Anheuser-Busch surprised the sports and entertainment industry this week with the announcement of a new sponsorship model that rewards properties based on a team’s performance on the field, court or track and with fans during a given season.

A-B plans to implement the model across its entire portfolio including music festivals, emerging sports and other properties.

And the impact will be significant. Anheuser-Busch was the second-biggest U.S. sponsorship spender in 2016 (behind PepsiCo) with a $355 million spend, according to ESP research.

Below, Anheuser-Busch shares the thinking behind the new strategy and how it will impact the properties it sponsors.

Background
The traditional sponsorship model of multi-year deals with fixed fees and marketing tactics doesn’t deliver the best value in the current environment where many teams and leagues are facing challenges engaging fans. As a leader in sports marketing, we’re delivering an innovative solution that provides incentive to maximize the value of sponsorships for us and our partners.

It’s important to note that this is not a cost-cutting measure for A-B. This is about maximizing value for us and for our partners, and we expect to spend the same amount on sponsorships with this new model.

Details
Under the new model, each of our sponsorship deals will include a guaranteed baseline fee with incentives on top of that tied to team or league performance that will increase our investment in the partnership.

Every one of our sponsorships is unique and we work together with our partners to identify the incentives that make sense.

For example, If a team has a turnaround season and makes the playoffs, we’re willing to increase our investment for the value that brings. If a league’s marketing team is using a new digital platform to engage fans and increase awareness of our sponsorship, we’ll recognize that value.

Partners
Currently, our deals with NASCAR, the Minnesota Timberwolves, New Orleans Saints and the Los Angeles Dodgers follow the incentive-based model, and we’ve all been energized by the new approach.

Timing
As our current sponsorship deals come up for renewal, we’ll be deploying this incentive-based model to all negotiations. From traditional sports properties to emerging sports, music and beyond, we expect each of our partners now and in the future to commit to delivering results that maximize the value of our sponsorship.