SBD/Issue 46/Sponsorships, Advertising & Marketing
Anheuser-Busch Sues MLB For Reneging On Sponsorship Deal
Published November 15, 2010
|A-B Has Been The Official Beer
Of MLB For More Than 30 Years
Anheuser-Busch has sued MLB, "claiming that baseball's licensing arm reneged on a multiyear renewal of the company's beer-sponsorship rights and demanded 'exponentially higher' fees," according to Bray & Kesmodel of the WALL STREET JOURNAL. A-B in a suit filed Friday in federal court in Manhattan claims that MLB Properties "agreed to renew its rights to be the league's official beer sponsor in April but then demanded to renegotiate the pact" after the brewer announced a deal in May with the NFL. The brewer, which has sponsored MLB for more than 30 years and is the official beer sponsor for 26 teams, is "seeking a court order stating that the April agreement is valid and that any negotiations with another beer maker would interfere with its exclusive sponsorship rights." A-B contends that it "reached a letter agreement in April to renew its sponsorship deal with MLB," and that "all that was left was the ministerial step of drafting a long-form contract." But the lawsuit argues that "after the NFL deal was announced, MLB Properties began to complain that the economic terms of the renewal were no longer satisfactory and that the market had changed." It also alleges that MLB Properties demanded on May 27 that A-B "agree to pay much higher fees to remain the official sponsor." MLB Properties last month reportedly notified A-B that it "planned to offer the sponsorship rights to the company's competitors." In a similar case, Bray & Kesmodel noted when FIFA in '06 "awarded an eight-year sponsorship deal" to Visa for the World Cup, MasterCard sued soccer's governing body, claiming that it "had the right of first refusal after a 16-year World Cup relationship." FIFA "settled the dispute" for $90M in '07 (WALL STREET JOURNAL, 11/13). MLB issued a statement stating, "Major League Baseball Properties hasn’t been served with the complaint and our lawyers have yet to review it. We don’t normally discuss active litigation however we have a different view of what has been reported" (THE DAILY).
BUYER'S REMORSE? In N.Y., Richard Sandomir noted the lawsuit claims soon after A-B reached a deal for its Bud Light brand to sponsor the NFL, MLB Exec VP/Business Tim Brosnan "began to complain that the economic terms of the April renewal agreement were no longer satisfactory and that the market had changed." The suit claims Brosnan then demanded A-B pay "several times" more than had been negotiated. On Oct. 1, Brosnan informed A-B President Dave Peacock that MLB was "going to disavow" the April deal. A week later, the brewer "sent letters to some of its domestic competitors informing them that it would defend its rights should any of them negotiate a deal" with MLB. A-B is asking the court to "declare the April agreement valid and enforceable, and to prohibit baseball from negotiating with another brewer." The lawsuit does not involve Budweiser's 26 team sponsorships (N.Y. TIMES, 11/13). A-B InBev VP/Marketing Keith Levy in a statement said, "A timely resolution is important" (ST. LOUIS POST-DISPATCH, 11/13). FANHOUSE.com's Josh Alper wrote no matter the "legal ins and outs of the case, it's safe to say that the two sides will find some way" to come to terms on a new agreement. There is a "lot of money to be made by selling beer at baseball games and companies with a long history of doing business tend not to let much get in the way of that." Alper added, "Should this truly be doomsday, however, it's probably a good bet that MillerCoors will take the money they no longer have to spend on football and make themselves the sponsor of 'Thirst Innings' all over this proud country" (FANHOUSE.com, 11/12).