What does A-B/Miller deal mean for sports?

Will the biggest deal in the history of the brewing business be a benefit or detriment to the U.S. sports industry? Like so many things surrounding Anheuser-Busch InBev’s $108 billion acquisition of SABMiller, there’s a lot of wait and see involved.

First, there are regulatory hurdles in the deal announced last week to overcome. Will a deal that would allow the new A-B InBev enough scale that it would sell close to a third of all beers around the world be readily accepted by regulators, especially in the U.S.? Most thought that SABMiller selling off its 58 percent share in the MillerCoors U.S. joint venture to Molson Coors would be enough to appease U.S. regulators. That will send the Miller brands and all the sponsorship and marketing agreements supporting it, including naming-rights deals, to Molson Coors.

Molson Coors holds the remaining 42 percent of the joint venture, and also got the Miller portfolio outside the U.S. for $12 billion.

“It was fairly certain that the [Department of Justice] wouldn’t let someone have 75 share of the U.S. [beer] market,” said Mike Sundet, former A-B InBev sports and entertainment marketing vice president, who is now senior vice president, North America director of sports and entertainment at Momentum Worldwide.

It is noteworthy that A-B InBev agreed to pay a $3 billion fee to SABMiller if the deal fails to gain approval.

“I credit them [A-B InBev] for thinking big, and I believe they’ve done the right things to get approval,” said Rick Dudley, CEO at Octagon, which consults and activates for large A-B InBev sponsorships outside the U.S., including Wimbledon and the FIFA World Cup. “Still, the trend for the larger players in that category are tough when it comes to growth. If ABI is looking to cut $1.4 billion in costs and Molson Coors a few hundred million, you’d have to wonder if that will impact marketing. With Molson on one side [with Coors and Miller] and ABI on the other, sports properties will still have a competitive set to sell into, but [beer] category growth is a question, so there’s a bit of an unknown now.”

“Because of the deal, Molson Coors can leverage its scale across the Americas, and we’ll see what difference that makes,” England said. “Whether the new management team is as big a believer in sports as myself and Tom Long were is a whole ’nother question.”

The possibility of Molson Coors being indifferent toward sports is concerning to anyone selling sports rights.

“There is a long history on the property side of always having multiple suitors to talk to, engage with, and ultimately partner with, so from a consolidation standpoint, it will be interesting to what the repercussions are,” said NBA D-League President Malcolm Turner. “Competition is healthy in terms of how brands engage with properties.”

Added Tony Ponturo, former A-B vice president of global media sports and entertainment marketing: “Any sort of indifference towards sports by one of the two top brewers would make me wonder if you’d see a bigger presence and a push for additional rights by spirits marketers.”

Premier Partnerships has done more than 100 beer deals. President and CEO Randy Bernstein said the category was changing long before the latest deal.

“It’s such a mature market, we may be past the time where every beer deal needs to be at the highest founding partner level or whatever,” Bernstein said. “Spirits have stolen market share from the beer category, so maybe it’s only fair to reinvent those rights as big beer loses share.”

Brad Brown, former A-B InBev vice president, sports and entertainment marketing, said that even if the vagaries of the beer market cause prices to soften on traditional sponsorship assets such as signage, tickets and hospitality, “there’s still considerable elasticity on pricing, especially digital and social media, as they support activation. Pricing there is still being developed and that’s where the demand is now.”

The complexities of spinning off MillerCoors was only one indication that what drove this deal was access to overseas markets. England expects the new A-B InBev to saturate overseas markets with the three brands it considers global.

“You’ll see them take brands like Bud, Corona and Stella to South America and Africa,” he said. “In sports, that means the dollars they pay for Olympics and [FIFA] World Cup will make more sense.”

Beer has long been the lifeblood of sport’s commercial side. Consolidation will continue to be a force roiling the breweries and other mature industries, like cars, telecommunications, quick-service restaurants and soft drinks, which are some of the biggest buyers of sports marketing and media assets. Many financial analysts suggest that A-B InBev’s next domestic acquisition target could be Coke or Pepsi. The companies are already linked with A-B InBev and SABMiller around the world through various bottling and distribution agreements.

Staff writer John Lombardo contributed to this report.