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Anheuser Busch President Explains Why New NFL Deal Makes Sense

Friday, 1 Apr 2011 | 4:56 PM ET
Bud Light Beer
Photo: budlight.com
Bud Light Beer

In May, when it became clear that Anheuser-Busch had won the rights to be the official beer of the NFL, I ripped the deal as a "lazy buy."

My rationale was that Anheuser-Busch would better doing the stealth type of marketing that craft beers were doing instead of the mainstream deals, which I argued would get less of a bang for their buck.

The deal, reported at six years and $1.2 billion, did include the right to the NFL shield and the use of all the logos. What didn't it include? Well, team deals are separately negotiated and there is no advertising exclusivity for any game except for the Super Bowl.

The package did include a two-year extension (through 2014) on exclusive beer rights for the Super Bowl broadcast. The folks at Anheuser Busch promised me they would respond to my criticism when the time was right. Since the deal actually began today they did so. Here's my conversation with Anheuser Busch president Dave Peacock.

Big Deal Brewing
A billion dollars for a Bud? That's what Anheuser Busch plans to pay, to be the official beer of the NFL. David Peacock, Anheuser-Busch president and CNBC's Darren Rovell discuss the deal.

Darren: Tell me why this deal makes sense for Anheuser Busch?

Peacock: Well, for us, we already had 28 of the 32 teams. What it did is allow us to expand our NFL marketing in about a third of industy volume where we weren't leveraging it before because we were limited to a 75-mile radius just around those teams that we sponsored.

Note: When a brand signs a team deal, the territory rights extend to a 75-mile radius around that market. So if A-B has a deal with the Denver Broncos they can't sell Broncos packaging on a retail display in Casper, Wyo. The NFL deal buys that "white space," something that I did not account for in my column. If you don't have the entire NFL deal, you can't use any NFL marks in markets that aren't within 75 miles of an NFL team.

Darren: So you now you have 28 of 32 teams? Is that correct?

Peacock: We have 28 of 32 and we obviously have the national deal with the NFL that we're very excited about.

Note: MillerCoors owns four teams exclusively -- the Chicago Bears, the Green Bay Packers, the Minnesota Vikings and the Dallas Cowboys. Anheuser-Busch owns at least advertising rights of all the other teams, though all those deals aren't exclusive. MillerCoors says it also owns non-exclusive rights to 17 other NFL teams.

Darren: Let's talk about the potential lockout here. Obviously, in order to say that this is the first day of the deal, you had to cut some sort of check. What happens if there's no NFL season? What happens to that contract? Does that roll over at all?

Peacock: We don't disclose the detailed terms of our contract, but there is money that will come back overall in our NFL investment. We have plans to re-invest if there isn't an NFL season. But we're confident that the NFL and the NFLPA will work it out.

Darren: Why go with the bigger brand Bud Light (as the official beer of the NFL)?

Peacock: Bud Light is the biggest beer brand in the country, biggest beer brand in world and over half of our consumers are avid NFL fans based on our research.

Questions? Comments? SportsBiz@cnbc.com

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