Kansas City Chiefs sue ‘official tequila’ sponsor for $4 million, alleging missed payments

FILE - The Kansas City Chiefs and the Cleveland Browns play during the first half of an NFL...
FILE - The Kansas City Chiefs and the Cleveland Browns play during the first half of an NFL football game at Arrowhead Stadium, Sunday, Sept. 12, 2021, in Kansas City, Mo. Kansas City Chiefs chairman Clark Hunt says the team prefers to renovate Arrowhead Stadium rather than build a new stadium. But that will depend on a number of studies that are examining the structural integrity of a building celebrating its opening 50 years ago this season. (AP Photo/Charlie Riedel)(Charlie Riedel | AP)
Published: May. 24, 2023 at 2:38 PM CDT
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KANSAS CITY, Mo. (KCTV) -After terminating their partnership with California-based Don Neron Spirits Inc. in late February, the Kansas City Chiefs filed a nearly $4 million lawsuit against their “official tequila” sponsor last month, alleging a breach of contract and multiple missed payments, court records indicate. A preliminary hearing is set for August 16, but court records indicate the tequila sponsor has not yet hired an attorney – though the case was filed in April.

Don Neron Spirits did not immediately respond to a request for comment.

Don Neron signed a partnership with the Chiefs in 2021 making them the “Official Tequila of the Kansas City Chiefs” for the 2022 to 2028 seasons, agreeing to pay approximately $4.08 million to hold the title. But the Kansas City Chiefs allege the tequila provider was months late completing their first payment and did not pay the next two back-to-back installments.

The lawsuit, filed in the Jackson County Circuit Court, reveals the Chiefs are asking for nearly $4 million to cover the remaining partnership fee the company failed to pay, interest on missed and late payments, legal fees and other expenses endured while enforcing the original contract.

Court records indicate Don Neron’s first payment of $180,000 was due on April 1 but was not paid until months later in late August. The Chief’s attorney, Keith Volpi of the Polsinelli law firm in Kansas City, Missouri, said the months-long delay carries a $7,308 price tag in interest fees.

The lawsuit alleges the tequila company’s second payment of $180,000, which was due at the beginning of July, was never paid, costing the company $16,863 in interest. Don Neron Spirits also allegedly failed to pay a third installment of $180,000 originally due on Aug. 1, costing the company an additional $14,914, bringing the total interest fees to approximately $39,000.

The company also owes the football club $5,000 to cover attorneys’ fees and the cost to enforce the original contract.

The original contract, signed in December 2021, shows the tequila brand agreed to incrementally increase their partnership fees each season over seven years, paying a total of $540,000 in three $180,000 payments during the 2022 season – the first of seven total seasons. By their final season in 2028, the company was supposed to pay $626,235 in three $208,745 installments. Don Neron also agreed to pay “additional fees” to the Chiefs for post-season games equivalent to 3% of the installment amount for home playoff games and Super Bowl games, and 2% of the installment amount for each away playoff game.

In exchange, the Chiefs would allow the spirits company to brand themselves as the “Official Tequila of the Kansas City Chiefs,” feature the company at the tail-end of each episode of online video series on the Chief’s social media pages, display Don Neron’s logo on the big screen and on an upper LED lights sign for one minute each at Arrowhead stadium and a create designated space during a few Chiefs tailgates dedicated to marketing initiatives, including samplings.

The Chiefs also agreed to re-brand multiple bars, adorn menu signs with the spirits company’s logo and offer a promotional cocktail adorned with the tequila company’s logo.

Don Neron is also the “official tequila” of Sporting Kansas City after signing a five-year partnership with the soccer team in October– its first ever tequila partner. Sporting Kansas City declined a request for comment.