SBJ/May 28-June 3, 2012/Marketing and Sponsorship

NHL signs five-year extension with Pepsi

The NHL has completed what many thought would be its most challenging renewal, signing a five-year extension of Pepsi’s North American sponsorship rights.

Financial terms could not be learned, but sources connected to the deal said negotiations were finalized in early to mid-May and that the two sides celebrated the deal at Game 4 of the Eastern Conference Finals between New Jersey and the New York Rangers on May 21.

An official announcement is expected sometime during the Stanley Cup Final, which starts Wednesday.

Sources said the deal comes with commitments for additional stateside beverage and salty snack food promotions around the league’s big events like the Winter Classic and during the spring, which would fit well into the league’s strategy of fashioning the two months of the Stanley Cup playoffs into the NHL’s version of March Madness.

“We had very productive discussions with Pepsi executives, including [CEO of PepsiCo Americas Beverages] Al Carey, who saw the value in where we are going and is supporting our jewel events, big-event strategy at retail with a combination of beverage and snack food promotions,’’ said NHL Chief Operating Officer John Collins. “It fits well with the strategy we’ve adopted for [fellow NHL sponsor] MillerCoors, and that’s not coincidental.’’ Pepsi has been an NHL sponsor since 2006.

“Carey was a key person because he is a big supporter of the sport,” said former NHL Chief Marketing Officer Andrew Judelson, who cut the league’s original Pepsi deal and now is a top marketing executive at WWE. “Relative to the cola wars, it is clear that Coke has been winning the race recently, but it is still a two-horse race, so keeping up to par with sponsorship assets is obviously still important to both competitors.’’

The renewal of one of the NHL’s largest sponsors when the league is heading into potential labor difficulties — its collective-bargaining agreement expires Sept. 15 — is also a nice vote of confidence.

Aside from the NHL, Pepsi’s national sponsorship portfolio includes league rights deals with Major League Baseball, Major League Soccer and the NFL, as well as with NASCAR drivers Jeff Gordon and Dale Earnhardt Jr.

With its biggest renewal concern now completed, the NHL is looking for new business among packaged goods, brokerage/financial services, consumer electronics and airlines. In Canada, it is looking to fill categories only within the insurance and consumer electronics categories.

“It’s never easy to sell in the kind of environment a labor impasse can create, but my experience in working in exactly that kind of situation is that full transparency works more effectively than anything,” said Ed Horne, chief operating officer of Madison Avenue Sports and Entertainment and an executive with the NHL during its 2004-05 lockout. “That’s why we didn’t lose a sponsor after our labor situation and probably why you see a significant sponsor like Pepsi returning.”
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