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This Suit's For You: Bud Charges MLB Jacked Up Sponsorship Tab

Ad Age, November 15, 2010

By E.J. Schultz

CHICAGO – Anheuser-Busch's long-standing relationship with Major League Baseball has turned sour as the two American icons battle over how much the brewer should pay to continue as the league's official sponsor, a distinction A-B has had for more than 30 years.

In a lawsuit filed Friday, Anheuser-Busch accuses Major League Baseball Properties of demanding higher fees and backing out of a deal struck in the spring to renew the partnership. The deal – which gives A-B the exclusive rights to use the MLB logo and game footage – is worth an estimated $10 million a year, according to IEG, a unit of WPP that tracks sponsorships.

The brewer says MLBP wants new terms in light of a "change in marketplace dynamics," according to a published report. A-B this year struck a much more expensive six-year deal for Bud Light to replace MillerCoors as the official sponsor of the National Football League. The NFL pact is worth an estimated $50 million a year, according to IEG.

Jim Andrews, a senior VP at IEG, suggested that MLB could be negotiating with MillerCoors as the brewer seeks to spend sports marketing money freed up from its NFL exit starting next season. "In some ways, MLB is in a very good position, because you have an incumbent that is interested in keeping their rights and an outside competitor who really wants them," he said.

MillerCoors declined to comment on its possible baseball interest.

Anheuser-Bush, meanwhile, said MLB is obliged to accept the terms of the renewal. "In April, Budweiser accepted MLB's offer and renewed our official beer sponsorship of the league," the brewer said in a statement. "We are asking the court to recognize our sponsorship agreement reached last spring."

MLB spokesman Matt Bourne said: "Major League Baseball Properties hasn't been served with the complaint, and our lawyers have yet to review it. We don't normally discuss active litigation. However, we have a different view of what has been reported."

The legal dispute represents a contentious new chapter in the MLB-Anheuser Busch partnership.

"The relationship has historically been very strong," said Marc Ganis, president of SportsCorp, a Chicago-based sports business consulting firm. "Something here is amiss. Either baseball overreached or the new ownership [of Anheuser Busch] is taking a different tack than the predecessor did – and that is not expected by MLB," he added, referring to the 2008 InBev merger with A-B to create Anheuser-Busch InBev.

It is unclear how much money MLB is seeking from the sponsorship, but analysts suggested the baseball pact is worth far less than the brewer's deal with the NFL, which draws significantly higher TV ratings. (The 2010 World Series had an average of 14.3 million viewers, the second-lowest average in the fall classic's history, and had the lowest adult 18-to-49 rating and highest median age – 52.6 – since at least the early '90s. The clinching Game 5 even trailed ABC's "Dancing With the Stars.")

"The NFL shield is perceived as one of the great brands in the world," Mr. Ganis said. "You don't typically see the MLB logo in the same range as the NFL shield."