Soccer fans weren’t the only ones disappointed with the decision to ban beer sales around World Cup stadiums. Anheuser-Busch InBev (“InBev”), maker of Budweiser beer, agreed over a decade ago to renew its contract with FIFA through 2022 to be the tournament’s exclusive beer distributor, and was set to pay FIFA $75 million this year for the privilege. However, days before the start of the World Cup 2022, host country Qatar announced that it was banning all beer sales at and around its World Cup stadiums.
Qatar’s decision raises questions about whether InBev will still be required to pay the $75 million sponsorship fee. While Budweiser’s nonalcoholic beer, Bud Zero, will continue to be sold at all eight of the country’s World Cup stadiums, InBev may have some defenses available should FIFA seek to enforce the sponsorship agreement, including, for example, the frustration of purpose defense. The Restatement (Second) of Contracts, Section 265, defines frustration of purpose, as, “where, after a contract is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or circumstances [of the contract] indicate the contrary.”
Without having all of the facts available, including, importantly, the terms of the actual agreement between the parties, it appears that InBev’s principal purpose in agreeing to sponsor the tournament was the opportunity to be the exclusive beer distributor at World Cup tournament sites. Moreover, at the time the parties contracted there was a basic assumption that beer sales would be permitted throughout the tournament. Finally, it was the Qatari government’s decision to reverse course and ban the beer sales, through no fault of InBev. If successful in raising this defense, InBev may be able to avoid paying some, or all, of the $75 million sponsorship fee.