Monster Energy agrees on extension to remain NASCAR Cup Series entitlement sponsor

NASCAR and Monster Energy have agreed to an contract extension for Monster to continue in its role as the Cup Series entitlement sponsor.

NASCAR and Monster Energy announced a one-year deal Tuesday that will see the energy drink company extend its entitlement sponsorship of the Cup Series through 2019, though NASCAR’s Chief Operating Officer said it is “highly unlikely” that partnership will go beyond next year.

The exact financial terms of the deal are not known, but the monetary figure is roughly the same as what Monster has paid annually for the past two years serving as entitlement sponsor, multiple sources with direct knowledge of the situation confirmed to SB Nation on the condition of anonymity.

Neither NASCAR nor Monster executives would confirm the specifics of the extension when contacted by SB Nation. But NASCAR COO Steve Phelps told reporters Tuesday that both sides acknowledge that while the partnership is likely to continue in some facet past 2019, it will not be with Monster serving as NASCAR’s chief sponsor.

Phelps said NASCAR is considering bundling its Cup Series entitlement sponsorship into a package that would include its television partners (Fox Sports and NBC Sports) and its 23 different tracks (owned by five different companies) to better serve all parties involved and provide better value.

“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.”

NASCAR, founded in 1948, has had a title sponsor of its premier division since 1971. R.J. Reynolds through its Winston cigarette brand served in that capacity from 1971-2003, with Nextel (later absorbed by Sprint) taking over beginning in 2004 and ended its association following the 2016 season.

”I wouldn’t suggest that the entitlement is not working, but we want to make sure our sport is as easy or easier to do business with,” Phelps said. “Our competitive advantage is that our fans understand the importance of sponsorship and they go out and support our sponsors.

“We just think this is a better model to be able to make sure that sponsors want to stay involved more broadly. ... We feel there is an opportunity to feel more invested in the sport -- and I’m not just talking financially and what they’re paying different entities, but more invested in the sport so they will then turn around and do more activation and feel like this position is an ownership position that they have.”

Monster initially signed a two-year contract with a two-year option with NASCAR to replace Sprint beginning with the 2017 season. That deal called for Monster to pay NASCAR between $20 to 25 million annually, and the energy drink company had to decide by Dec. 31, 2017 whether to exercise its option, though it asked for and was granted multiple extensions.

Eventually Monster and NASCAR were able to agree to terms of a new contract, with the deal finalized Monday that will keep Monster in its current role for another year.

Although Monster will continue paying considerably less than its predecessor, Sprint — the telecommunications company was paying upwards of $50 million annually in the final three years of its contract — the energy drink company’s commercial appeal to the coveted 18-34 demographic is something NASCAR values amidst continuing issues with declining television ratings, stagnant attendance and an aging fan base.

“It’s very difficult to isolate one particular thing versus 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.”

Monster has faced some criticism in its role as Cup Series sponsor. Questions have arisen related to its long-term commitment, marketing activation at some tracks, and how little the energy drink company has spent on television commercials promoting its association with NASCAR — especially compared to Sprint’s high volume during its run as entitlement sponsor from 2004-16.

But the positives of what Monster brings far outweigh the negatives. And as NASCAR adjusts to a shifting sports landscape that has impacted its popularity, NASCAR executives knew going into the marketplace and attempting to secure a replacement for Monster was not going to be an easy process. Nor was the stigma of having to introduce a new entitlement sponsor for the second time in three years.

Many within NASCAR believe its partnership with Monster, initially facilitated by NASCAR CEO and chairman Brian France making a virtual cold call to Monster executives in 2016, will help the sport rebound while also exposing it to a new audience. Monster has enacted several popular marketing campaigns outside of what NASCAR is accustomed to, including MMA fights, stunt motorcycle shows in fan zones at various racetracks, and a post-race concert featuring rapper Machine Gun Kelly.

”It seems to be a happy marriage at this particular point between fans and Monster,” Phelps said. “...The vast majority [of fans] have really embraced it.”