NASCAR – lawsuit shows anatomy of Farmers deal with Hendrick Motors

Kahne's wrecked Farmers Insurance Chevy at Daytona in 2012
Kahne's wrecked Farmers Insurance Chevy at Daytona in 2012

Farmers Insurance paid Hendrick Motorsports about $660,000 per race over the last six seasons in which Farmers was the primary sponsor for Kasey Kahne, according to contracts from the deal writes Bob Pockrass of ESPN.

The insurance company was the primary sponsor for Kahne for 22 races in 2012 for $13.5 million, in 2013 for $14.04 million and in 2014 for $16.348 million. It decreased its total to 12 races for the next three years, paying $7.6 million in 2015, $7.8 million in 2016 and $8 million in 2017.

The company announced last year that it would not renew the deal, and Kahne was told in August that he would not return to the team next season.

The sponsorship contracts are part of a lawsuit filed by Sports Marketing Consultants against Hendrick Motorsports over a dispute regarding the percentage of commissions owed on the deal.

During the first contract for the 2012 to 2014 seasons, when Farmers Insurance was the predominant sponsor, there was a performance clause and bonus structure.

The team would get $450,000 to $550,000 for each race win, $250,000 for a top-5 and $100,000 for a top-10. A Daytona 500 pole was worth $150,000 to the team, and other poles were worth $75,000. Those bonuses were capped at $1.5 million in 2012 and 2013 and $2 million in 2014 — and Kahne's performance allowed Hendrick to hit those numbers.

A championship would have earned the team $1,157,895, while a top-5 in owner points was worth $578,947 (Kahne was fourth in 2012). A spot in the Chase was worth $289,474 (Kahne made the playoffs in 2013 and 2014).

If during 2012 or 2013 Kahne had finished 16th or worse and failed to have 10 top-10s with five top-5s, Farmers would have received a $1 million discount on its base sponsorship fee for 2014.

Also during that first contract, Farmers Insurance received 9 percent royalties on all licensed products.

When Farmers sponsored fewer races from 2015 to 2017, no performance clauses or royalties were paid.

Among the other details in the sponsorship contract and the lawsuit:

* Kahne had to do 16 two-hour appearances per year from 2012-2014 and nine per year from 2015-2017. He had to do a 10-minute hospitality session each race weekend that Farmers Insurance was a primary sponsor as well as meet-and-greets.

* Kahne was committed to three eight-hour production days per year. Team owner Rick Hendrick was committed to one four-hour production day per year.

* Each contract contained a morals clause. In the 2015-2017 contract, Farmers can immediately terminate the deal "if driver is convicted of any felony, performs any irresponsible act or an act which materially and publicly prejudices sponsor, is convicted of driving under the influence, arrested, charged or indicted for driving while intoxicated, arrested, charged or indicted for any act involving drugs, controlled substances, sexual misconduct or illegal firearms or weapons possession or is convicted of any similar crime."

* Farmers received six annual "hard card" passes for its personnel to get into races and four single-event hot garage passes — allowing the holder to be in the garage area while cars were in action — for every primary race.

* Farmers would get one race suit, helmet and set of gloves that were used during the season.

* The initial $43.88 million, three-year deal resulted in $3.38 million in commissions to the broker.

Hendrick Motorsports said it was aware of the lawsuit but declined comment. Bob Pockrass/ESPN

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