NASCAR discussing tiered sponsorship model
NASCAR has begun sharing provisional plans for its new sponsorship model with potential partners and industry stakeholders, according to sources, ahead of its possible implementation in 2020.
The model is still being developed and the proposed structure could change. But it’s being envisioned as having five tiers, with a top tier that would have around four to six brands, which would receive exclusivity at the league, track and potentially media-partner levels.
While NASCAR vaguely outlined the model to the public in recent months, sources said the sanctioning body has begun briefing potential sponsors plus key industry executives from teams, tracks, agencies and media partners in recent weeks. It’s unclear whether NASCAR divulged pricing during its presentations, but sources said they envision that top-tier slots would go for around $10 million annually.
It is a complicated matrix to work through due to the sheer number of partners in the sport and varying business terms.
“It’s been a very encouraging process,” said Daryl Wolfe, NASCAR’s executive vice president and chief sales and partnership officer, who has been leading the talks. “We’re still early in the process, but I feel good about the progress being made.”
How the sanctioning body would divide current official sponsors into different categories under a new model is still not finalized, but the plan is to move away from one title sponsor in place of a tiered system like the NCAA’s, where the top-tier partners acquire rights to the league’s top assets, including possibly race title sponsorships and camera-visible signage, while lower-tier partners would get potentially less visible or valuable assets.
NASCAR has more than 50 official sponsors that span several different categories from title sponsorship partners to official partners, green partners and performance partners. The move represents a heavy lift for NASCAR, and Wolfe conceded that it has been complicated to try to work through how the sanctioning body would move existing sponsors with deals expiring at various times into new categories.
What's In A Name?
Title sponsors of NASCAR’s three national touring series through the years
■ NASCAR Winston Cup Grand National Division (1971-85)
■ NASCAR Winston Cup Series (1986-2003)
■ NASCAR Nextel Cup Series (2004-07)
■ NASCAR Sprint Cup Series (2008-16)
■ Monster Energy NASCAR Cup Series (2017-present)
■ NASCAR Budweiser Late Model Sportsman Series (1982-83)
■ NASCAR Busch Grand National Series (1984-2003)
■ NASCAR Busch Series (2004-07)
■ NASCAR Nationwide Series (2008-14)
■ NASCAR Xfinity Series (2015-present)
■ NASCAR Craftsman Truck Series (1996-2008)
■ NASCAR Camping World Truck Series (2009-present)
■ NASCAR Gander Outdoors Truck Series (Starting in 2019)
Source: SportsBusiness Journal research
A $10 million asking price for a top-tier slot compares to Monster Energy paying $20 million annually for its premier series title sponsorship. So the belief is the series will be able to generate more sponsorship revenue from multiple levels of partners rather than having one title partner and subsequent series sponsors.
“It is a complicated matrix to work through due to the sheer number of partners in the sport and varying business terms,” Wolfe said. He expects a new model will be rolled out across a series of phases.
It’s unclear how many companies to which NASCAR has pitched the new model. But several executives in the sport pegged Coca-Cola — one of the most visible partners in the sport — as a prime candidate to land one of the top-tier spots. Coke in January extended its partnership with NASCAR as the sport’s official soft drink through 2023 in a deal that also includes International Speedway Corp. venues, while its longtime deal with fellow major track operator Speedway Motorsports Inc. lasts through 2020.
Other NASCAR sponsors that have been mentioned as potential top-tier candidates include heavy spenders Monster, Sunoco and Mobil 1.
Jesse Harris, a former salesman for ISC and IndyCar who now serves as a consultant for entities including Front Row Motorsports, thinks brands will find the new model alluring if constructed correctly. Harris noted that NASCAR executives are likely looking to the new injector model used at ISC-owned Daytona International Speedway as a guide to their new system. Sponsors were attracted to the broad, integrated asset that Daytona created during its renovation.
“Any brand that has been in the sport at a high level for five years or more, yes, [they’re going to be receptive to the new model],” Harris said when told of NASCAR’s plans. “The Daytona injector model really worked, and I think that’s what they’re reproducing.”
There has been some concern from teams about NASCAR creating a new model that could see it aggressively court new sponsors, at a time when teams are having to work even harder to land that revenue stream, which accounts for about 75 percent of their annual revenue. But NASCAR has said that team assets could be included as it develops its sponsorship model, and a source said that Wolfe recently gave an update on the system at a Team Owner Council meeting.
When NASCAR Chief Operating Officer Steve Phelps first spoke about the deal in April, he indicated it wasn’t out of the question that NASCAR could still decide to stick with the current model, a notion reinforced by sources who confirmed that the sanctioning body would be content with the status quo if a company offered it enough money and activation intent to be the sole top-tier partner.
However, that scenario is seen as increasingly unlikely.
Winston was the premier series title sponsor for 33 years, and Nextel-Sprint held the role for 13 years, but Monster’s deal looks set to end after just three years, and there’s a thought that the asset is getting diluted with every further change.
Monster Energy, whose $20 million annual deal was set to expire after this year, renewed in April with NASCAR for one more year through 2019. Phelps revealed at the time that series executives were considering switching to a new model entirely after the Monster deal expires.
Any formal unveiling of the new system is unlikely until at least next year.
“By ’20, I think they can do it — landing four to six partners by then is very reasonable,” Harris said. “It sounds like a big number, but I really believe the dollars are out there. It’s just about, ‘What kind of deal are you going to cut?’”