SBJ/February 28 - March 6, 2005/Marketingsponsorship

NFL flags team beer sponsors for promos

Mobile, Ala., is 333 miles from Atlanta and 210 miles from touching the nearest part of the Georgia border. So when Atlanta Falcons sponsor Budweiser ran a team sweepstakes last year that reached into the Gulf of Mexico port city, NFL national sponsor Coors cried foul.

It was not an isolated case. After complaints from Coors Brewing Co., which has near-exclusive rights to states without NFL teams, the league last season cracked down on team beer sponsors like Budweiser extending their alliances into these areas. The league sent memos to its clubs reminding them of Coors’ sponsorship rights, which the Colorado company reportedly paid $300 million for in 2002, a figure that includes promotions and advertising spending.

“We had an issue down here with Alabama,” recalled Jim Smith, the Falcons’ vice president of partnerships. “We had one of our partners extend outside our marketing territory, and we had to talk to them and correct it.”

Smith declined to say whether the beer sponsor was Miller or Bud, both Falcons backers. Sources identified the company as Budweiser. Anheuser-Busch, parent of Budweiser, declined to comment.

As the NFL sponsorship model evolves with more rights returning to the teams, along with the territory where a club sponsor can market, feuds such as these are apt to arise.

But several events brought this issue to a head.

Traditionally, team sponsors could promote their ties to the club only within 75 miles of the team’s home city. All other areas were the province of national league sponsors.

In practice, however, the league had turned a blind eye to such practices. Take Iowa. It borders four states with NFL teams, and some clubs in those states have long been active in the Iowa markets, marketing sources said.

Teams like the Minnesota Vikings, and even the Denver Broncos in Coors’ home state, had to pull back the reins on their local beer sponsors. And some sources said the crackdown went as far as instructing local bars in non-NFL states to remove team and beer sponsor neon signs.

“We do report violations of team logo usage outside of their rights area,” said Laura Sankey, a Coors spokeswoman. “We do this to protect our sponsorship value and sponsorship rights.”

The NFL could not be reached for comment.

Vince Cicero, marketing director with the Cincinnati Bengals, said his team has always looked at neighboring Kentucky as a fertile territory.

In March 2004, the NFL adopted a new business model, which included eliminating the 75-mile rule and giving teams access to their entire state.

For clubs adjacent to states without NFL teams, the new rule is fairly limiting. If the non-NFL state falls within 75 miles of the team’s home city, then a club’s sponsors can run promotions in that state within that radius.

The Falcons’ Smith figures that gave his sponsors about 10 miles into east Alabama, a far cry from Mobile. The problem: Beer distributors who deliver the cases promoting the sweepstakes have different territories. And in the case of an Atlanta distributor, it included Mobile.

“The tricky part in our case is when you have distributors who cross state lines,” Smith said.

Jamey Rootes, Houston Texans chief marketing officer, said it is always a problem when sponsor companies have different geographic assignments than the league.

“It’s not a new issue, but given the change in the territory definition, we need to work through it,” Rootes said.

The problem is particularly acute with beer sponsors, given the large number of point-of-sale promotions and contests run in the category.

“How clubs utilize beer rights will continue to be a hotly debated topic,” said Mark Donovan, vice president of marketing for the Philadelphia Eagles. He helped negotiate the national Coors deal three years ago while with the league’s marketing office.

One former beer executive, who declined to be named, said it was good that the league was cleaning up the marketing territory issue. Before, what a team sponsor could do was a gray area; now it has become more black and white, this executive said.

The league has said it will make exceptions, and it is considering a request from the Carolina Panthers, based in Charlotte, to include Charleston, S.C., in its territory, sources said. Charleston is 209 miles from Charlotte, and by comparison, 321 miles from Atlanta. The Panthers did not return calls for comment.

And the league gave Gary, Ind., to the Chicago Bears. While Gary is in the home state of the Indianapolis Colts, the city has long been considered part of the Chicago market, said Bears senior director of corporate sales Dave Greeley.

Phil Thomas, marketing director of the St. Louis Rams, said towns across the Mississippi River in Illinois, such as Belleville and Alton, are also considered the Rams’ territory and not that of the Bears.

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