Should Danica and NASCAR be Nervous?

Should Danica and NASCAR be Nervous?

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Wednesday, 01 March 2017
Mike Harper - SOZ

Buried underneath the controversies of stage racing and Monster Energy girls we find one of NASCAR’s most popular drivers stuck in the middle of a confusing lawsuit.

Without getting into all of the legalities – Stewart-Haas Racing (SHR) sued Nature’s Bakery for $31 million for a breach of their contract. In return, Nature’s Bakery has submitted a counterclaim providing details on why they terminated the contract.

I find those details surrounding the case interesting and somewhat troubling.

First, to keep it simple…Nature’s Bakery fired Danica Patrick and SHR. When you read the reports of the counterclaim as found in an ESPN article published on February 25, 2017, Nature’s Bakery said Danica and SHR didn’t do their job. If Nature’s Bakery kept good documentation and have proof of this allegation, they will easily win this lawsuit.

Breach of contract lawsuits are never fun and can be unpredictable. For me personally, I live every day in corporate America and I’m driven by contracts based on service level goals. In every contract there’s a clause stating if our company doesn’t fulfill our obligations set forth in the agreement, clients can terminate the relationship. To help with this we’ve added a remedy clause – giving us a specific time frame to resolve client issues and if we still can’t resolve the issue, we lose our client. It’s pretty simple.

So what’s happening here? The answer – this is a money play, period. SHR was counting on being paid through the term of the contract, which was three years. And now after one year the contract has been terminated and it financially hurts their company. If they delivered and I mean fully delivered on all aspects of the agreement as SHR stated in a FOX Sports article on February 7, 2017 the judge could make a decision in their favor.

Earlier I said I was troubled – let me explain.

The prospect of SHR losing this suit could have far reaching consequences for not only SHR, but Danica Patrick and NASCAR. When was the last time you heard of a sponsor leaving a NASCAR team for simply off the track management issues? I can’t remember. Most of the time, sponsors change teams or they end up leaving the sport at the end of an agreement. It’s rare a team and driver are fired for not performing off the track – allegedly in this case. The effect could hurt a team’s reputation and ability to secure future sponsorships . It could also bring challenges to the sport by raising a red flag with current and future sponsors – giving them additional leverage with off the track performance goals (especially with social media) they don’t currently enjoy. The consequences should make NASCAR and team owners nervous.

Let’s dig deeper in my troubled mind.

It’s getting ugly. The language and actions by Stewart-Haas Racing, Nature’s Bakery and the media should be concerning to all of us. One side paints a picture that the other couldn’t pay its bills. The accusations are met with cries of being bullied. And some in a very soft NASCAR media interjects by planting seeds in the minds of NASCAR fans against a company that they’ve determined had no means of paying their bills. It’s a game…the media can create a perception because everyone knows perception is reality, right? If we’re honest with ourselves we’d admit – with favoritism comes closed mindedness. Like with most things personal, in this sport we’re guilty of being overly critical of those who stand against our favorite team and drivers – even when our favorite team or drivers are wrong. And sadly those embedded within the sport are aware of this social weakness currently found not only in NASCAR but throughout our country.

Allow me to give you a little flavor. Before the counterclaim was filed by Nature’s Bakery, printed in one story by a major NASCAR news outlet was, “Nature’s Bakery Double Chocolate Brownie Twin Packs sell for less than $3 each at Walmart.com.  With economics like that, it’s hard to fathom exactly how the sponsor could move enough extra product to afford the annual $15 million sponsor tab.”

It’s an amazing statement and one I’m not sure is a fair measurement when vetting a potential sponsor. And honestly, if the above statement is correct you’ve got to ask yourself why did SHR move forward with a three-year deal in the first place?

I won’t claim to know the true intentions of the writer, but the consequences of the statement caused many NASCAR insiders and fans to believe Nature’s Bakery couldn’t pay for their sponsorship.  The counterclaim as detailed by NBC Sports published on February 25, 2017, states Nature’s Bakery “paid over $17 million to SHR in 2016.”  If this is true, we certainly have some trust issues to deal with in our sport.

