Major World Cup Sponsors Cede Exclusivity Rights! What?


Writer, Ron Derby (rderby1@bloomberg.net) recently reported on www.Bloomberg.com that Mcdonald’s, the world’s biggest restaurant company and official World Cup sponsor, waived their rights to exclusively supply food at World Cup soccer stadiums and fan parks during the tournament starting this June 11.

What? (that’s what I said.)

Apparently, the company will instead focus on providing food at its 132 restaurants in the country.  Sechaba Motsieloa, marketing director at McDonald’s South African unit said:

“We are best suited to leverage our position at our restaurants than outside that environment…it’s also a “consideration of capacity.”

According to the article:

McDonald’s expects sales at existing stores to increase between 17 percent and 35 percent in the build-up to the tournament that begins on June 11, with revenue seen climbing 10 percent during the actual event, Motsieloa said.

But this doesn’t mean that stadium concessions will be filled with mom & pop operations or that fans will be expected to pack a bunny chow in their bag.  No, McDonald’s, has allowed FIFA, to find a partner to provide food inside stadiums and fan parks, but they can’t be a branded fast-food company.  According to Motsieloa:

McDonald’s will continue to maintain their in-venue presence through its player escort program at all stadiums, and one McCafe coffee- house-style outlet outside the international media centre at the country’s main stadium in Johannesburg, which will host both the opening and final games.

Also, earlier this month, Anheuser- Busch InBev NV, the maker of Budweiser and Stella Artois, ceded their rights to be the exclusive beer provider inside stadiums.

What’s going on here?

Is it related to the fact, as Mr. Derby reports, that:

South Africa earlier this month cut its visitor estimate for the tournament to 350,000 people from 450,000 previously, with only 100,000 international air tickets having being sold three months before the event?

Are sponsors expecting lower tourism related revenue opportunities?  Are Anheuser-Busch Inbev NV gambling that there will be more money to be made (or less to lose) by focusing on their operations outside the stadiums and fan parks, like McDonald’s are doing.  Are they dropping South Africa (and Africa) as a market?  Are they just anticipating and mitigating the risk of angering fans for only offering Budweiser at the stadiums, particularly in light of their main competitor, SABMiller (SAB = South African Brewery), being a South African born brand?

Or did SABMiller, pay their rival A LOT of money to take over their rights?  It seems like that’s pretty feasible, given that they just reached an agreement with FIFA to supply as many as 10 million beers at the 10 fan parks, serving up to 280,000 people a day, that have been built to cater to fans unable to get game tickets. Perhaps on a per game basis they calculated greater opportunity to build their brand locally (and sales) outside the stadium knowing that the majority of those watching from the fan parks (rather than the majority of those in the stadium) will be the folks remaining in the country after the games are done.

Whatever the reason is, I’m assuming it was a calculated decision; it just seems strange for a sponsor to pay all that money for the sponsorship rights only to give them up 2.5 months before the games begin.

This is a very interesting trend and I’ll be curious to to learn more about the underlying motives of McDonald’s and Anheuser-Busch Inbev.

For Mr. Derby’s full article, click here: http://www.bloomberg.com/apps/news?pid=20601116&sid=am4CpTMfPov0

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One Response

  1. My opinion is that AB would rather not force everyone to drink their beer. If I remember correctly, back in Germany 06, the only beer available was Budweiser. Can you imagine going to Germany, one of the beer capitals of the world, and drinking a low quality American beer? There must have been a backlash, and many people who built ill will towards Bud (and American beer in general). It would be smarter for them to focus on their brand (long term) than making the extra sales (short term). McDonalds is probably using the same strategy.

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