Sponsorship Rights Fees: Know When to Say When

In the high stakes game that is NFL sponsorship, MillerCoors has folded. The winner: Anheuser-Busch. A-B signed a 6-year deal to become the official beer of the NFL beginning in 2011 that will pay between $43 and $50 million per year over the life of the contract. The asking price became too high for MillerCoors, and a determined A-B committed the dollars necessary to again partner with the country’s most popular professional sports league. MillerCoors has enjoyed a successful run as NFL sponsor, and during that time it launched the popular ad campaign featuring former NFL coaches’ press conference sound bites used as fodder for offbeat questions asked by Coors Light drinkers.

Did MillerCoors make a mistake by not retaining its NFL rights? Distributors liked the NFL sponsorship because they saw a correlation with sales. And, MillerCoors brands were able to hang on to market share in recent years in a sluggish market for beer sales. Yes, sponsorships like the NFL deal can lead to desired brand impacts such as top-of-mind awareness, brand image enhancement, preference, and increased sales. Sponsorships require a return-on-investment mindset, just as any business investment entails. The situation faced by MillerCoors is not unique. Other companies have walked away from high profile sponsorships of properties such as the Olympics and NASCAR. It is possible to reach a point beyond which sponsorship spending levels do not generate incremental benefits. And, we must remember that the NFL rights of upward of $50 million must be supplemented with additional spending on advertising, sales promotions, social media, and other initiatives to leverage the NFL association.

The partnership with the NFL has been beneficial for MillerCoors. Unfortunately, many business relationships end similar to many personal relationships: divorce. The NFL’s desire for higher rights fees did not mesh with MillerCoors’ needs to responsibly manage its marketing dollars. A consolation for MillerCoors is that it still can tap into the popularity of pro football through its coaches’ ad campaign and separate sponsorship deals it has with 22 of the NFL’s 32 teams, not to mention the possibility of new creative directions.

Anheuser-Busch introduced the idea of “know when to say when” in a responsible drinking campaign in 1982. The advice given in that campaign has applicability in 2010 for MillerCoors as it understood the point at which it had to bow out of negotiations with the NFL. Sponsors must strike a balance between associating their brands with properties that can deliver marketing impact and brand stewardship that allows for balanced allocation of resources.

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