Nature’s Bakery also detailed their challenges with Danica Patrick. If their claims are true, Danica was rightfully fired. If their claims are true, SHR could not control Danica – which will most certainly give additional ammunition to her critics. If their claims are true, sponsors may take notice and could act to protect themselves from future issues or they could place expectations on social media usage by drivers and teams. The ramifications of losing this suit for SHR could change the landscape of how sponsorship relationships are handled in NASCAR. But for NASCAR and SHR the loss would be survivable.

For Danica, her brand could…and I say could, be hurt. She’s extremely popular and with larger sponsors not needing the same level of engagement as a smaller company, she’ll most likely be fine. But she’s finished inside the top-10 only 4% of the time at NASCAR’s top level causing her to lose some brand leverage – add a damaged reputation from this Nature’s Bakery fiasco and her value could take a hit.

For Nature’s Bakery, if their counterclaim is not accurate – untruthful – it will be devastating.  I don’t know if they had the financial means to continue their sponsorship or not, but if you unfairly accused a company and a person of wrongdoing as they did in this case, not only should they pay the full sponsorship costs, they will most certainly lose the public trust. It’s a recipe for a slow and painful company death.

As a society we should be fair to all parties involved in this lawsuit. NASCAR nation, stay open minded and don’t allow some in the media, favorable to our sport, point you down the wrong path. Hopefully at the end of the day, all parties will sit at the table, enjoy a fig bar together and quietly work it out.

 

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The views and opinions expressed in this column are those of the author (SOZ) and does not necessarily reflect RaceTalkRadio.com or our advertisers.   

10 Comments

  1. Steven says:

    Thanks for an interesting and unbiased article. I feel that Danica’s presence in NASCAR has diminished the sporting aspects of racing. I’ve seen much more talent at my local short track speedway.

  2. Annie says:

    Thanks for a well rounded article, on both sides. I am sure there is a lot on both sides we are not privy too. But as a NASCAR fan(on my way out the door with the idiocy of NASCAR). I for one was shocked given Danica’s poor performance, how a company can dive in with that commitment knowing how bad her stats are and how THANKFULLY most of her BS praise was gone, she has been regaled as to where she should be, zero coverage with the back of the pack.

    But given her social media push, Danica seems to only promote DANCIA. Only Danica!!!!! Other drivers give it their all it seems, and are grateful, to promote and work for their sponsor. She from a lay persons viewpoint does not seem to do that. How do I know, we hear about these things, I don’t hear or see zip about her! I gotta say I see no gratefulness with her, no humility, no willing to try and better herself as a driver, no dropping back to the minors to get better…no sponsor RAH RAH RAH..just promotion of her…DANICA!

    I do take offense to the “popular” term with anything, to me it implies an honor, something earned. She hasn’t earned a thing, maybe they should thank her parents for her being born female…other than that..nothing going on that warrants the attention or dollars funneled to her. Hey power to her, she mastered the art of the hustle, but do not confuse that with achievement or earned accolades..She and the other hucksters are a dime a dozen.

    Call me a hater if you will. No I do not like her, but I am also practical as to what my eyes see despite what the booth tries to sell us, and other things. If you strip away the faux narrative of a “woman” for the sake of a different anatomy. it makes logical sense..when you strip away all that societal “bs” that they want you to believe means something and it does not..meaning because she is a woman in a race car at the Cup level..she is automatically successful, not so. Other woman have been forgotten because she came along, but the story is..they succeeded far better with less. Success equals results…no matter who you are….and she has not achieved those goals..not one bit..not even close.

    And I am a woman…..

    I hope if Nature’s Bakery has a case, they win it!!!!!

