News Analysis: 5-hour Energy leaving NASCAR, Furniture Row

What happened: 5-hour Energy, one of the main sponsors for Martin Truex Jr. at Furniture Row Racing, announced it would be leaving the team — and the sport — at the end of this season in what it termed a “business decision.”  5-hour joined Truex’s No. 78 this year after being the full-season sponsor on Erik Jones’ No. 77 last year. Prior to that, 5-hour was linked with Clint Bowyer during his time at Michael Waltrip Racing and HScott Motorsports (2012-16).

What it means: Even winning at a frequent rate doesn’t ensure continued sponsorship anymore. Truex is coming off a championship season and has been one of the “Big Three” drivers with four wins already this year. And yet, for whatever reason, 5-hour decided it was time to spend its marketing dollars somewhere other than NASCAR. That’s a discouraging sign, especially since Monster won’t be the Cup Series title sponsor for much longer and thus would have freed up 5-hour to go wherever it wanted.

News value (scale of 1-10): Seven, for a combination of reasons. Truex is a big-name driver losing a big-name sponsor, for one. But it’s also newsworthy that yet another major sponsor is departing from NASCAR after spending a couple hundred million dollars in the sport over seven seasons at the Cup level. It’s yet another punch in the gut for those hoping NASCAR’s slide will end soon.

Three questions: Can Furniture Row find a replacement, or will team owner Barney Visser have to put his company on the hood again? Does this end the speculation Furniture Row could re-expand to a second car next season? What does it mean for NASCAR when a company stops spending its money altogether instead of just staying involved at a reduced commitment level?

11 Replies to “News Analysis: 5-hour Energy leaving NASCAR, Furniture Row”

  1. Here’s my take on racecar sponsorship and what makes a company spend millions of dollars …
    1. Minutes your car is on the screen with your name or logo legible and easily recognizable.
    2. A great driver to appear in promos and be an excellent representative for your product.
    3. Hospitality tents, free tickets and driver appearances for your big customers at the races… (This is often the most important factor for a sponsor. When Budweiser takes a couple of dozen top executives from Kroger to the Daytona 500, you can bet Bud will be the featured display at all their stores for a long time.)
    4. Important that your product category is somewhat unique in the series. How happy would M&M’s be if four other cars showed up with competing candy companies?
    5. Crowd attendance is important, but more to impress sponsor’s guests rather than eyeballs on the cars.

    Believe me, any sponsor shelling out 10 to 20 million dollars is tracking all of the above factors. Plus, it’s amazing how inexpensive it is to name and your message out using programmed and properly directed social media.

    Think about how 5-hour Energy relates to the above points.

  2. It is a well-known fact an advertiser/sponsor only needs to spend around five years to saturate the NASCAR market. Anything beyond that is likely a gift to the sport.

    5-Hour got their money’s worth and has decided time to move to another market. NASCAR fans say thank you to the companies like 5-Hour that use our sport. But we cheer the companies that stay around long term like Lowes, Fed Ex, M&M/Mars, Nationwide, Anheiser-Busch, etc, etc. We know who loves us and we reward them!

  3. Normally, I’d say it’s a sinking ship sponsor leaving – as so many have.

    In the case of 5-Hour, it’s unclear how much longer they’d exist in the first place.

    First, Monster is DOMINATING the market now. Second, repeat studies show 5-Hour doesn’t actually do anything were well publicized, especially about 18 months ago when not only were they not “energetic”, they were actually about half as effective as 8oz of coffee (and they taste terrible to boot). Third, they – again – lost another lawsuit in one state last year and they are under the eyes of several more states through the state AGs.

    They are also being loosely linked to several deaths – though, considering they are just bitter water, basically, I doubt those suits would win. The problem is, they either admit the deaths relation, or deny the relation and state their product doesn’t do anything. They are in a bad PR moment. Now, while I fully think taking responsibility for yourself should be required and drinking anything with caffeine when you just had heart valve replacement is stupid, it doesn’t mean there won’t be a court battle in our lovely court system.

    1. I agree with your evaluation of 5-hour… it’s a scam and probably has a short life. However, Monster hardly dominates the energy drink market since Red Bull sales are about 40% more than Monster, ($3.9 billion vs $2.8 billion in 2017).

