Modelo set to replace Bud Light as UFC U.S. beer sponsor in 2018

The Sports Business Journal reports that beer maker Modelo Especial will replace Bud Light as the UFC’s Official Beer for the United States starting in January 2018.  The deal is a benchmark move by the beermaker as it is attempting to make a splash in the U.S. market.

Bud Light signed a 10-year pact with the UFC in 20008.  At the time, the deal was huge for a still-growing company.  But, it appeared that despite renewal talks and being pleased with the sponsorship performance, Annheuser Busch did not want to come back at the same terms.

Financial terms were not disclosed but the report indicates it rivals the $10 million deal the UFC had with InBev for the global sponsorship.  The new deal with Modelo allows the UFC to negotiate sponsor deals with other beer companies outside of the United States.

The brand is new to sports sponsorships as it ran its first national English language TV campaign 18 months ago and signed its first sports sponsorship just a year ago.

According to the Sports Business Journal, Modelo is attempting to make a move into sports and this is the biggest deal thus far for the company.  Perhaps a surprise, Modelo is the number 1 beer of choice in the Los Angeles market.  It is the fastest-growing beer in the U.S. over the last 5 years according to SBJ.  Only sister brand Corona, is the best-selling import beer.

Payout Perspective:

The deal is a calculated risk for Modelo as it is seeking to grab more of an audience an attract the vaunted 21-34 male demo.  Unlike other sports sponsorships, this may come with some risk since UFC events are announced in a relative short timespan as compared to other sports.  Thus, market activation targeting a city (outside of Las Vegas) may be somewhat harder than baseball where it is known what cities will hold events.  For the UFC, it’s a good win for the company.  Not only does it grab a US beer sponsor, there is not global exclusive so the company can negotiate with local regions and countries to be the official beer in those respective areas.  Yet, the speculation is that the financial terms of the Modelo deal is on par with what Bud Light paid for the global sponsorship.  Also, the deal may open up what could be a lucrative liquor/spirits market as the Bud Light deal blocked this potential.