Speaking with an analyst during his company’s most recent earnings report, Monster Energy chief executive Rodney Sacks was asked about where he planned to market Monster’s new “Mutant Super Soda” drink. Sacks noted plans for the Vans Warped Tour music festival and Feld Entertainment’s Monster Jam truck series.
Absent from his answer was NASCAR, America’s largest motorsports property and Monster’s likely largest-ever series title sponsorship.
The lack of a mention of NASCAR likely wasn’t an oversight. Instead, according to industry sources, Monster can’t market Mutant with its title assets under the terms of its NASCAR deal because the drink is classified as a soda, a category controlled by Coca-Cola. Monster does have a team sponsorship with Stewart-Haas Racing, where it could market the drink.
The situation reveals an example of the tricky navigating Monster faces in NASCAR relative to some of the other smaller sports properties it sponsors. While the sport is seeing an unprecedented level of collaboration, NASCAR remains unlike those other sports properties because the sanctioning body owns neither teams nor venues.
“Our other properties didn’t really have an ecosystem where the tracks are separate from the series, and of course they all have teams, but really it’s different than anything we have,” Mitch Covington, Monster’s vice president of sports marketing, said this month. “I don’t want to say it’s worse or better because as with anything there’s some great things about it and some things you don’t like, but it’s just different than the other series that you title. Because in those, you deal with the promoter and they control the races totally in their series, as compared to NASCAR where … the tracks themselves play a much bigger role.”
Monster’s first-quarter earnings —- the first fiscal quarter since the title sponsorship started — were “inline with expectations” and “better than feared,” according to a note from investment firm Stifel. Monster’s net sales increased about 9 percent, from $680.2 million to $742.1 million, while net income for the first quarter also increased about 9 percent, from $163.9 million to $178 million. That is likely to be taken as a positive for NASCAR, which stands to benefit if Monster’s growth continues unabated. And the company and NASCAR have both said they are happy with the start of its deal overall, as Monster has slowly started introducing new activation elements.
Steve Phelps, NASCAR’s executive vice president and chief global sales and marketing officer, noted that since Monster isn’t working with an outside consulting agency on the partnership, the sanctioning body has been able to step in and offer more guidance, which he thinks has helped with the learning curve.
Phelps added that on top of Monster’s business-to-business deal it signed with grocery store giant Kroger leveraging assets from the title deal, Monster has had a number of similar B2B wins with convenience stores. For example, the company is working with Pocono Raceway to offer free admission on Friday of the upcoming race weekend if fans bring a Monster can, and NASCAR noted that 500 point-of-sale displays in stores in Pennsylvania and New York tout the promotion.
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A promotion with Pocono offers fans free Friday admission for bringing a Monster can.
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Still, another example of the company getting used to the sport came during last weekend’s Coca-Cola 600 at Charlotte Motor Speedway, where Monster had a reduced activation presence as part of an agreement with Coke. Industry sources have said that some executives at Coke consider Monster a competitor, even though Coke owns a 17 percent stake in the company.
Whether the move came through mutual agreement or Coke took special action over a perceived competitor could not be determined. Sources say Monster was ultimately comfortable with the arrangement because it did not feel it needed to activate heavily at the same track two weeks in a row (the Monster Energy NASCAR All-Star Race was held at the track the previous week). But a source said that Coke never asked Sprint to dial back its activation during its 13-year run as title sponsor, indicating that Coke may be taking special action since the sport’s new title sponsor is a fellow beverage company.
Covington said Monster is still negotiating track deals in NASCAR, though the season is about a third of the way through. It’s the type of situation expected considering Monster signed the $20 million annual deal only about two and a half months before the start of the NASCAR season.
“Is it more work [than the other properties Monster sponsors]? Yeah, because you have that many more people to deal with. Is it different than we expected? Not really,” Covington said. “It’s just a lot more deals to be made.”