      1. Mark, Red Bull has a larger geographical region where Monster doesn’t sell, which means they have less competitors in much of their market.. for now. Monster is dominating them, Monster passed them a couple years ago, in any market in which Monster was available.

        In the US, despite Monster’s retail price being half as much, they earned TWICE as much as Red Bull.

        In the market Monster and 5-Hour share (which is a portion of Red Bull), Monster far outpaces them both. In fact, Monster took over nearly 15% of the global market in 2016 alone, the first year they had real distribution. They are expected, in their current market geographics to not just be majority of minorities, but top 50% of total market share within another 18 months and that’s before accounting for the global distribution push.

        Red Bull also has a boost for being in a few alcoholic drinks, but Monster has started getting used by “mixologists” now too, especially their coffees, so they are starting to pick up some share in the bizarre “energy drinks+alcoholic additive” section.

      2. Mary, FWIW – just 5 hour on it’s own merits, it’s sales are half as much as they were over 5 years ago and it’s worst year since nearly inception. So even if we dropped Monster and Red Bull from the equation, 5-Hour lost half it’s revenue despite economy driving upwards.

  4. Teams demand too much money from sponsors (out of need), and sponsors can’t afford (justify) to sponsor a full season.
    If the brand is not on the car weekly (or vast majority), it is incredibly hard to develop the brand in NASCAR where the driver and your company/product are ingrained together. Like Rusty and Miller or Sr and Goodwrench, or Target and all of Chip Ganassi Racing before 2 years ago.
    The return is not there in the same way with only being on the car 15 times, or whatever (I know 5 Hour has a much bigger share of that on the 78) vs all 36 minus some promos. And it still costs an incredible amount.
    The last piece is now it’s much more competitive as NBA, NBA, soccer in general, has leeched off of NASCAR and allowing teams to sell ad space on their jersey’s. The team’s don’t really need that money in the way NASCAR does, but now companies have options and other sports can be more competitive for ad space.

    TV money, while we still have it needs to be redistributed to pay the teams in all 3 National Series much better from purses to help off set loss in sponsorship.
    Majority of that money can come out of the track percentage, because the tracks can make that up in ticket sales (in theory). Force promoters to promote like Gossage does, and Humpy did. And if a track can’t float on only ticket and concessions etc. we need to ask ourselves is that track really good for us anyway? (Sanctioning fees could be redone in someway to help offset lost revenue from TV also though. If nothing else let NASCAR the sanctioning body promote there own races and rent the facilities.
    But a lot of red tape to make something pretty simple happen.)
    There’s no simple answer as everything effects everything… but there seems to be no movement in this front for finding a better way.
    I think charters have proved to not be that better way as total cars entering events is at a low, and chartered teams are still going bankrupt.

  5. I have yet to see where charters have been good for anyone, except the mostly multi-millionaire owners who didn’t pay a dime for them. As a business owner I never had anyone say here’s a gift that will protect you from failure. If a business owner has a bunch of used equipment that because he is failing must be divested he will get pennies on the dollar. That’s a fact of business. Even with the built in protection of chartered teams, and guaranteed money to those teams, we have shortened the fields and still start many races without a full field. There are very few signs of new owners clamoring to get into NASCAR and many sponsors doing the two step out the door.

    In general anything that has come from the RTA or driver’s council does nothing for the fans who pay at least part of the bills for tracks and teams. The fans have become less important in this era of extreme TV revenues vs seats in the stands. While empty stands may not have the impact to revenue that they once did, those empty seats make sponsors think long and hard about where their dollars will be spent. The media who report on our sport nearly across the board support shortening races and takl about that frequently. I have no problem with shortening races, if, and this is a big if, we also see a corresponding reduction in race purses and ticket prices. Cutting 100 miles (or laps) out of a race is 20% less so reduce everything an equal amount. The reporters who lobby for reductions should also be willing to accept 20% less pay for their covering the events. Fair is fair, after all.

    As someone who has been around and involved in racing since my teen years in the early 1960’s my opinions may vary from many of today’s fans who have never been to a race or who have an attention span of minutes, not hours on end. I fear our sport will never be what it once was, but I will simply enjoy what there is until the end of my days.

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