This Lawsuit's For You: Why Litigation Is A Black Eye For Major Sports Properties

As someone who has been involved with selling and buying sponsorships for about 20 years now, a couple of recent lawsuits involving sponsors and sports Leagues have struck me as, well, just plain nuts. In the first, Anheuser-Busch, the "Official Beer" sponsor for some 30 years, is suing Major League Baseball.

In essence, Bud claims it had signed a letter of intent to renew that deal back in April, but then MLB saw that Bud had signed on as an official sponsor of the NFL for a lot more money and, so, MLB wanted to renegotiate its own deal. When Bud balked, MLB started talking to other beer brands. MLB denies all of this, however. In a response to the lawsuit, it says that the letter of intent was non-binding and that it could break it because Bud negotiated in bad faith. MLB claimed that the NFL deal broke a promise in its existing deal that baseball would always be the No. 1 sports property for Bud.

You know what? I don't care who's right and who's wrong. I'm just appalled that all this dirty laundry is being aired in public, and I hate the message it sends to other current and potential sponsors. If you are the CEO of a major corporation contemplating a large sponsorship deal, would you want to risk finding yourself in a situation like this? Surely, there was a way to settle this behind closed doors, whichever side was actually to blame.

I'm a great believer in the power of sponsorships to change consumer perceptions and drive sales. However, I also know how difficult it is to persuade major corporations to invest millions of dollars in a medium that is far less well understood than traditional advertising. Add to that the current recession, and the last thing anyone selling sponsorships needs is to be asked by their prospective sponsor, if they'll be suing each other in five years.

While Budweiser is suing MLB to stay in, the U.S. Tennis Association (USTA) is suing Olympus for allegedly reneging on its sponsorship, and Olympus is countersuing. Olympus claims the USTA effectively broke the contract by having a competitor (Panasonic) become a sponsor in a different product category (televisions) while the USTA claims that Olympus' exclusivity was absolute within the legal definition of the camera category. Again, I don't care who's right and who's wrong; I just find it sad that it got this far.

The reality is that these disputes happen all the time without ever reaching litigation. When I was at sports marketing agency ISL, we dealt with these types of disputes all the time with sponsors of the Olympics and other major global events. But it never got to the point of a lawsuit because we saw the potential for damage to the image of the property and our ability to market it.

In fact, the last time a lawsuit like this happened was when MasterCard sued FIFA in 2006 for giving sponsorship rights to Visa, despite what MasterCard claimed was a valid deal for it to be the sponsor. That FIFA, the body that chose to play the World Cup in Qatar in 105-degree heat, would show such expensive arrogance (it eventually cost it $90 million to settle with MasterCard) may not be a surprise. However, for such august institutions as MLB to be involved in similar suits is surprising.

Every time I read one of these articles about a fresh lawsuit, I am reminded of the clever ads for the Windows 7 phone. I have the same shocked reaction as the lingerie-clad wife being ignored while her husband texts furiously in bed -- "really?"

Editor's note: Since this piece was written, the MLB and Anheuser Busch renewed their deal and dropped the lawsuits against each other.
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