Sponsorship Disputes Are Never Good

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For those that hate NASCAR and come here strictly for IndyCar news and views, I apologize for writing the second NASCAR-related post in as many days. But something caught my eye over the weekend that got me to thinking about how it relates to IndyCar and all motorsports. No, it wasn’t yesterday’s crash-filled Daytona 500 won by 2014 Indianapolis 500 starter Kurt Busch. Instead it involved former IndyCar driver Danica Patrick, who finished thirty-third yesterday after getting involved in a crash while spending most of the day in the Top-Ten.

I’ve said this before, but I can’t count on people remembering or reading everything I post here – I am not a Danica fan, nor a Danica hater. I’m one of the few people that is really sort of ambivalent towards her. During her time in IndyCar, I considered her an average racer who was a very good qualifier. There’s a difference.

Her IndyCar career was very inconsistent. She seemed to excel on some days with virtual no-shows on others. There was no real statistical trend toward what type of track was her best. Her rookie year, she finished fourth at Indianapolis but finished eighteenth and twentieth at Fontana and Michigan respectively. Her first year at Andretti-Green Racing in 2007, she finished eleventh at Motegi, Watkins Glen and Chicagoland, but finished second at Belle Isle and third at Texas and Nashville. It’s sort of hard to read any trend into those results.

While some fans adored her, others despised her – sometimes, both for the wrong reasons.

My one negative personal experience with Danica occurred on a practice day at Barber in 2010. John McLallen, my One Take Only cohort, and I were on site that day. Being a Friday, there were a lot of different groups present as well – many being special-needs kids. We were headed to the pit area for the IndyCar practice that was about to start. So were the drivers, along with Danica who happened to be walking next to us with a couple of her handlers.

One of the special-needs kids chased after her yelling her name and wanting an autograph. She told her handlers to speed up so she could ignore him. He caught up with her anyway, tugging at the leg of her firesuit. She whipped around, snatched the item out of his hand and scribbled her name before throwing it back to him in frustration without saying a word. The kid didn’t care. He beamed with delight at his new prize as Danica stomped off. John looked at me said “That’s the worst thing I’ve ever seen”. Being the parent of a special-needs daughter myself, I couldn’t have agreed more.

I couldn’t help but think back to the photo-ops that showed a more compassionate Danica bending down and hugging them. I tried to write off the episode at Barber as her simply having a very bad day. But seven years later, it sticks with me as if it happened yesterday.

That being said, I’m still not a Danica hater.

That brings us to what is currently happening with her sponsorship situation in NASCAR. Most are aware that Danica’s NASCAR team, Stewart-Haas Racing (SHR), is suing her last year’s sponsor, Nature’s Bakery for $31 million. Last year was the first of a three-year deal to be the primary sponsor for Patrick’s car at roughly $15.5 million per year. It should be noted that Nature’s Bakery is a relatively tiny company compared to most of the more well-known NASCAR sponsors.

At some point last season, Nature’s Bakery began asking for relief from its obligations and SHR complied. Just weeks before yesterday’s Daytona 500, Nature’s Bakery severed the deal, leaving Patrick’s car unsponsored for twenty races this season before Aspen Dental stepped up its sponsorship – including yesterday’s race.

This past weekend, we learned that Nature’s Bakery has counter-sued Stewart-Haas claiming that they “could not control” what Danica was posting on social media, including what they claim was Danica promoting rival products on Instagram. Nature’s Bakery makes fig bars and brownies, which Danica reportedly ate on a regular basis before Nature’s Bakery became a sponsor.

The counter-suit claims that Danica regularly promoted other products on Instagram; including terribly disgusting sounding items such as protein powders, home-made energy balls and a spinach smoothie. To even type out the words spinach smoothie makes me feel just a little queasy.

Nature’s Bakery contends that this was akin to “…as if Michael Jordan decided to wear Adidas while being paid by Nike”. This is where Nature’s Bakery lost me. To me, a more accurate example would be Michael Jordan advocating the wearing of shoes while being paid by Nike. Unless Nature’s Bakery makes a spinach smoothie or protein powder, which is not indicated on their website – I don’t see that they have a leg to stand on.

