Wednesday, February 23, 2011
Molson Coors is set to become the official beer of the NHL as part of a sponsorship agreement
Molson Coors hit archrival Labatt and Anheuser-Busch/InBev with a bruising body check Tuesday, signing a coveted major sponsorship agreement with the National Hockey League.
Labatt, meanwhile, accused the league of unsportsmanlike conduct, alleging it had already struck a deal with the NHL to renew sponsorship rights in Canada through 2014, and said it will pursue legal action to ensure their own deal is honoured.
The new North America-wide sponsorship agreement with Molson-Coors is worth an estimated $375 million, runs for seven years, and is the biggest sponsorship agreement in NHL history, the league announced Tuesday.
It replaces two existing national deals, with Labatt in Canada and its parent company Anheuser-Busch/InBev in the U.S., which it said expire after this season.
“This is a monster deal,” said NHL Chief Operating Officer John Collins, of the agreement with Molson Coors in Canada and Miller-Coors in the U.S. (MillerCoors is a U.S. joint venture of Molson Coors and London-based SAB Miller).
It wasn’t a tough deal to decide on, said Molson Coors Canada president and CEO Dave Perkins.
“We’ve known the power of hockey to connect with our customers for a long time, and we’ve been around enough to keep our ears to the ground for new opportunities. This one was glaringly obvious,” said Perkins. “This is a great way for us to build on the momentum for Canadian which grew around the Vancouver Olympics.”
The new contract also makes Molson Canadian the official beer of the NHL, a role held currently by Bud Light.
Not that Bud Light or Budweiser will be disappearing from league rinks any time soon, however. As reported in the Star Saturday, Labatt recently signed long-term sponsorship deals with the Calgary Flames and Vancouver Canucks, and also has deals with 22 of the NHL’s 24 U.S.-based teams. Those teams offer Labatt or AB/InBev products in their arenas, and feature them in advertising campaigns. Tuesday’s deal, however, allows Molson-Coors to use NHL properties like the Stanley Cup or the league logo in advertising and marketing campaigns.
If Labatt and AB/InBev had gotten a new league-wide deal in addition to their team deals, it would have kept Molson-Coors from reaching a big part of their target market, according to Alan Middleton, a marketing professor at York University’s Schulich School of Business.
“Molson-Coors had to do this deal or they would have been out of the game. Part of marketing, particularly in sectors where there are only two dominant players, is keeping your rivals out of it,” said Middleton. Labatt’s owners may also have simply not wanted to pay the NHL’s asking price.
“I think the people who run AB/InBev have been looking at a lot of the spending on sports and wondering if the return on investment is really what it should be,” said Middleton.
Molson’s Perkins denied the deal was a defensive one.
“This is really about what’s right for us,” he said.
The $375 million includes roughly $100 million in rights fees, another $100 million in guaranteed advertising buys, and $100 million in “activation” money, which would include promotions such as including miniature Stanley Cups in cases of beer, promotions at restaurants, those “fan experience” tents at all-star games and drafts, or even trips to NHL events like the Stanley Cup or draft.
Still, Labatt’s Charlie Angelakos, vice-president of corporate affairs, insisted: “We have an agreement with the league and are pursuing all legal remedies available to us to enforce this agreement . . . and we will pursue our case aggressively.”
Bill Daly, the NHL’s deputy commissioner, hit back at Labatt’s claim.
“Labatt has been and continues to be a terrific partner, but we strongly disagree with their assertion that an agreement was in place for the 2011-2012 NHL season. We have no further comment at this time,’’ Daly said in an e-mailed statement.
While the two beer rivals have long been at each other’s throats, one source, familiar with league business, who asked not to be named, says the legal dispute looks particularly bad for the league.
“What it boils down to is this: Did the NHL realize how far along the road the Toronto office was in talks with Labatt?” the source said. Labatt had what the source characterized as a hand-shake deal for Canadian rights in November, while talks with Anheuser-Busch/InBev for a new U.S. deal hadn’t progressed as far. The source said the NHL was seeking quadruple the value of its old U.S. deal in negotiations with AB-InBev.
While the Molson Coors deal doesn’t include pouring rights — the lucrative right to sell Molson’s beer at team rinks — Perkins has no doubt the deal will be worth the hefty price tag.
“We’ve had a lot of experience with sports properties at this company, and I’ve got a lot of confidence in our ability to activate these rights in a way that will add to our bottom line,” said Perkins.
While NHL teams had long signed lucrative local sponsorship deals, the league itself had languished when it came to national or continent-wide deals, Collins acknowledged.
While he wouldn’t specify numbers, Collins said the Molson-Coors deal was a far bigger package than what their archrivals were offering.
“We talked with our incumbents for quite some time but quite frankly the Molson-Coors guys came in and put a very large and almost peremptory offer on the table,” said Collins. The NHL currently has 28 sponsorship deals, including Canadian and U.S. national deals, and some which are North America-wide.
With the league searching for a new U.S. TV contract after this season, having that many sponsorships — some of which include guaranteed advertising buys — will help the NHL’s position at the negotiating table with broadcasters, Collins acknowledged.
Source: The Star