Motorsports Sponsor Spend Sees Slowdown But Category Remains Revved To Hit $5.7B
Thursday, February 16, 2017 at 10:03PM in Auto Racing, Formula 1, IEG, Monster Energy, Nascar, sponsorships, sports marketing

By Barry Janoff

February 16, 2017: With the 2017 Nascar season about to start at the Daytona 500, and Formula 1 just weeks behind, brands, marketers, racing teams and drivers are gearing up activation and angling for position among fans and consumers.

In what has been several months of big changes — including Monster Energy taking over for Sprint as title sponsor for the lead Nascar Cup Series and Liberty Media acquiring Formula 1 — sponsors are still spending on motorsports activation but at a slower rate than predicted.

Global spending on motorsports sanctioning bodies, teams and tracks is expected to total $5.75 billion in 2017, up 3.1% from $5.58 billion in 2016, but behind the projected 4.5% increase in overall global sponsorship spending, according to research and consulting firm IEG, Chicago.

The moves by Monster Energy and Liberty Media could jump-start spending in the category.

"Motorsports has proven to be a highly effective marketing platform," according to William Chipps, senior editor for the 2017 IEG Motorsports Sponsorship Report. "But concerns over the shifting political and economic climate globally could weigh on big-ticket sponsorship expenditures."

When Monster Energy unveiled its multi-year deal, it became only the fourth company in Nascar history to have title sponsorship for the circuit’s top-tier race series.

The brand also obtained status as the official energy drink for Nascar and will hold title sponsorship to the Nascar All-Star Race.

Sprint, which had been title sponsor since 2008, was paying about $50 million annually, and supported with an undisclosed amount of marketing, according to industry analysts. The Monster Energy pact was viewed as being lower in dollars, but high-profile in terms of potential.

"They're going to bring their brand, their excitement, their energy to this partnership, and the fans are going to be the winners," said Steve Phelps, evp-chief global sales and marketing officer for Nascar. "It's all about engaging the fans and giving the fans unique, fun experiences, whether at the race track or through different mediums, through social, digital, content," said Phelps.

This past September, Liberty Media acquired Formula 1 for $4.4 billion in cash, stock and convertible debt according to industry analysts and investors. Formula 1 has been owned by private equity firm CVC Capital.

Formula 1 sponsors include Heineken, financial firm UBS, Rolex, Pirelli, Puma and Tata Communications. Formula 1 said more than 200 companies are involved with its races.

The 2017 season is scheduled to begin in March with the Australian Grand Prix.

Although IEG said that "growth remains unspectacular," sponsorship spend in motorsports has increased annually over the past several years.

Worldwide spend was $5.58 billion in 2016, $5.43 billion in 2015, $5.26 billion in 2014, $5.12 billion in 2013, $4.97 billion in 2012 and $3.51 billion in 2011, per IEG.

By comparison, worldwide sponsorship spend on soccer hit a record $60.2 billion last year, golf topped $1.82 billion, the NFL came in at $1.25 billion in 2016, tennis sponsor was $801 million, the NBA hit $799 million, MLB reached $778 million and the NHL was at $477 million.

Among deals at the sanctioning body, team and track levels, Toyota Motor North America Inc. was the biggest spender in Nascar during the 2016 season. The company spent 7.6 times more on the sport than the average of all Nascar sponsors.

When Nature’s Bakery opted not to remain as lead sponsor for Danica Patrick for the final two years of their four-year deal, Patrick and Stewart-Haas Racing sponsor Aspen Dental expanded its role, taking on a lead sponsor spot for Patrick’s No. 10 car for upward of 20 races during the upcoming Monster Energy Nascar Cup Series season.

Aspen Dental has been a partner of SHR since 2012 and aligned with Patrick since 2014.  The No. 10 Aspen Dental Ford Fusion will debut in the season-opening Daytona 500 Feb. 26 at Daytona (Fla.) International Speedway.

Toyota spends 7.6 times more on Nascar than the average of all sponsors.

The most-active companies here include Sprint (7.5, but no longer title sponsor for the Cup Series), Chevrolet (7.3), Lowe’s (4.3), Shell (3.6), Pennzoil (3.6), Target (3.6), Mars (3.3), Nature’s Bakery (3), Ford (2.9), FedEx (2.8), Napa (2.7), Menards (2.7), Advocate 92.7) and Caterpillar (spends 2.5 times more on Nascar than the average of all sponsors).

"Concerns over the shifting political and economic climate globally could weigh on big-ticket motorsports sponsorship expenditures."

Construction materials, soft drink, food, telecommunications and chemicals are the top five most active non-endemic categories sponsoring Nascar.

Automobile manufacturers are 10.1 times more likely to sponsor Nascar than the average of all sponsors, according to IEG.

The top categories also include aftermarket (4.6), telecom (4.1), construction materials (3.8(, soft drinks (3.3), food (3.2), retail-auto parts (2.5), chemical (2.4), alcoholic beverages (2.3), professional services (1.9), sports footwear, apparel and equipment (1.7), letter and gaming (1.6), build and home (1.6), waste management (1.6), specialty stores (1.5), motor oil and lubricants (1.5) and insurance (1.3 times more likely to sponsor Nascar than the average of all sponsors).

There is tremendous distance between Red Bull and other sponsors in Formula 1. The energy drink company spent 26.1 times more on the motorsports series than the average of all F1 sponsors.

Marlboro is the second most active sponsor (17.9), Pirelli (17.4), Ferrari (16.3), Honda (13), UBS (8), Petronas (7.5), Santander (6.8), Emirates Air (6.5), Heineken (6.5), Shell (5.9), Infiniti (5.1), Mobil 1 (4.9), SAP (4.9) and DHL (spent 4.9 times more on the motorsports series than the average of all F1 sponsors).

Automotive is the most active category sponsoring F1. Automobile manufacturers are 4.6 times more likely to sponsor Formula 1 than the average of all categories, according to the 2017 IEG Motorsports Sponsorship Report.

Sports apparel and equipment is the most active non-endemic category sponsoring F1, 4.1 times more likely to sponsor Formula 1 than the average of all categories.

They are followed by business technology (3.1), tires (2.8), alcoholic beverages (2.6), telecom (2.4), automotive-aftermarket 92), watches (2), construction 91.7), IT software (1.7), consumer electronics 91.5) and lifestyle apparel (1.5).

Top category spenders in F1 led by automotive (Automotive brands spend 6.4 times more on Formula 1 than the average category), non-alcoholic beverages (3.4), tobacco (3.3), tires (3.2), fuel (3), business technology (2), airline (1.8), mailing and shipping ((1.6) and financial services (1.5).

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