Stewart-Haas Racing filed a $31M "breach of contract lawsuit against Nature's Bakery on Friday, accusing the company of refusing to pay millions of dollars it owes the team to sponsor driver Danica Patrick this season," according to Jenna Fryer of the AP. Nature's Bakery was "scheduled to sponsor at least 20 races this NASCAR season, the second year of a three-year deal to be the primary sponsor for Patrick." The suit claims Nature's Bakery Founder David Marson and CFO Joe Marshall after executing the agreement contacted SHR about "cash flow issues, and asked if payment amounts and deadlines" could be modified on the more than $15M the company owes the team each season. SHR also "accused the company of eventually concocting 'a scheme to avoid further payments' by claiming Patrick had been endorsing competing products and was not using her social media presence enough to promote Nature's Bakery." The suit says that Nature's Bakery "sent a letter to the team on Jan. 19 terminating the sponsorship agreement, and that the company has missed several re-scheduled deadlines to pay." The lawsuit seeks $31.7M, plus interest for the "breach of contract." SHR said that it "wants a court to resolve the matter" (AP, 2/3).
TURNING POINT? Some sources have pointed to the ’16 minority investment by private-equity firm VMG Partners into Nature’s Bakery as a turning point for the deal, as the fig-bar company had previously been solely owned by the Marson family. The suit indicates that VMG Partners, which declined comment for this story, became responsible for large decisions after it made the investment, according to ESPN, and industry observers noted that private equity firms are typically solely interested in boosting a company’s bottom line before flipping it. However, three sources close to Nature’s Bakery said that the company is claiming that it saw no meaningful increase in sales revenue last year. One of those sources said that because of the claimed lack of a revenue jump, the deal was creating issues for the company regardless of any outside factors including new investors. Many in the industry had speculated over the last week and a half that SHR would look for a settlement in bid to avoid litigation, as even though SHR could prevail from a legal perspective, teams view these suits as undesirable for myriad reasons (Adam Stern, Staff Writer).
WHERE TO NOW? USA TODAY's Brant James noted if Nature's Bakery is "out of the equation, Patrick is well short on sponsorship" for the '17 season that kicks off with the Daytona 500 on Feb. 26. James noted the Nevada-based company is "small by comparison to many NASCAR sponsors." Patrick wore a firesuit "adorned with her TaxAct sponsor for her NASCAR media day appearance" last week, prompting "further questions and raised eyebrows" (USATODAY.com, 2/3). James noted there is an expectation that Patrick’s 36-race Cup schedule "would be cobbled together with existing sponsors TaxAct, Aspen Dental and Code 3 Associates expanding their commitments." It would be "expected that TaxAct and Aspen Dental could move to the fore at SpeedWeeks with one taking over the primary sponsorship in the non-points Clash and the other in the season-opening Daytona 500." Aspen Dental originally had been "committed to four races this season, TaxAct and Code 3 Associates three each." It is "unclear how Patrick’s situation will unfold or intertwine with that of new teammate Clint Bowyer." Bowyer has "participated in pre-season production activities in a Mobil 1 uniform" (USATODAY.com, 2/4). ESPN.com's Bob Pockrass noted it is possible that Haas Automation, the company owned by team co-Owner Gene Haas, "could sponsor additional races although it already is on the car for select events for SHR driver Kurt Busch" (ESPN.com, 2/3).
