SBD/September 19, 2017/Marketing and Sponsorship

Lawsuit Provides Details On Farmers Insurance-Hendrick Motorsports NASCAR Deal

Kahne had to do 16 two-hour appearances per year for Farmers from '12-14
Farmers Insurance "paid Hendrick Motorsports about $660,000 per race over the last six seasons in which Farmers was the primary sponsor for Kasey Kahne" in the Monster Energy NASCAR Cup Series, according to details from a lawsuit filed by Sports Marketing Consultants cited by Bob Pockrass of ESPN.com. Farmers was the "primary sponsor for Kahne for 22 races" in '12 ($13.5M), '13 ($14.04M) and '14 ($16.348M). It "decreased its total to 12 races for the next three years," paying $7.6M in '15, $7.8M in '16 and $8M in '17. The contract also shows that Kahne "had to do 16 two-hour appearances per year" from '12-14 and "nine per year" from '15-17. He had to do a "10-minute hospitality session each race weekend" that Farmers was a primary sponsor as well as "meet-and-greets." Kahne was "committed to three eight-hour production days per year." Team owner Rick Hendrick was "committed to one four-hour production day per year." The initial $43.88M, three-year deal also resulted in $3.38M in "commissions to the broker" (ESPN.com, 9/18). YAHOO SPORTS' Nick Bromberg noted the lawsuit also puts NASCAR's entitlement deal with Monster Energy into "greater context." Some initial reports pegged the NASCAR-Monster deal as worth $20M annually, but details from the Kahne lawsuit show the brand is "paying more like" $25M in '17 and '18. It is "staggering to step back and think" that Monster is paying close to $25M to sponsor the entire NASCAR Cup Series -- a figure that would have been "less than a full season sponsorship" of Kahne’s car in '14. Bromberg: "It’s still crazy to think that roughly the cost of a full season sponsorship of a Hendrick Motorsports car not driven by Dale Earnhardt Jr., Jeff Gordon or Jimmie Johnson could have netted you the rights to the entire racing series just three years later" (SPORTS.YAHOO.com, 9/18).
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