Is Danica not allowed to mention any type of food on social media? Since Graham Rahal is sponsored by Steak ‘n Shake, is he not allowed to ever say he likes pizza? I could see him not being able to acknowledge that he went to Wendy’s or Denny’s, but I think most people understand he would not eat Steak ‘n Shake for every meal. Maybe I don’t think like a sponsor, but I think a little common sense needs to come into play.

In my opinion, which doesn’t count for much – I think Nature’s Bakery has bitten off more than it can chew, and they didn’t want to admit it until early into the deal. They say they were expecting a quadruple return on their investment. Danica claims they “liked” most of her Instagram posts and never complained about her endorsements of other products until they stopped paying.

However this turns out, this whole situation is not good for motorsports. Whenever sponsors and teams sue each other – everyone in racing loses. Sponsorship is the life’s blood of motorsports – plain and simple. Without healthy sponsorship relationships, there is no racing.

In the early nineties, NASCAR and IndyCar were flush with sponsorships from beer, tobacco and oil companies. Budweiser and Miller had a major presence in both series. RJ Reynolds was the decades-long title sponsor in NASCAR with their Winston brand. That sponsorship prevented any rival tobacco company from entering NASCAR, so Philip Morris poured their money into IndyCar through Marlboro. Pennzoil, Valvoline and Texaco-Havoline were found on cars on top cars in both series.

In the early 2000’s, that changed. Winston Cup became the NEXTEL Cup. Marlboro signage went away before disappearing altogether. Oil companies dropped out also. Suddenly, top teams in both series had to adapt to a revolving sponsorship philosophy – something that had been previously reserved for only the bottom dwellers in each series.

Costs were rising and sponsorships were becoming tougher and tougher to find. It’s still that way today. Major corporations are finding it more and more difficult to justify spending in excess of $10 million per season to have their logo on a car that may or may not be seen by their target audience.

Yes there are success stories. Do you think NAPA was happy that they took a chance and sponsored Alexander Rossi for last year’s Indianapolis 500? Apparently so, because they’ve upped their involvement for several races this season including this year’s Indianapolis 500. But they still haven’t jumped in for the entire season. I’d say Steak ‘n Shake is pleased with their Rahal deal, but they too have balked for more than a handful of races.

But for every one of those deals is a Nature’s Bakery deal. It isn’t clear where they got the impression that they would get a return of four times their investment. Did SHR show them how this would happen, or was it just some wishful thinking on their part?

Regardless, now that all this is unfolding in the very public eye – it’s another example that a company can use to justify saying no to a team seeking sponsorship. Things were tough enough. This will just make it tougher.

My personal feeling is that Danica Patrick and Stewart-Haas Racing are getting a raw deal. In my opinion, the only thing they are guilty of is striking a deal with a company that clearly did not have the resources to sustain it.

I am admittedly biased, but I do think motorsports sponsorships can work out when both sides do their due diligence properly. The team should investigate the financial health and stability of the company they are about to do business with; but the onus is on the company to do some major research to make sure they are reaching their targeted demographic. NAPA and Steak ‘n Shake are probably reaching theirs. Nature’s Bakery has probably missed the mark. I’m just not sure how many NASCAR fans are keeping a box of fig bars in their cabinets.

But I do know one thing. I’m siding with Danica in this dispute. If I was ever inclined to eat a fig bar, I would make sure it didn’t come from Nature’s Bakery. But like I said in Friday’s post – this dispute cannot be good for motorsports.

George Phillips

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10 Responses to “Sponsorship Disputes Are Never Good”

  1. Great subject George, my question is with Andretti Autosports and The HHGregg sponsorship. Allegedly HHGREGG is filing for bankruptcy next month. Were they paid up front? It will be interesting.

  2. Bruce Waine Says:

    NAPA & Herta Motorsport………. I seem to recall reading (following the 2016 Indy 500 race completion) that the 2016 INDY 500 NAPA sponsorship for Rossi was sourced from only a local (to Indianapolis area) level and initially was just a one-off for the 2016 INDY 500.

    Following Rossi’s 2016 INDY 500 win & international exposure of the NAPA brand, the NAPA national brand then stepped forward with sponsorship …………………….

