A restaurant, as an additional source of revenue, sought to sell the sponsorship rights to its establishment, or parts or its establishment, to a third party. The third party would then sell the sponsorship rights to other companies, including alcoholic beverage manufacturers and wholesalers. As an example, the sponsorship rights would result in a particular room in the establishment having signage identifying it by the name of an alcoholic beverage. For example, the “bud Light Room” or the “Dom Peringon Lounge” might be room names at the restaurant.

A property owner that leases to a tenant, is not considered to give the landlord an “interest” in the tenant’s business. However, the Authority restricts the inclusion of terms in a lease that entitles the landlord to a percentage of the tenant’s retail sales (often called “percentage rent”).

Historically, brands of alcoholic beverages have been associated with the sponsorship of sports teams, concerts, and similar events at venues designed for such events.

In the view of the Members of the Authority, there are material distinctions between the types of traditional sponsorship arrangements at sports and concert venues, and similar arrangements with other retail premises like a restaurant. In addition to the history of manufacturers and wholesalers being involved in the sponsorship of sports/concert venues, the purpose behind the sponsorship of those venue and premises such as this restaurant are different. Neither the alcoholic beverage manufacturers and wholesalers, nor the venue operator, seek these sponsorships to draw business for the retailer or create additional revenue for the retailer. The purpose of the sponsorships arrangements approved by the Authority at sports and concert venues is the promotion of the brand of alcoholic beverages.

The primary purpose of this arrangement at the restaurant is to provide an additional source of revenue for the retailer. The retailer is using the arrangement to obtain a financial benefit from the use of the name for the alcoholic beverage. This financial interest is impermissible under the tied house laws. In addition, the Members of the Authority are not convinced that such arrangements will not be used by manufacturer and wholesalers to illegally control, or at least attempt to influence, the choice of alcoholic beverages offered for sale by the restaurant. Thus, sponsorship at a restaurant is in violation of the tied house regulations and not permissible practice.