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Nature's Bakery countersues SHR over Danica Patrick sponsorship

On Friday, Nature’s Bakery filed a counterclaim to Stewart-Haas Racing’s $31million breach of contract lawsuit filed on Feb. 3.

Danica Patrick, Stewart-Haas Racing Chevrolet

Danica Patrick, Stewart-Haas Racing Chevrolet

Action Sports Photography

Danica Patrick, Stewart-Haas Racing Ford
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet
Romain Grosjean, Haas F1 Team, Esteban Gutierrez, Haas F1 Team check out Danica Patrick's car at Stewart-Haas Racing
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet
Danica Patrick, Stewart-Haas Racing Chevrolet

Nature’s Bakery signed a three-year deal to support Danica Patrick starting in 2016 but terminated its contract based on the lack of return on investment and a conflict of interest due to Patrick’s continued support of Six Star Pro Nutrition. Stewart-Haas Racing promised Nature's Bakery four-times the return on its $15million annual sponsorship. Last season, Patrick finished 24th in the NASCAR Cup standings. When team owner Tony Stewart was asked about the countersuit, he declined comment. Below is the summary of the dispute from Nature’s Bakery:

"This case concerns the fallout from a failed sponsorship relationship that was built on deceptive promises by Stewart-Haas Racing (“SHR”), one of NASCAR’s largest race teams. In 2015, SHR solicited Nature’s Bakery, LLC (“Natures Bakery”)—a small, family owned baker of healthy fig and fruit bars—to become the primary team sponsor for SHR superstar driver Danica Patrick, a social media megastar with massive crossover appeal. SHR promised that the engagement would generate at least “four times return” on the approximately $15 million annual investment Nature’s Bakery was asked to make in the relationship.

"As a key component of its sales pitch, SHR promised to ensure that Ms. Patrick enthusiastically promoted Nature’s Bakery’s products on all available platforms and that Nature’s Bakery would be her and the team’s exclusive brand for “on-the-go” foods. This vow was so important that SHR agreed Nature’s Bakery could unilaterally terminate the engagement should Ms. Patrick ever “commercially endorse a Competitive Brand.” SHR knew Nature’s Bakery lacked prior NASCAR or major sponsorship experience, so it also solicited Nature’s Bakery on assurances it would guide the company through the racing industry’s complicated activation process and would oversee and manage Ms. Patrick’s performance.

"SHR and Defendants entered into a Sponsorship Agreement (the “Agreement”) in July 2015. Unfortunately, the relationship did not go well. SHR’s team suffered setbacks both on and off the track. More damaging, contrary to its representations, SHR could not control Patrick’s performance, particularly as to her social media, which Patrick often refused to use to promote Nature’s Bakery. Nor could SHR guarantee exclusivity for Nature’s Bakery’s brand in category of on-the-go foods because Patrick was already endorsing a protein bar made by one of Nature’s Bakery’s competitors, Six Star Pro Nutrition (“Six Star”). It was as if Michael Jordan decided to wear Adidas while being paid by Nike.

"Other promises also fell by the wayside. SHR focused attention on its own team problems rather than supporting Nature’s Bakery, its lead sponsor. A mere six months into the relationship, it was evident that the engagement was not working. Nature’s Bakery required significantly more support and guidance than SHR was providing, and the brand failed to realize any of the promised return on its investment.

"For months, Nature’s Bakery repeatedly asked SHR to help sell future races and to transition the sponsorship to a new lead brand. SHR ignored those requests—content to keep cashing Nature’s Bakery’s checks. After the 2016 race season ended, Nature’s Bakery evaluated its options. It concluded that many of SHR’s core promises, such as Patrick’s exclusive endorsement of Nature’s Bakery within the category, had not been true. Sales related to the sponsorship were flat and the brand had little faith that 2017 or 2018 would be any different.

"Even still, Nature’s Bakery attempted to find a “win-win” outcome for the parties. It repeatedly offered to meet in person with SHR to develop a transition plan and even proposed to “backstop” some of SHR’s sponsorship fees in 2017 and 2018. SHR refused to cooperate and ridiculed Nature’s Bakery’s offers. It also repeatedly threatened to sue its sponsor and its sponsor’s family owners personally.

"Without meaningful assurances from SHR and due to Patrick’s ongoing endorsement of Six Star, in January 2017, Nature’s Bakery exercised its right to cancel the engagement. In doing so, however, it again offered to help smooth the transition, to cooperate in identifying substitute sponsors, to jointly manage public communications, and even to provide financial assistance to Patrick’s team as it began the new season. These were not obligations Nature’s Bakery was required to take on, but instead things it wanted to do out of a sense of good faith to its former partner and the broader NASCAR industry.

"SHR essentially rejected these offers and instead focused on attacking its former partner both in the press and by filing this misguided and often false complaint—which was filed just days before the parties were due to meet to discuss a commercial resolution to the dispute.

"Below is Nature’s Bakery’s Answer and Counterclaims in response to SHR’s ill conceived complaint. Many of SHR’s allegations are untrue and calculated to cast Nature’s Bakery in a false light. The real facts and context for this dispute are set forth in Nature’s Bakery’s Counterclaims below, which begin on Page 18. That story is based on evidence of SHR’s false promises and its abuse of a small brand’s interest to be endorsed by Danica Patrick. As explained below, Nature’s Bakery has tried for almost half a year to resolve the failed relationship in a productive business-like manner, but it now faces a public lawsuit that never should have been filed. Forced to engage, Nature’s Bakery will not be bullied and is intent on prevailing in this case—even as it continues to support NASCAR and wish Ms. Patrick much success on the track in 2017 and beyond."

On Daytona 500 Media Day, Patrick commented on Nature's Bakery decision to terminate the three-year deal after just one year, saying, “I think that it was a shock to all of us that one year into a three-year deal that there was a problem, but everything that was ever asked of me I did to the very best of my ability."

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