No More Clydesdales?!? Say It Ain't So!

We’re all familiar with Budweiser’s ads. You know, the ones with the Clydesdales playing football? Or if you’re really good, we can throw it back to 1995 and the “Bud-weis-er” frog commercials. Unfortunately, we may be seeing less and less of those beautiful beasts. The recent sale of Anheuser-Busch to Belgium-based InBev could have effects on advertising and marketing that could reach all corners of the American sports industry. It’s a big buy for InBev. The $52 billion deal unites the maker of Budweiser and Michelob with the producer of Stella Artois, Bass and Brahma. The two companies would have had over $36 billion in yearly sales using 2007 figures, making it the world’s largest brewing company.

According to Nielson Media research and the SportsBusiness Journal, A-B is the country’s number one sports advertising and sponsorship spender. They spent $218 million in 2007 alone. The A-B brand has sponsorships in the NFL, MLB, NBA, NHL, NASCAR and the PGA Tour. Consequently, teams and leagues have come to depend on A-B for much of their promotional and advertising revenue. Though A-B shareholders may be happy with the $70 per share deal, it turns out that the sale has fomented some concern among American sports marketing executives.

With the A-B board no longer calling their own shots, many sports marketers predict that the American company will ultimately have to cut ad spending to keep in line with InBev’s cost and price cutting post-merger strategy. Tom Pirko, a consulting executive at Bevmark who has consulted for both firms, anticipates as much as a 33% cut in A-B’s sports marketing spending. As the new team works on debt and cost reduction, Pirko says “It’s [Advertising] all going to decline severely.” But it won’t happen overnight “because they have to make things look good here. It’s a lot easier to cut an ad budget than to close a brewery.”

However, others are not so sure that the merger will truly alter the sports marketing landscape in a negative way. For one, sports sponsorships are often long term deals which carry conditions that make them hard to break or modify. Also, A-B spends an additional $300 million a year on marketing outside the US, a market that InBev could stand to gain ground in. Moreover, there seems to be no real reason why A-B and InBev couldn’t just combine forces and continue as usual. After all, InBev’s strategy appears to be to let A-B function with relative sovereignty due to A-B’s long-standing and deeply rooted advertising tradition in the US. It thus seems unlikely that InBev would significantly slash something that has been successful for so long. So expect ad spending to decline slightly, but not dramatically so. Finally, the deal could open up opportunities for other US-based breweries to fill in the gaps should A-B cut spending. It could allow companies such as Sam Adams or Coors to step up and position themselves as the new All-American beer. Increased spending from such companies would probably level out whatever could be lost from cuts by A-B.

But of course none of this will do anything to bring down the price of beer at a game. I’d almost rather brew beer out of my own spit than spend $8.75 on a domestic brew.