NHL sponsors

Execs weigh impact on NHL’s future sponsors

By Terry Lefton & Christopher Botta, Staff Writers

Published November 26, 2012

Kraft Foods’ decision last week to cancel its annual Hockeyville promotion, in which an NHL exhibition game has been staged in a small Canadian town since 2006, brings into sharp focus the league’s sponsorship business, likely the biggest casualty of a lockout moving into its third month.

Hockeyville was the largest activation staged by any single NHL corporate sponsor, so with the NHL’s third lockout in 18 years, and the cancellation of the Winter Classic outdoor game, an event emblematic of the “new NHL,” the question of the impact on the league well beyond missing games is gaining attention.

“National sponsors will eventually have to move their dollars because they have to sell soap, beer or whatever,” said Peter Luukko, president and CEO of Comcast-Spectacor, which owns the Philadelphia Flyers and the Wells Fargo Center. “Locally, there’s more loyalty, sponsor-wise, and not as many choices, though obviously we don’t take them for granted.”

Respecting NHL bylaws, Luukko declined to speak specifically about the lockout or labor negotiations. But his comments on the league’s sponsors — and the memories that lockouts canceled the entire 2004-05 season and shortened the 1994-95 season to 48 games — resonate with marketers.

“If I was a company being courted by the NHL today, or if I was advising a company being courted, I would be concerned,” said Michael Neuman, the managing partner at Scout Sports and Entertainment, the agency for Geico, which has league sponsorship rights, and around 20 complementary NHL team deals. “The current commissioner [Gary Bettman, commissioner since 1993] has three work stoppages under his belt.”

Sponsors have clauses in their NHL contracts granting relief in the event of a work stoppage, reportedly after at least one quarter of the 82-game regular season is not played. Two weeks ago, MolsonCoors, the NHL’s largest sponsor, cited the lockout as one reason for lagging beer sales in Canada. The brewer said it will ask for financial compensation when the lockout ends.

Experts say interest in the NHL will be market-driven, but that leaves questions for weaker markets. Photo by: ICON SMI

Neuman and others credited NHL Chief Operating Officer John Collins, who declined to comment through a spokeswoman, for his transparency with sponsors during this lockout. But despite the open communication, the lockout is now beginning to affect important activation platforms, and may cause NHL licensees to miss the entire holiday shopping season (see related story).

In the case of Kraft, the company last week very publicly canceled its title sponsorship of Hockeyville, in which two NHL teams play a preseason game in a Canadian town selected for its dedication to the sport. Kraft will instead donate $1 million to Hockey Canada, the country’s youth development program.

“Without the collective-bargaining agreement getting done by Nov. 15, we just couldn’t properly execute Hockeyville at the retail and consumer level,” said Jack Hewitt, vice president of marketing insight and services for Kraft Canada.

Hewitt confirmed that Kraft’s contract for the program has one year left and said the company still plans to sponsor Hockeyville in 2014. He added that Kraft was in regular communication with Collins, Bettman and NHLPA Executive Director Donald Fehr. “They understood where we were coming from,” said Hewitt.

While many observers believe Kraft’s cancellation will be a rarity among current sponsors, one former league sales executive offered a cautionary tale about winning new business.

“We shut down for a full season and it took us two years to get back to where we were,” said Andrew Judelson, who was senior vice president of sales and marketing at the NHL for eight years, including the canceled 2004-05 season, and is now an executive vice president for WWE. “There was a year of selling and then a year of getting those partners up to speed and activating. The unfortunate thing is that the league had so much momentum over the past several years, and now you wonder how much of that momentum has been extinguished. … The good news is social and digital media allow your sponsors to activate and plan to activate much more quickly and in the U.S., most of the NHL partner activation is during the Stanley Cup playoffs, so that is still very possible.”

Genesco Sports Enterprises CEO John Tatum, whose clients include league sponsors MillerCoors and Pepsi, also gave Collins and the NHL points for communication. Still, Tatum backed Judelson’s assertion that signing new corporate sponsors will be the league’s biggest challenge whenever the labor standoff ends.

“New sponsors are going to be the slowest thing to get back,” said Tatum. “They had so much momentum with last season’s playoffs and all the postseason games on national TV for the first time [on NBC and NBC Sports Network]. Fans will come back, but you have to reclaim some portion of their media consumption, because that has changed. I’m also concerned about the franchises that were struggling before the lockout.”

Luukko, from the perspective of a thriving club like the Flyers, agreed with Tatum’s assessment that the league’s weaker markets will resume play having even more challenges of getting attention.

“Fan-wise, the return will be market-driven” Luukko said. “Look at our strong markets: New York, Chicago, Toronto, Montreal, ourselves, and others will come back. You have to be concerned about some of the markets where we aren’t as strong. Where will they be?”

Former NHL Enterprises President Ed Horne, who worked for the league from 1994 to 2007, including the first two lockouts under Bettman, believes the NHL can utilize another lengthy shutdown as an opportunity to rebrand.

“It’s easier to sell after a work stoppage then you might think.” said Horne, now the COO of Madison Avenue Sports and Entertainment. “We had a new story to tell about the game coming back better than ever, and with new marketing efforts.”

On corporate sales, Horne revealed the game plan after the 2004-05 lockout: “The starting point was trying to hold on to the business partners we had,” said Horne. “We didn’t lose any [sponsors] because there was real transparency with our partners. If you can show the business community that your current partners have stuck with you, it makes for easier discussions with new and potential partners.”