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SBJ/September 5 - 11, 2005/Marketingsponsorship
Molson Coors renewing with NFL
Published September 5, 2005
Molson Coors agreed to renew its sponsorship of the NFL through 2010 in a five-year deal worth $500 million, multiple sources said, the latest testimony to the marketing foothold of America’s top sports property.
Coors has had the category on ice for four years.
“Our overall sponsorship, advertising and promotional investment in the NFL is significantly better than the competition, and we’re disappointed that the NFL chose to go in a different direction,” said Tony Ponturo, Anheuser-Busch’s vice president of global media and sports marketing, in a prepared statement.
For Coors, the stakes were high when the league notified it this summer that it would trigger a contract provision eliminating the option for a fifth year. Despite financial struggles at times during the first three years of the deal, the company obviously coveted the national exposure that the NFL provided the No. 3 brewer in the United States.
“On a national basis, it’s keeping them in the game,” said Mike Reisman, a principal with Velocity Sports & Entertainment, of the Coors NFL sponsorship. “They are the challenger brand in this category.”
Coors spokeswoman Kabira Hatland said negotiations were ongoing and therefore it was premature to comment. The NFL declined to comment.
The NFL and Coors signed a deal memo in late August, sources said, and the final contract awaited signing last week.
The new deal, which has option years in 2011 and 2012, pays the NFL a $30 million rights fee, up from $14 million in the current contract. The remaining $70 million annually in the new deal, up from an average $46 million in the current agreement, is spread across advertising, promotions and other team deals.
To date, Coors only has sponsorship relationships with five NFL teams — the Patriots, Jets, Raiders, Steelers and Broncos — while Anheuser-Busch has 28, missing only the Miller Brewing-sponsored Vikings, Bears, Packers and Cowboys.
Under the new contract, Coors is committed to increase its number of team deals (teams have multiple beer sponsors in many cases). Depending on the type of sponsorship and the market, a team beer sponsorship can stretch from the mid-six figures into the low seven figures.
Coors has strongly supported NFL marketing initiatives since becoming a sponsor.
Anheuser-Busch passed on the league deal at the time, confident the value in sponsorship lay at the local level, where distributor connections were most important and fan loyalty intense.
“I remember meeting with Tony Ponturo … and presenting to Tony the whole business plan,” said John Collins, the former NFL head of marketing who is now the Cleveland Browns’ president. “I remember Tony saying, ‘If you are telling me I’ve got to make a choice between the league and the club marks, I am taking the clubs.’”
The success of national events the league created in part for national sponsors such as Coors, like the Opening Kickoff night and weekend, and the growing importance of the NFL draft, however, helped elevate the significance of backing only the NFL.
Just last month, the league announced a national wireless deal with Sprint that allows local teams to do their own alliances in this category.
Coors, which merged with Molson earlier this year, has not exactly flourished financially under the deal. Leo Kiely, Molson’s chief executive, warned in last month’s quarterly earnings report that price wars among U.S. beer marketers would pose “substantial financial challenges.”
Some NFL team executives cautioned that alienating the powerful Ponturo and Anheuser-Busch could be a problem for the league.
“They are risking the anger of the ‘Pope’ [Ponturo] by continuing with Coors,” said one such executive.
In Coors’ favor was the power of its incumbency, its support of every NFL marketing initiative since becoming a sponsor, and the league’s calculation that Anheuser-Busch will continue to spend its vast marketing budget with NFL broadcasters and teams. The status quo was judged to be the most lucrative deal for the league and its teams.
Anheuser-Busch already has said it would increase its in-game NFL media spending by 10 to 15 percent this year.
“If Bud got the league deal, Coors walks away to some other property,” said a source involved in the negotiations. “If Coors gets it, Bud can’t walk away.”
Indeed, Ponturo, in his statement, noted that Anheuser-Busch remained the exclusive Super Bowl advertiser, and its team sponsorships had resulted in individual club logos on 12 million cases of beer.
“We are confident that this local team sponsorship strategy, supported by national advertising, resonates with fans and helps them make the connection between our brands, their favorite team and professional football,” he said.