Monster Energy is reportedly getting the sponsorship rights to NASCAR’s No. 1 series at a per-year rate far less than what Sprint paid.
According to a report from Sports Business Daily, Monster’s agreement to sponsor NASCAR’s Cup Series is a two-year agreement with an option for two more years. The energy drink company is reportedly paying $20 million per season, though NASCAR CEO Brian France said the numbers reported weren’t “accurate.”
Sprint’s agreement (when Nextel took over in 2004) was initially a $750 million deal over 10 years — an average $75 million a season. Sprint extended that contract for another three seasons through the 2016 season at a rate reported to be about $50 million a year and $65-75 million with activation included per the report.
“Those are not accurate numbers,” France said Monday on SiriusXM about the reported Monster deal financials (via NBC Sports). “We have a good understanding about where this relationship is going to be. So no, those are not accurate numbers. We’ll work on that.”
Both the annual rate and the length of the deal of Monster’s agreement with NASCAR is jarring when compared side-by-side to Sprint’s contract with the sport. It’s even more so when you consider that SBD reported in May 2015 that NASCAR was wanting its future title sponsor to pay $1 billion over 10 years in both sponsorship and activation fees.
Monday’s report notes that Monster’s activation — how much it will spend to promote the sponsorship — hasn’t been determined, so even if the per-year rights fee being reported is correct, France has a point about the numbers not being accurate. But those activation costs are expected to be less than Sprint’s as well.
Despite the crazy initial reported asking price, it was widely expected that NASCAR would receive less than it did from Sprint from its new title sponsor; especially as the season ended in November with no sponsorship announcement scheduled for 2017. The pact with Monster was announced the day before the season-ending awards banquet in Las Vegas.
And it’s also important to note that while the price difference is steep, it isn’t something that should impact NASCAR. The sanctioning body is rolling in the riches of a $4+ billion television contract that has eight more years to go and is still a profitable enterprise for the France family despite lagging attendance and television ratings.
The hope, of course, is that Monster will help deliver a younger audience to prop up NASCAR’s aging fanbase. If it does, then the money NASCAR is missing out on from its previous contract is a worthy investment.
– – – – – – –