Sports Biz with Darren Rovell

MillerCoors Sues Patriots, Claiming Team Reneged on Beer Deal

MillerCoors filed a lawsuit against the New England Patriots on Monday afternoon after the America's second largest brewer claims the team reneged on an exclusive and more lucrative deal and chose to award that deal to its top competitor, Anheuser-Busch InBev, instead.

MillerCoors (a joint venture of SABMiller and MolsonCoors), which has been a sponsor of the Patriots for nearly 10 years, said it negotiated an exclusive beer deal with the team that would begin at the end of this season and run through 2019.

But after the deal was signed and even commemorated with a dinner by the marketing agent working on behalf of MillerCoors and the Patriots sales team, the company says the Patriots decided it was not a valid contract and chose to do the deal, for the same category and time frame of seven years, with Anheuser-Busch InBev .

The suit, which was filed in Massachusetts Superior Court asks for the exclusive agreement to be deemed valid and enforceable and that the brewer be awarded additional damages to compensate them for costs and good will.

"We expect to win and when we win we will be a great partner to the Patriots," said Jackie Woodward, vice president of media and marketing services for MillerCoors. "We look forward to bringing our marketing muscle and activation prowess to bringing football to fans in New England."

Woodward told CNBC that it was clear that her team had reached agreement on all material business terms and that "there was nothing left to discuss." But company execs now believe that the Patriots will or have entered into an exclusive deal with Anheuser-Busch.

"We appreciate competition, but we respect the integrity of a deal above all else," Woodward said.

A spokesman for the Patriots had not seen the suit and could not immediately comment.

As part of the pitch, the Patriots told MillerCoors that the NFL Board of Governors had agreed to expand each team's definition of "Home Marketing Territory," defined as the area in which team sponsors can activate their campaigns in stores. The Patriots' territory was expanded from Massachusetts and a 75-mile radius around its Gillette Stadium to further include Maine, New Hampshire, Vermont and Connecticut.

From 2002-03 season to the 2010-11 season, Miller Coors' Coors Light brand was the official beer of the NFL, but Anheuser-Busch InBev paid a reported $200 million a year for the rights to get that designation for its Bud Light brand for the next six seasons. Teams can, however, do their own deals, which are mostly non-exclusive. The Patriots currently have deals, through this season with MillerCoors, Anheuser-Busch InBev and Boston Beer, parent company of Sam Adams.

Aside from its right to use league marks as part of the NFL sponsorship, Anheuser-Busch InBev has deals with 28 of 32 teams. The Dallas Cowboys, Minnesota Vikings, Chicago Bears and Green Bay Packers have an exclusive with MillerCoors. MillerCoors also has the rights to 17 teams on a non-exclusive basis.

Bud Light's annual sales in the US is $5.2 billion, according to Symphony/IRI, a market tracking firm. The firm says Coors Light is a $1.9 billion brand in America, though it has grown at more than twice the rate that Bud Light has over the last 52 weeks.

UPDATE: Statement from outside litigation counsel Dan Goldberg of Bingham McCutchen:

"We received and reviewed the complaint filed by MillerCoors. Since the team never had an agreement with MillerCoors, their decision to file this complaint is, at best, perplexing. It is hard to see how launching a meritless lawsuit against the Patriots will allow MillerCoors to capitalize on what the complaint claims is the 'goodwill' MillerCoors has built up with the Patriots and their fans over many years. This appears to be more of a media strategy to attack a competitor of theirs than a legal one against the Patriots."

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