Anheuser Busch, The NFL and Major League Baseball
For more than thirty years, Anheuser-Busch has been the official sponsor of Major League Baseball in the malt beverage category. The agreement is set to expire at the end of the year, though Anheuser claims - in a recent lawsuit - that it reached a renewal agreement with MLB in April . Specifically, Anheuser alleges that MLB sent a written proposal to Anheuser, which Anheuser signed and returned to MLB. MLB also signed the agreement, sent it back to Anheuser, and both sides congratulated each other. According to Anheuser, although MLB was supposed to prepare a complete contract, it never did so. Anheuser decided to draft the contract in September, and after it was sent to MLB, Anheuser was informed that the agreement was not binding, and MLB planned to offer sponsorship rights to Anheuser’s competitors.
Also, on May 4, 2010, Anheuser revealed that it was to become the official and exclusive beer sponsor of the NFL, starting with the 2011 season. Anheuser alleges that, once this deal was announced, MLB then claimed that the economic terms of the April renewal were no longer satisfactory and that the market had changed. According to Anheuser, MLB eventually demanded that Anheuser pay a “rights fee” several times the amount that was already agreed upon.
Asserting that monetary damages can not adequately compensate it, Anheuser asks the court to declare that the April renewal agreement is a valid and binding contract, and also that any agreement between MLB and an Anheuser competitor would violate Anheuser’s exclusive sponsorship rights.
MLB answered last week, and responded that Anheuser made representations to MLB that MLB would remain Anheuser’s “number one” sports property in the U.S. In light of Anheuser’s subsequent announcement regarding its agreement with the NFL, MLB claims it was “fraudulently induced” to sign the April agreement, which MLB claims is a mere “Letter of Intent.” As a result, MLB asserted a counterclaim against Anheuser, seeking a declaration that the April Letter of Intent is not binding upon MLB. MLB points to the April Letter of Intent itself, which expressly acknowledges that certain terms and conditions must be agreed upon in the future to complete the agreement.
Under certain circumstances, a Letter of Intent may constitute a binding contract in New York, especially if the essential terms have been agreed upon. On the other hand, if the April document is merely an “agreement to agree in the future,” it will not bind MLB. A complete reading will be necessary to assess the merits of Anheuser’s suit. If the Letter of Intent is binding, MLB will then have to show that it relied upon Anheuser’s representations that MLB was its “number one” sports property, and to MLB’s detriment.
My name is Christopher Fusco. I am the managing partner of Callahan & Fusco, LLC with offices in New York, New Jersey, and Pennsylvania.