  3. keith says:

    I think nascar has priced itself out of a job if you ask me

  4. Joe Jacalone says:

    Keith’s statement says it all. NASCAR has been operating like our government has in the past. Happy to spend money like a drunken sailor that is not theirs. There is no reason that it should take 15 million dollars plus a year to run a car built from a pile of steel tubing. The cars are fundamentally no different than the late models we see run on local short tracks. But, NASCAR and the teams have been happy to take the sponsors money in the boom times to add airplanes, personnel, and many other perks that just aren’t necessary. The ARCA race at Daytona was a perfect example of this for me. I walked thru the garage shortly before the race, and some of the cars didn’t look as nice up close as some I see on Saturday nights at New Smyrna Speedway. Many were towed in by small enclosed tag along trailers. But the show was just as entertaining as many I have seen at Daytona. AS far as DP goes, her record speaks for itself. It is abysmal considering the money wasted on her. You do have to ask yourself, “Why doesn’t she run some lower tier races to learn?” I think Annie touched on it above. She is not here for that. She is here to grab as much money as she can for her and her team.

  5. T-man says:

    Wow! A well written, thoughtful article on this subject is hard to find. Thank you! And a hand for those commenting, too. Insightful all.

    • Howard W says:

      yes the above articles pretty much cover it all.. The talking heads in the booth very often do not do the drivers and (some)teams any justice.. They are presently at it again putting undue pressure on a young driver trying to develop him into another wonder boy .. They can not make him great , but they can most definitively can harm his self respect every time he is unable to live up to their hype.just my thoughts.. older race fan

  6. Bill B says:

    I agree with some other commenters. If the media and NASCAR hadn’t continually hyped Danica and treat(ed) her like a star, fans would have been more open minded. The fact that they keep treating her like a top tiered star, despite a lack of success on the track, raises the ire of anyone that isn’t willing to drink the koolaid and calls a spade a spade.

    On the other hand, I get why there continues to be a lot of coverage as evidenced by the number of comments (most negative) on any article about her. The fact that she keeps being covered like she’s a star when her on track stats clearly suck, creates controversy and controversy gets people to click on the link. Clearly a self perpetuating situation… the more people click on the link, the more stories, the more controversy, the more negativity.

    So if people started ignoring articles about her would the number of articles decrease, and would she eventually stop being treated like a star? I doubt it because there is another dynamic at work here. NASCAR wants to flaunt diversity any way they can for the positive publicity it garners. So they are using her in the same way she is using them and the integrity of the sport (if there is any left) suffers as a result.

  7. John says:

    I predict that this will be settled before going to trial. But if it does go to trial, then the entire opaque world of team sponsorship and driver personal service contract agreements will be entered into public record. If this happens, it will not be good for NASCAR or the other teams trying to make/keep sponsorship deals.

    Who’s to blame here? I think it is shared: Nature’s Bakery should have known up front that committing $15+ million annually for sponsorship from their company’s gross annual sales of (a reported) $500M would be a recipe for financial trouble. Also, I noticed very little in the way of off-track activation of the sponsorship by Nature’s Bakery, which typically requires an additional 50% to 100%, above of the team/driver sponsorship outlay. However, SHR shares the blame by overselling the value of the exposure Nature’s Bakery would get from their team and Danica. Plus, SHR’s lawyers should have done better due diligence before making this sponsorship agreement in the first place.

    Then there is the sticky issue of on-track performance. Did Nature’s Bakery’s slow paying of the sponsorship installments make the #10 SHR team struggle in 2016, or did SHR promise better-than-2015 #10 team performance as a result of the funding? No matter, because these suits may cause future team/sponsor contracts to be laden with annual, minimum performance clauses, letting sponsors walk early on teams that don’t run up to expectations.

    This will be messy.

  8. TheNASCARJeff says:

    The Hancher rocing/TylerJet Racing/Tobasco fiasco of the 1990’s come to mind…

    Tobasco entered the 1998 season with Bob Hancher Racing and Todd Bodine in Pontiacs, the team failed to qualify for several races and when Darrell Waltrip shut his team down somehow the 35 Tobasco car was sold to Tim Beverly who had also bought Waltrip’s Darwal Racing.

    Tobasco was not thrilled and the team owner, driver and a sheet metal changes to Chevrolet and opted out of the contract buy August and several lawsuits begun. To this day Tobasco, Bob Hancher and Tim Beverly have not been seen in NASCAR. DW ended up driving for DEI when Steve Park got hurt.

    So this isnt new and I am surprised we havent seen more of it with the amount of money being spent and paid in the sport. With Danica’s performance or lack thereof I could be a point of interst if there is a clause in the contract.

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