
The extension with Monster is positive news for NASCAR, which continues to seek ways to reenergize its fan base. The public companies that own tracks reported that admissions were down 2.7 percent in 2017 -- the 10th-consecutive year of falling admissions revenue, albeit a much smaller decline than the 7.4 percent in 2016.
According to track operator International Speedway Corp. annual reports, NASCAR Cup races on television averaged 4.1 million viewers per minute in 2017, down 10.9 percent from 4.6 million viewers in 2016.
"It's been a great brand for our sport," ISC president John Saunders said on a conference call April 3 with financial analysts. "It speaks to a younger demographic. By all metrics from their perspective, we think it's been successful."
The deal is not expected to impact Monster Energy's sponsorship of driver Kurt Busch at Stewart-Haas Racing, which is up for renewal at the end of the season as the sides inked a 1-year deal late last year.
"The decision on Kurt is a totally separate decision," Covington said. "We're always happy with Kurt. He's been great for the brand and face of the brand in NASCAR for us."
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