SBJ/20100222/This Week's News

Corona near deal as ATP top sponsor

The ATP World Tour is in advanced negotiations to tab Corona as the circuit’s top sponsor, said multiple tennis sources, which would make a beer company the top backer in the sport for the first time.

The sides had not signed a contract as of late last week, but talks were far enough along that ATP board members were told to prepare for a conference call. Exact terms could not be determined, but sources place the first year of the deal in the high- seven-figure range, and the second year in the low eight figures, about comparable to the $13 million annually that Mercedes-Benz was paying before it bowed out of its deal at the end of 2008.

“We’re in discussions with a range of companies about sponsorship of the ATP World Tour,” ATP spokeswoman Kate Gordon wrote in an e-mail. “Signing a new premier partner is a top priority for us, but we don’t have any news to share just yet.”

The ATP has had a few false starts in trying to replace 13-year sponsor Mercedes-Benz. In the summer of 2008 it came close to signing insurance company Aviva, but the global financial meltdown scuttled that deal. Last fall, Toyota also came close, sources said, but the deal fell apart suddenly. Thinking he had the car sponsor in hand, sources said, new ATP Executive Chairman Adam Helfant told reporters in September that he expected a deal by the end of the year.

Luxury cars and financial services are the usual targets for tennis sponsorships, so news of a deal with Corona, America’s No. 1 beer import, caught experts by surprise.

Given the “vacation-in-a-bottle” positioning carefully cultivated in the U.S. with years of TV ads set on sunny beaches from Chicago-based ad agency Cramer-Krasselt, many marketers were surprised at the move into tennis.

“I am a little shocked, actually,” said Bob Basche, chairman of Millsport/The Marketing Arm. “It is a little bit of a category reach.”

And Peter Stern, whose Strategic Agency in New York has handled InBev business since 2002 and currently does work for Labatt in the U.S., said, “It’s a disconnect. With the positioning Corona’s established, I’d expect them to move into something like the AVP if they wanted to add a league sponsorship. It may be a means to an end in terms of the brand expanding into Europe, but I’d rather see them do something on the beaches of St. Tropez, rather than risk losing the ownership they have with vacation and beer.”

Corona is owned by Grupo Modelo of Mexico and Anheuser-Busch, with Grupo the controlling shareholder. Corona’s Extra and Light brands totaled $1.12 billion of sales in the U.S. in the 52 weeks ended Dec. 29, 2009, compared with runner-up Heineken’s $585.7 million, excluding Wal-Mart, club stores and liquor stores, according to Information Resources Inc., a Chicago-based market research firm.

Nonetheless, Corona’s sales have slipped in the last three years, and it is not as strong in Asia and Europe, traditional tennis hotbeds, as it is in the Americas.

“It’s been trying to broaden its appeal even further and been looking for new ideas,” said Eric Shepard, executive editor of Beer Marketer’s Insights. The company recently told distributors, he added, that it was shifting more marketing resources into sponsorships. Corona has never been a big sports sponsor outside of Mexico, where it sponsors auto racing and soccer.

Grupo Modelo did not respond to a request for comment.

An ATP tournament source said the event had been notified of the Corona deal and was told the money it had been paid under the Mercedes deal would now be replaced. The ATP will have to buy out the beer sponsorship at its more than 60 events, though not all have them have beer deals. Some, like the Sony Ericsson Open, have conflicts (Heineken), while others, like the BNP Paribas Open in Indian Wells, Calif., do not.

Beer sponsorships are not totally uncommon in the sport. Heineken is a major sponsor of the U.S. Open Tennis Championships, and Stella Artois has been sponsor of an event in England. Nevertheless, the sport is known more for the older wine-and-cheese crowd then for the younger demographics who more commonly drink beer.

While the ATP sponsorship is not a title deal, it will give the company logo rights on all nets and on signs at all events.

In related news, the WTA Tour expressed hope that it might be able to renew its title sponsorship with Sony Ericsson.

“I am cautiously optimistic; there have been positive discussions,” said Steve Simon, a WTA board member. “It is always hopeful when there are still discussions going on.”

Many in the sport assumed Sony Ericsson, given its financial troubles and executive turnover, would not renew, so Simon’s words could indicate that such pessimism is misplaced. The cellular company is in the last year of a six-year, $88 million title sponsorship. The WTA originally gave the company until the end of 2009 to make a decision, but then extended the deadline.

Simon said there is now no deadline for Sony Ericsson to decide.

Staff writer Terry Lefton contributed to this report.

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