SBD/February 23, 2011/Marketing and Sponsorship

Labatt Plans To Pursue Legal Action Against NHL Over MillerCoors/Molson Coors Deal

NHL's deal with MillerCoors/Molson Coors worth an estimated $375M
After the NHL yesterday announced a seven-year deal with MillerCoors in the U.S. and Molson Coors in Canada, Labatt Breweries of Canada claimed that they "had already struck a deal with the NHL to renew sponsorship rights in Canada through 2014," and said that they will "pursue legal action to ensure their own deal is honoured," according to Josh Rubin of the TORONTO STAR. The new North America-wide sponsorship agreement with MillerCoors and Molson Coors is worth an estimated $375M and is the "biggest sponsorship agreement in NHL history." Molson Coors Canada President & CEO Dave Perkins said that it "wasn't a tough deal to decide on." Perkins: "This is a great way for us to build on the momentum for Canadian [hockey] which grew around the Vancouver Olympics." Rubin notes the new deal makes Molson Canadian the official beer of the NHL, a role held currently by Bud Light. 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." However, Labatt VP/Corporate Affairs Charlie Angelakos said, "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." NHL Deputy Commissioner Bill Daly said in a statement, "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." A source said that the legal dispute "looks particularly bad for the league." The source: "What it boils down to is this: Did the NHL realize how far along the road the Toronto office was in talks with Labatt?" Rubin notes 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" (TORONTO STAR, 2/23).

TAKING IT TO THE COURTS: Angelakos said that a "lawsuit will be filed in Toronto in the near future." Angelakos: "From our standpoint, nothing went wrong. We completed legally binding terms of renewal for our sponsorship agreement with the NHL" (GLOBE & MAIL, 2/23). But NHL COO John Collins today said, "We completely disagree with their assertion that we had a deal for next year" (Bloomberg TV, 2/23). The WALL STREET JOURNAL's David Kesmodel notes the dispute is the latest involving A-B InBev, the "world's largest beer maker by sales, and a major sports league." The brewer's U.S. unit sued MLB Properties in November, "claiming that it reneged on a multiyear renewal of sponsorship rights and demanded 'exponentially higher' fees." A-B InBev "later dropped the suit after the two sides reached a new pact to continue Budweiser's role as the league's official beer" (WALL STREET JOURNAL, 2/23).

MONSTER DEAL: Collins said the MillerCoors/Molson Coors sponsorship is a "monster deal." Collins: "They're going to have major position across all of our events -- both our existing events as well as a lot of new ones that we hope to create." Perkins added, "What this will allow us to do is to take the brand to a whole new level. It enables us to really take hockey to our beer drinkers and to fans, and to provide hockey experiences behind the brand." The CP's Chris Johnston noted Collins "joined the NHL in August 2008 after holding a number of positions within the NFL," and he has "helped develop the league's current strategy and believes it is starting to pay off." Collins: "It's created a really easy path for corporate partners and advertisers to spend money against hockey. In this environment, that's critical -- to be able to attract the blue-chip top advertisers and get them to spend their marketing and advertising dollars on your sport." Johnston wrote business "has been very good for the NHL," as the league had "already eclipsed last year's number of sponsor commitments by the midpoint of this season" (CP, 2/22). In N.Y., Richard Sandomir notes the league indicated that its sponsorship revenue grew 32% from the '08-09 season to the '09-10 season. Since this season began, the NHL "has renewed deals with Bridgestone, Cisco Systems and McDonald's and signed new ones with Canadian Tire, Tim Hortons, BlackBerry, Discover (in the United States) and Hershey's (in Canada)." But the new beer deal is "by far the biggest." The money from MillerCoors and Molson Coors "will be split among a rights fee to the league, spending with teams, TV advertising and the value of the breweries' promotional campaigns" (N.Y. TIMES, 2/23).

IMPACT ON TV RIGHTS: Collins was asked if the league’s new beer deal could positively affect the next television rights deal for the league. He said the league's TV partners "want to know that people are going to spend money in advertising.” Collins: “Advertising is kind of the fuel that drives the entire sports business and certainly drives rights fees, so a deal of this size and a commitment from a company like (MillerCoors) is an important signal that business has got a lot of momentum and a lot of upside going forward" (Bloomberg TV, 2/23).
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