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COCA-COLA RENEWS NFL PACT: $4M ANNUALLY AND LOCAL "AUTONOMY"
Published May 22, 1998
Coca-Cola has renewed its pact as the official soft drink of the NFL through the 2001 season. The company will execute a national promotion during each NFL season geared toward specific fan development efforts and Coke will also be the official soft drink of the Super Bowl and Pro Bowl. Coca-Cola receives the right to use all league marks, including the NFL shield, and the Super Bowl and Pro Bowl logo, in advertising and promo activities. It has also been granted the collective use of the 31 team trademarks, and Coca-Cola will co-sponsor the NFL Experience (NFL). STANDOFF: In N.Y., Stefan Fatsis writes that in negotiations that "were acrimonious from the start," the NFL "blinked," signing with Coca-Cola for "slightly more" than $4M per year, a "fraction" of the $15M a year under its previous contract and "nowhere near" the $36M per year the league sought in January. As part of the deal, Coca-Cola has relinquished its local marketing rights, freeing each team to negotiate its own local soft drink sponsor. NFL execs estimate that an average local deal of $750,000 a year would more than make up for the lost income on the new deal. The local autonomy is "just what Coke wanted," as it can now focus spending "on fewer properties in key markets." Fatsis adds that there "are no guarantees clubs will get rich sponsorships," as smaller markets will likely be at a disadvantage to larger ones (WALL STREET JOURNAL, 5/22). WHAT IT MEANS: Fatsis reports that the new agreement "contains a larger message" to the sports-sponsorship industry: In an era of "sponsor overload," the value of being an official sponsor "may be eroding." After rejecting asking prices as low as $15M, Coca-Cola last month argued for paying no rights fee at all but using its "marketing muscle to sell the NFL worldwide, as it currently does" with the NBA. But the NFL "countered that the league, awash in TV revenue ... didn't need Coke's marketing muscle," as NFL owners and players set aside $100M for grassroots marketing. Coke "was ready to walk away from the NFL as recently as Monday, but the league responded with a new, lower-fee offer." Meanwhile, NFL execs said that they were prepared to "walk away from Coke if it couldn't structure a favorable marketing deal." NFLP President Sara Levinson: "Would we do a deal just to have one in the soft-drink category? I don't think so" (Stefan Fatsis, WALL STREET JOURNAL, 5/22).