A-B InBev Adds Incentives to Sports Sponsorship Contracts; Environmental Performance Should Be In Mix

A-B InBev, the parent company of Anheuser-Busch and America’s biggest sports sponsor, is making a big change to the way it deals with its sports property partners. Incentives for positive on- and/or off-field performance are now being included in their contracts with leagues, teams, events and venues. Will environmental incentives be in the mix?

 

Terry Lefton, arguably the dean of sports-business journalists, broke an important story in the April 2 issue of Sports Business Journal (SBJ)

In “A-B’s Sponsor Shocker,” Lefton wrote that A-B InBev (ABI), America’s biggest sports sponsor, is “instituting incentive clauses within its [sponsorship] deals…offering properties as much as a 30 percent bonus if specific on-field performance and marketing criteria are met or surpassed…ABI is believed to be the first major sponsor to make it a standard part of its sponsorship contracts.”

A challenging and changing landscape for sports, both at stadia and arenas as well as on TV, is providing new leverage for sponsors and is helping to drive this new way of dealing with properties.

Lefton quoted Joao Chueiri, ABI’s vice president for consumer connections and a prime mover behind this new approach, as saying, “The traditional sponsorship model, based on fees and media commitments, does not deliver the best value for us at a time when most leagues and teams are facing challenges with live attendance and TV ratings. We want to evolve the model and encourage fan engagement … with an awareness that each deal is unique.”

 

Joao SBJ

Joao Chueiri, ABI’s vice president for consumer connections (Photo credit: Terry Lefton/Sports Business Journal)

 

Lefton reported that the early partners in new, incentive-laden ABI deals are the Minnesota Timberwolves of the NBA, MLB’s Los Angeles Dodgers, the New Orleans Saints  of the NFL and NASCAR: “The stock car circuit opted for earned media, fan engagement/social media measures, while the Dodgers, after a season in which they won the National League pennant, chose on-field performance indicators, including wins and losses.”

 

Budweiser TWolves

Budweiser signage adorns the scoreboard at Target Center in Minneapolis, home of the NBA’s Minnesota Timberwolves (Photo credit: NBA.com)

 

Will properties suffer a penalty if they don’t meet the minimum thresholds for incentives?

In a word, no.

Per Lefton, “they won’t get paid less if they fail to meet those targets.” Not surprisingly, every property that has been asked to accept an incentive-laden model has done so.

Chueiri told SBJ that key performance indicators for incentives available under ABI’s new sponsorship model include “attendance, wins/losses and other on-field performance measures, social media and other fan engagement metrics, and brand awareness and consideration among those aware of the sponsorship. The idea is to motivate the property to ensure every fan knows that Budweiser is the official beer.” ABI hopes the incentive program might be the differentiator to make a team, league or event choose it over a competitor.

Environmental performance was not a part of the list of metrics mentioned by Chueiri.

This is not surprising at this early stage. Metrics like wins and losses and social media traffic should be at the top of a list of incentives for a potential ABI sports property partner to hit. These are all “mothers’ milk” for teams and sponsors alike.

But, it says here that, sooner rather than later, environmental performance metrics need to be added to ABI’s list:

  • ABI has made clear that environmental performance, especially on water-related issues, is a core part of its DNA
  • Flagship ABI brands like Budweiser and Stella Artois advertise their commitment to access to clean water on mega sports broadcasts like Super Bowl LII
  • Lefton reported that all of ABI’s 90 or so U.S. team and league sports sponsorships are up by the end of 2021 and that “the brewer hopes to have completely overhauled its sponsorship model by then.”

 

Matt Damon stars in Stella Artois’ 30 second, water conservation-themed, Super Bowl ad

 

With that being the case, metrics like water use efficiency and waste diversion rates need to become part of ABI’s sports partnership incentive program soon.

THAT will be a very big deal.

Watch this space.

 


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2 thoughts on “A-B InBev Adds Incentives to Sports Sponsorship Contracts; Environmental Performance Should Be In Mix

  1. This is a fascinating development— performance bonuses already exist for player contracts, so it’s not that weird for sponsors to follow a similar model for the teams. Curious to see how this evolves.

    Also AB InBev has a number of breweries already high on the list of those utilizing high capacity renewable energy, so adding environmental incentives is surely on brand.
    http://chesterenergyandpolicy.com/2017/10/05/brewed-with-renewable-energy-best-beers-for-the-green-consumer/

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