Major League Baseball has a battle on its hands. One of its main sponsors, Anheuser-Busch Inc., has filed a lawsuit against MLB, claiming that the company was entitled to a multi-year renewal on its beer-sponsorship rights based on negotiations that ended with a letter agreement in April 2010, and that MLB all of a sudden went back on its promise to renew, asking for much higher fees. More specifically, Anheuser-Busch claims that MLB changed its mind after it found out the details of the beer company’s new sponsorship agreement with the NFL.
Anheuser-Busch products, including its popular Budweiser brand, are the official beer sponsors of all but four MLB teams (Toronto Blue Jays, Milwaukee Brewers, Colorado Rockies, and Chicago White Sox). The purpose of filing the lawsuit is to have the court order that the aforementioned April 2010 agreement be deemed valid and prevent MLB from negotiating with competitors on a major sponsorship deal.
The court’s decision will be no small holding. Anheuser-Busch plans to spend tens of millions of dollars in conjunction with the MLB, on its Budweiser brand alone, in 2011.
A long-form contract was never drafted nor signed by Anheuser-Busch and MLB regarding the multi-year renewal. The key question is how the court will view the supposed April 2010 letter agreement. Supposedly, on April 22, 2010, the following was written by an MLB executive in a fax to Anheuser-Busch – “We are excited about the extension of this amazing partnership. Congratulations partner!!” Will that be enough evidence to lead the court to believe that an actual agreement had been established?