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New Zealand: DB Breweries is to take legal action against the NZRU (the New Zealand Rugby Union) this week in the face of a major row over what beer fans can buy at All Blacks test matches. Rival brewers Lion want the NZRU to make the Steinlager the only beer available at All Blacks tests at Christchurch's Jade Stadium, Wellington's Westpac Stadium and Auckland's Eden Park, The New Zealand’s Staff posted on September 26 2004.

The threat of going to the courts to resolve the matter has already caused a backflip at the union's Wellington headquarters with the NZRU. The Union told DB in May it planned to terminate its contract, but on Friday it changed its mind. That late move has not dimmed DB's appetite for a legal stoush.

For the past seven years, the three major test venues have poured both DB and Lion brands at internationals as a result of a tri-partite agreement signed by the two brewers and the NZRU. That agreement, brokered by then NZRU CEO David Moffett in 1997, gives shared rights to DB at test venues where it is a sponsor of the provincial union. Those rights has been a simmering hot potato in recent years but an embarrassing administrative blunder by the union's Wellington headquarters further inflamed the issue.

At the same time as the NZRU posted a letter to DB, updating the brewer on the issue, it wrote to Lion outlining and suggesting several strategic initiatives to resolve the dispute to Lion's satisfaction. However, the envelope containing the letter posted to DB also included a copy of the letter, which was sent to Lion. DB executives are seething over the contents of the Lion letter.

Sources told the Star-Times that DB believes the letter seeks to have the Auckland, Wellington and Canterbury unions consider new sponsorship contracts with Lion and regard it as confirmation that the NZRU is actively working with Lion to reduce if not completely remove DB from the premier test venues. Both letters were written by NZRU deputy chief executive Steve Tew and were mailed earlier this year as protracted discussions between the union, Lion, DB and the Auckland, Wellington and Canterbury unions intensified.

The row is unresolved and DB now appears set to dramatically up the stakes by pursuing court action to preserve what it claims are its legally binding rights to pour its beer at the three stadia.

Tew yesterday confirmed the termination notice sent in May had been withdrawn on a "without prejudice basis in the hope that it will bring DB back to the negotiating table to see if we can find a solution outside the realms of the court".

He also confirmed the letter gaffe. "It did happen. The letter was not actually material to the negotiations we were having with DB and Lion. "It was an error and it would have been better if it had not happened," he said.

The prospect of defending itself against legal action taken by Canterbury, Wellington and Auckland's major sponsor is a nightmare scenario for the NZRU at a commercially and strategically sensitive time. The union is in renegotiation with blue chip sponsors, trying to complete the critical Sanzar broadcasting deal and is also chasing a one-off cash bonanza from next year's Lions tour.

It also needs the co-operation of the powerful Auckland, Wellington and Canterbury unions to implement the Competitions Review and to provide support for the fast-approaching negotiation with the Players' Association for a new collective bargaining agreement outlining employment terms and conditions for professional players. Auckland, Wellington and Canterbury have been vocal in their support of DB in their communications with the NZRU. The three unions are worried they will suffer financially in renewal discussions with DB if the brewer is stymied or stopped from pouring its beer at All Blacks tests.

Lion has long been irritated by the 1997 agreement even though it signed it. It believes the agreement may not be legally enforceable, and has for several years been complaining to the NZRU that as a major sponsor of the All Blacks, Steinlager should be the only beer available to supporters at test matches.

The issue intensified when Lion renewed and significantly increased its Steinlager sponsorship of the All Blacks last year, making the brewers second only to adidas in size of sponsorship fee paid to the NZRU. While the new contract does not require the NZRU to gain exclusive rights for Lion, the brewer made it clear it wanted to see progress on the issue. Since that time, Tew has been handling the negotiation and the NZRU also employed a consultant to assist.

DB's national sponsorship manager Peter Wills refused to make any comment on the letter error or on possible legal action. However, several sources told the Sunday Star-Times legal action would be taken this week.


29 September, 2004