Should Sports Leagues Be Worried About Merger Of Anheuser-Busch And Miller?
Anheuser-Busch InBev SA agreed to a $107 billion deal to acquire SABMiller on Wednesday. The deal would create a consumer products giant with $64 billion in revenue and $24 billion in EBITDA.
Given the size of the organizations, one of the clear the losers of the merger would seem to be sports organizations. The companies rank among the biggest sponsors in sports spending more than $500 million per year on corporate partnerships. Anheuser-Busch Inbev spent $300 million in the U.S. alone on sports last year, according to IEG.
The National Football League is the largest and most successful sports league in the world. It projects that it will earn $12 billion during the 2015 season. Last week, Anheuser-Busch extended its Bud Light sponsorship of the NFL for another six years at a cost of more than $1.4 billion. Bud Light launched a campaign this football season with 28 NFL team-related cans.
If these two companies merge, then there would be one less major alcoholic beverage company. This means less of a need for InBev to purchase advertising generally and sports sponsorship inventory specifically. If there is less competition then why should the new company buy advertising?
This logic relies on a faulty assumption. The combined AB InBev-SABMiller will be like other large corporate sponsors that work with sports properties. The company will work with sports leagues and teams when these properties develop sponsorship activation that is unique to their needs. This includes a need for sports properties to communicate how they deliver a significant ROI in different channels, including in-venue, media, social, and mobile channels. The merger of AB InBev and SABMiller does not mean this combined company does not need sponsorship. It means that it will want to spend its advertising on sponsorship that meets its unique needs. In fact, Anheuser-Busch extended its Bud Light sponsorship for another six years for more than $1.4 billion last week.
Creating and communicating unique experiences and value propositions is where the sports industry is moving in the future. For example, sports fans want to consume content when, where, and how they want it. Sports organizations have adjusted to meet these changes in consumption patterns. Major League Baseball Advanced Media has grown to be one of the most successful sports media ventures in the world based on the foundation of delivering content, tickets, and promotions directly to baseball fans.
Corporate sponsors are not much different then fans. The most successful sports teams are the ones that can effectively analyze this audience and create sponsorship inventory that meets the demand. Saying a sports organization can effectively target 18-34 males is not always enough to retain sponsors like InBev-SABMiller. Teams and leagues that can generate and communicate value in specific ways will continue to attract sponsors regardless of what mergers occur in the future.
Photo courtesy of InBev-SABMiller via www.ab-inbev.com