Pepsi Renew MLS Deal but Lose Out in Local Rights

April 13, 2011

A four-year extension has been agreed to a long-running partnership between soft drinks giant Pepsi and Major League Soccer (MLS).

Having been one of the league’s founding partners in its launch year of 1996, Pepsi has negotiated its renewal with the league’s marketing arm, Soccer United Marketing (SUM). The new deal is reported to be worth a low eight figure sum, some US$12m in total.

PepsiCo brands Pepsi, Aquafina and Gatorade will retain national exclusivity as the league’s respective official soft drink, bottled water and sports drink under the terms.

However, Pepsi was unable to secure local rights to the league’s individual teams, a rights category that remains available to the league’s 18 professional clubs.

Jeff Dubiel, vice president of sports marketing for Pepsi, admitted: “We’d love to have league plus local rights to all of the MLS teams, but I don’t think losing local rights will impede us. All other major leagues are operating this way, so we expected MLS would get there too.”

In March, SUM announced a similar renewal which again saw Anheuser-Busch, another of the MLS’ founding partners, lose out on local rights after years of league-wide branding being sold centrally. The new deals put Pepsi and Anheuser-Busch in line with the league’s other major partnerships with Allstate, AT&T, Home Depot and Volkswagen.

SUM president Kathy Carter, speaking to SportsBuisness Journal, stated: “It’s an evolution, not a revolution. As the value of the league has increased, our clubs have become more relevant. They have relationships with local marketers and distributors, and by trying their hands with exclusive deals we were not taking advantage of their value.”

Despite the change in the way marketing rights are sold, Pepsi is still pursuing local rights to a number of the league’s teams, which according to Dubiel, include the Chicago Fire, Columbus Crew, DC United, New England Revolution, Real Salt Lake and Sporting Kansas City, all of whom have stadium deals with the drinks firm.

Fellow MLS clubs the Colorado Rapids, Philadelphia Union, Portland Timbers and Seattle Sounders all have stadium deals with Pepsi’s main rival Coca-Cola, while the San Jose Earthquakes signed a multi-year partnership with 7Up in March.

Elsewhere, MLS has agreed a multi-year partnership with value hotel brand Four Points by Sheraton, a subsidiary of Starwood Hotels and Resorts Worldwide.