    Whereas, Steak & Shake are a regional brand and understandably would prefer to and rightfully so are investing in those markets (race venues) within those regions where their restaurants are located.

    Based upon what little factual information we know and what has been released, it appears that any sponsor generally develops a marketing perspective based upon sound/realistic data prior to signing on the dotted line.

    On the other side of the coin (or tire as you prefer) a race team does not dupe a sponsor or sponsors who provides for the very existence of said race team…………

  3. From what I’ve read, Nature’s Bakery says SHR never revealed Danica had a personal services contract with Six Star Pro Nutrition that has a protein bar that they feel is a competitor to their product. I suppose a protein bar could be used as “food on the go” like their fig bars. They also claim Danica didn’t show up much with a fig bar in her hand during their sponsored races though she often had a bottle of Coke with her. Very few mentions on her Twitter or Instagram. They also claim that SHR said they’d get a 4 times return on their investment. As well help them with guidance on making the most of this sponsorship as Nature’s Bakery is a relatively small company without experience in this sort of thing.

    Whether any or all of those things are true, I do not know. I do think that Nature’s Bakery bit off more than they could chew. It’s a bit of a mess.

  4. I also meant to mention that I’ve read SHR repeatedly questioned Nature’s Bakery’s ability to commit to such a large sponsorship given the relatively small size of the company. If true, then SHR put themselves in a bad position. If false, they still put themselves in a bad position.

    Don’t think I can give a pass to either side on this one.

  5. My son is a baker. “Cressspringbakery.com”. Blessed are the bakers, so I will side with the bakery in this matter.

  6. billytheskink Says:

    Since the Nature’s Bakery-SHR relationship went south so soon before the season, it will be interesting to see how often we will still see Danica in Nature’s Bakery colors in ads, merchandise, and promo items.
    – During the Daytona 500, she appeared in a Coca-Cola ad wearing the white-and-blue firesuit but with the Nature’s Bakery text digitally removed.
    – Also, a cardboard cutout of her in the Nature’s Bakery firesuit appeared in a regionally-aired Texas Motor Speedway ticket ad.
    – At the NASCAR online store, you can still buy 2017 shirts, hats, and die-casts with Nature’s Bakery on them… and not in the clearance section.

    From my view, it looks like Nature’s Bakery is looking for excuses to get out of a deal that they really can’t cover. I have not seen the contracts themselves, so my view doesn’t likely mean much. Still, it seems like most of the things they seem to be hitting SHR and Danica on could have been resolved without trying to kill the sponsorship.

    Despite this, SHR is, at the very least, in a much better place than some of the Indycar teams that have seen sponsors refuse to pay over the years. See Pacific Coast Motorsports-Mexico City, Sarah Fisher-Gravity Entertainment falsely claiming to represent RESQ, and Bryan Herta-Integritee Energee. It is such a miserable situation to find yourself in as a team owner, I’m sure.

  7. My experience with observing Danica at the Milwaukee Mile was always a positive impression. She always took the time to spend with her young girl fans in their little Danica suits. IndyCar needs some women drivers in the series. That 15 second YouTube video of Danica taking the lead at the 2005 Indy500 is the loudest sustained cheer I have ever heard at any sporting event bar none.

  8. I voted “other,” because it would make me physically ill to click that “I side with Danica.” I do side with Stewart-Haas…but at the same time, they are not free from accountability. As you pointed out, they have to be responsible for looking into a company that they get into business with. Both parties have to sign the contract, after all.

  9. I’m not a NASCAR regular, and was undecided, but leaning towards the team when this story broke. Then the “4x return on investment” sentence appeared, and now I’m on the bakery’s side.

    Yes, they are in breach of contract, but the scenario is clear to me now — Go Daddy pulls out, the team is wildly brainstorming how to replace that money. They see her eating an energy bar that she paid for one day, then beat down their door carrying a bunch of statistics on how many social media followers and female fans she has, and promises that the bakery will have to build new factories if only x% of those women start buying their product once they see Danica pimping it.

    Yes, they bit off more than they could chew, but what waitress recommended that huge platter? The courts should just dismiss both cases and let everyone walk away upset, but none the richer or poorer.

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