NHL agrees to massive US$375 million sponsorship deal with Molson Coors

With the busiest stretch of events on the NHL schedule now completed, league executives are reaching for a cold one.

Molson Canadian is set to become the official beer of the NHL as part of a sponsorship agreement announced Tuesday that is believed to be the most lucrative in league history.

Terms of the seven-year deal weren’t disclosed, but a source with knowledge of negotiations said it came in at slightly more than US$375 million.

“It’s a monster deal,” NHL chief operating officer John Collins said in an interview. “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.”

The announcement comes days after the Heritage Classic game at Calgary’s McMahon Stadium, the second time the NHL went outdoors over a 50-day stretch that also included the all-star game in Raleigh, N.C.

It’s part of an aggressive strategy developed by the league in recent years to try and grow its brand by creating a series of major events.

The North American agreement with brewers Molson Coors in Canada and MillerCoors in the U.S. will see the sister companies heavily represented across the NHL calendar starting next season. It also includes money for television advertising and smaller deals with individual teams.

“What this will allow us to do is to take the brand to a whole new level,” said Dave Perkins, president and CEO of Molson Coors Canada. “It enables us to really take hockey to our beer drinkers and to fans, and to provide hockey experiences behind the brand.

“As you’d know, Molson Canadian is really synonymous with hockey—it has been for decades—so this is a really nice fit with what the brand is all about.”

Labatt Breweries of Canada expressed its dissatisfaction at being left out in the cold, saying it had been told by the NHL that the league intends to terminate their relationship at the end of June.

“Labatt has been the official beer sponsor of the NHL in Canada for more than a decade and we began sponsorship renewal negotiations with the league several months ago to secure sponsorship rights,” Charlie Angelakos, Labatt’s vice-president of corporate affairs, said in a release.

“These negotiations with the NHL proceeded positively and in good faith to the point where the parties had agreed upon the terms of renewal of a sponsorship agreement until 2014. Nothing has happened to change that situation.

“We have an agreement with the league and are pursuing all legal remedies available to us to enforce this agreement.”

Bill Daly, deputy commissioner of the NHL, 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.”

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The NHL hopes the Molson agreement is another sign of positive momentum as it continues to negotiate new American TV contracts. The current agreements with Versus and NBC expire at the end of the season.

Ratings increased for both the Jan. 1 Winter Classic outdoor game at Pittsburgh’s Heinz Field and the all-star game in Carolina—events that sponsors also gravitated to because of the opportunities they present to both entertain clients and reach hockey fans.

“I love what the NHL is doing,” said Perkins. “They’re really taking hockey to the public. Hockey is obviously extremely well-developed in Canada, so you’re dealing with a premier sports league that really knows how to get the fans involved.”

Collins joined the NHL in August 2008 after holding a number of positions within the NFL. He’s helped develop the league’s current strategy and believes it is starting to pay off.

“It’s created a really easy path for corporate partners and advertisers to spend money against hockey,” said Collins. “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.

“It’s the fuel that drives the entire business.”

Business has been very goodfor the NHL. The league had already eclipsed last year’s number of sponsor commitments by the midpoint of this season.

In recent months, the NHL renewed deals with Bridgestone, Cisco and McDonald’s while establishing new ones with Canadian Tire, Tim Horton’s and Hershey’s in Canada, and Discover in the U.S.

The significant agreement with Molson Coors and MillerCoors announced Tuesday is the cherry on top of the cake.

“It just is another validation of what we’ve been doing and the momentum the league has,” said Collins.

A number of interesting decisions lie ahead.

The league has yet to decide how many outdoor games it will stage each season moving forward. While not wanting to dilute the product, the NHL is having trouble ignoring how big the impact is on each city that gets to play host to an outdoor game—a point that was reinforced last weekend in Calgary.

“In the market, whether it’s Calgary or Pittsburgh or Buffalo, it’s just such a big deal,” said Collins. “It’s so much fun and really brings people together. From that standpoint, it always feels big in the market. …

“The power and the energy in those markets that are involved with the game is hard to resist.”