Despite the expiration after next season of the NHL's collective-bargaining agreement — and almost certain upheaval for teams, the players union and fans — most NHL sponsors already have committed to long-term deals and are largely poised to ride out the turbulence.
The league's marketing office faces a short list of national sponsors with contract renewals coinciding with the end of the NHL's nine-year labor agreement with its players union. Those are Southwest Airlines, Dodge and software and computer server provider Sun Microsystems, which operates the league's official Web site, nhl.com. Dodge is one of the league's older sponsors, dating to the 1980s, while Southwest signed on in 2001, followed by Sun in 2002.
"We are working aggressively with all of them," said Andrew Judelson, the NHL's group vice president of corporate marketing. "We hope they'll continue to see the value of partnership [with the NHL] based on their past histories."
Judelson declined to comment on details of the league's contractual obligations to sponsors in the event of a shutdown caused by labor negotiating gridlock. A corporate marketing executive speaking on condition of anonymity said sponsors typically seek the right to suspend their relationship and withhold quarterly payments for as long as any stoppage might last. Others have a rebate option on money already paid, the executive said.
At least one sponsor, Southwest Airlines, would be inclined to wait to renew its marketing relationship with the league after next season, when its current agreement lapses, until the airline has a clearer view of how the NHL's presumed labor turbulence will affect television rights deals beyond 2004.
"TV is the critical piece of this, so we are waiting for [the NHL] to renew with ABC/ESPN, or to announce new television partners," said Andy Allmann, manager of sports marketing at Southwest. "We will be very interested to see how it all works out. If we have to wait to renew until after the [2003-04] season, we are fine with that."
But a majority of NHL sponsors, covering about 20 categories, have contracts that extend into mid-decade and beyond, including wireless communications sponsor Nextel, which extended its deal for three years just last month. Michael Robichaud, Nextel's sports and event marketing director, recently told SportsBusiness Journal that the NHL provided "language that protects us" in the event of a work stoppage.
Judelson said the league has extended contracts with more than 10 existing partners beyond the end of the 2003-04 season. "In a very challenging economy, we've been able to bring on several new partners [Starwood Hotels, Kellogg in the U.S. market and Lego in the United States and Canada]," he said. "We are also seeing promotional spending by our partners continue to increase, from $350 million to $400 million in little over a year."
During the past two years, the NHL extended category exclusivity with Labatt, the Canadian brewery, financial services sponsor MBNA and MasterCard on five-year deals; Anheuser-Busch (in the United States), Coca-Cola, Kraft Nabisco (in Canada), McDonald's (in Canada) and PowerAde on four-year deals; plus Nextel for three more years.
The NHL has been blessed by labor bliss compared to Major League Baseball and the NBA for nearly a decade. Thus, a loyal, mostly content fan base and the value prices that NHL deals offer can be irresistible for the right company.
But the question remains: Are the entities signing the sponsorship checks content enough to ride out a work stoppage?
"Sponsors are really asking, 'Do I have a platform when [players] get back to work that I can use in the same way as before the stoppage?' " according to an industry marketing source. "If fans go away, it could damage the property."
"As with most professional sports, renewals and sponsor commitment is requisite to a fair degree of labor peace," said marketing consultant Scott Becher of Miami-based Sports and Sponsorships, which handled sponsor sales for the 2002 NHL All-Star Game.
"If you look at the recent renewal by Nextel, it seems to suggest they know there is a risk of a work stoppage and are prepared to plan for that accordingly. Does [labor strife] inhibit some of your selling efficiencies? Yes, certainly. Is it insurmountable? Certainly not."
Part of the survival equation for the NHL might be how well it manages damage and image control amid a potential stoppage.
"When you have a trending down [average TV ratings] number," said former SFX Sports marketing executive David Paro, now an independent marketing consultant, "and the league is saying our [economics] aren't good, and players are saying [they] need a bigger piece of the pie, then that's the perception — that they are fighting over money instead of saying that maybe there should be a bigger focus on just building the sport."
Steve Woodward is a writer in Chicago.
