COCA-COLA RENEWS NFL PACT: $4M ANNUALLY AND LOCAL "AUTONOMY"
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).