Budweiser-brewing giant Anheuser-Busch InBev, NV, recently filed suit in a Manhattan federal court against Major League Baseball Properties (MLBP) in an attempt to maintain its exclusive beer sponsorship status with the league in 2011 and beyond. The suit comes as a result of the MLBP allegedly requesting more money to renew its exclusive beer sponsorship deal with Anheuser-Busch for the coming years. Anheuser-Busch is currently the official beer sponsor for 26 of MLB’s 30 teams, as well as the holder of naming rights for the St. Louis Cardinals’ Busch Ballpark in Missouri.
American brewing behemoth Anheuser-Busch merged with InBev in 2008, becoming Anheuser-Busch InBev, NV, headquartered in Belgium. In 2003, its brand Bud Light became the best-selling beer in the United States. Anheuser-Busch InBev is the world’s largest brewer and one of the top five consumer goods companies in the world.
The lawsuit alleges that MLBP demanded more money from Anheuser-Busch on May 27, but that the beer giant received a fax a month earlier, on April 22, from an MLBP marking executive regarding the extension agreement, saying “”We are excited about the extension of this amazing partnership. Congratulations partner!!!”
The paramount issue for the court to decide is whether a contract existed between the two entities, as the final alleged oral agreement between Anheuser-Busch and MLBP was not reduced to writing before it was contested by the latter party. Anheuser-Busch is seeking a judicial declaration that the contract it believes it had with MLBP in April is valid and enforceable.
While the exact value of the contract in question is not readily ascertainable, some believe that it amounts to approximately $10 million a year for the official sponsor status, with financial commitment of four to five times that amount in television ad spending and promotional considerations. In the suit, the company estimates that it would invest “tens of millions of dollars” this year alone in advertising and promotions related to Major League Baseball. “Anheuser-Busch has spent decades, and millions of dollars, building the reputation and goodwill of Budweiser and the other Anheuser-Busch brands with these fans,” the lawsuit said. “Their loss would be unquantifiable.”
There is speculation that the request for more money to maintain its exclusive contract with the MLBP comes as a result of a recent $1.2 billion deal with the National Football League, making Bud Light its official sponsor for the next six years. Perhaps this is part of the change in “marketplace dynamics” that the suit cites to as MLBP’s reason for reopening negotiations with Anheuser-Busch.
According to the lawsuit, Major League Baseball Properties notified Anheuser-Busch in October that it was pursuing negotiations with the brewer’s competitors after the parties unsuccessfully attempted to reach an agreement for several months.
While there is little litigation covering the area of sport sponsorships, in 2006, Federation Internationale de Football Association (FIFA) was sued by Mastercard Inc. for an eight-year deal it struck with credit card rival Visa International. Mastercard argued that the contract was a violation of its right of first refusal following a 16-year World Cup sponsor relationship. The case settled for $90 million the next year.
It has been reported that on October 8, Anheuser-Busch took steps to enforce what it believes to be its continuing exclusive sponsorship by sending correspondence to U.S. beer competitors, warning that it will enforce its contractual relationship with MLBP if its competitors enter into negotiations with the league.
“As our renewal with MLB begins with the 2011 season, a timely resolution is important, and we hope to resolve this issue as quickly as possible,” said Keith Levy, vice president of marketing for Anheuser-Busch, in a statement. “Major League Baseball remains a top priority for our Budweiser brand and is important to our plans.”
For current information on this case, please see Anheuser-Busch, Inc. v. Major League Baseball Properties, Inc., Case No. 1:2010cv08513, S.D.N.Y., (Nov. 12, 2010).
