Examining what’s next for NASCAR after Monster deal ends in 2019

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CHARLOTTE, North Carolina — NASCAR announced Tuesday that Monster Energy will return as Cup Series sponsor through the 2019 season but is not expected to be in that role after that.

So what does that all mean?

Let us explain.

What happened Tuesday?

Monster Energy’s contract to be the Cup sponsor was set to end after the 2018 season. There was an option for Monster Energy to extend the deal. Monster was to have notified NASCAR before Jan. 1 of its decision. Instead, Monster asked for an extension. Both sides agreed to extend the sponsorship through the 2019 season only.

Why only a one-year extension?

Steve Phelps, NASCAR’s chief operating officer, said both sides wanted it that way.

“For Monster, I think it would be highly unlikely that they would come back,’’ Phelps said. “Both NASCAR and Monster, I believe, are on the same page on that. I wouldn’t say there is anything there hard and fast, but it is highly unlikely that they would return or we would have them return. That is not one-sided. That’s a decision that has been made by both companies. It will give us an opportunity to explore what this new (sponsorship) model looks like.’’

Wait, what is this new sponsorship model?

NASCAR wants to change the structure in how sponsorship would look. The plan would be to bundle the sanctioning body, tracks and media partners instead of having to do separate deals with each.

After NASCAR agreed to a deal with Monster Energy in December 2016, Monster then had to work out agreements with the tracks for signage and such. That took additional time.

Under NASCAR’s new sponsorship model, that shouldn’t be as big an issue.

“What we’re talking about here,” Phelps said, “is looking at combining assets and creating a new sponsorship model.’’

Such a model, though, would not include teams.

“It’s a little more difficult given the number of entities that are out there that are teams to make sure all the teams are participating in one fashion,’’ Phelps said.

So what will the name of the series be after 2019?

Good chance there will be no sponsor name tied to the Cup Series. That way it can be called the NASCAR Cup Series or NASCAR Premier Series or whatever NASCAR chooses to call.

One benefit is that fans don’t have to go through name changes as they have in going from Nextel Cup to Sprint Cup to Monster Energy Cup.

The Premier League did a similar thing in 2016 when Barclays did not renew its deal with the soccer league. There’s no sponsor of the NBA, NFL, NHL and Major League Baseball, but all those leagues have categories of sponsors. That’s the approach NASCAR wants to take.

What if the new model doesn’t work?

“We want to keep our options open,” Phelps said. “There’s some benefit to trying to go all in on something. I think the stakeholders will be in a good place. If the sponsors come back and say, ‘you know what, we’re not sure this is the best avenue to partner with this sport,’ then we’ll have to pivot and go in a different direction. Could we go back to an entitlement model for our top series? We could. Again, I think that’s not our intention. I don’t think we’ll get there, but we certainly want to keep our options open.’’

How does all this impact the Xfinity Series and Camping World Truck Series?

It does not for now. Xfinity signed a 10-year deal to be the entitlement sponsor of that series through the 2024 season. Camping World has a deal in place to be the Truck Series sponsor through 2022.

What happens with Monster Energy after 2019?

Phelps said NASCAR expects Monster Energy to remain in the sport. Monster Energy was aligned with drivers and teams before becoming series sponsor. That avenue would remain for Monster if it chose to do so.

A Monster Energy spokesperson told the Sports Business Journal that the company “wants to continue to be a part of the sport one way or the other.”

What about the sport using a sponsor to build a younger fan base? What happens now?

NASCAR continues to tout efforts to reach a younger fan base. That includes, among other things, children 12 and younger getting in free for Xfinity and Camping World Truck Series races.

Phelps said it was challenging to say if one thing over another was the overriding factor in reaching a younger demographic.

“It’s very difficult to isolate one particular thing vs. another in terms of it being the cause of something,’’ Phelps said. “There are other things that this industry has done over the past couple of years to increase the Millennial audience of NASCAR. That’s a journey we’re going to continue on.

“We have to continue to make sure our content is as strong as it can be that we’re pushing through the digital and social channels. We need to make sure that we continue to cater to kids and to make sure that our Millennial audience is happy. We have to continue the gains we’ve made with our Hispanic fans, which has been significant over the last three years. That journey doesn’t end. And, by the way, we have to make sure that we’re nurturing the existing fan base that we’ve had for many, many years. They’re incredibly important.’’

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