MillerCoors takes over NHL beer sponsorship

[Mwd711]

For the first time since 1994, Budweiser/A-B is out as the beer sponsor of the NHL. MillerCoors has signed a seven year deal worth $400 million. This is the largest sponsorship deal in NHL history. It includes rights in Canada so Molson will take over for Labatt. Supposedly, the previous Bud deal was worth $75 million.

http://www.sportsbusinessdaily.com/Daily/Morning-Buzz/2011/02/22/Coors-NHL.aspx

http://www.nytimes.com/2011/02/23/sports/hockey/23beer.html

Click to read more...

 

[jessebelanger]

400 mill!!!!

MillerCoors has committed to spending $375M over the next seven years through an estimated $100M in rights fees, $100M in activation expenditures, another $100M in media buys with league rights holders and various club spending obligations.

Wow.

2nd article mentions this is "more then twice" what the old deal was worth.

edit: my numbers were of course way off.

 

[TaketheCannoli]

For the first time since 1994, Budweiser/A-B is out as the beer sponsor of the NHL. MillerCoors has signed a seven year deal worth $400 million. This is the largest sponsorship deal in NHL history. It includes rights in Canada so Molson will take over for Labatt. Supposedly, the previous Bud deal was worth $75 million a year.

http://www.sportsbusinessdaily.com/Daily/Morning-Buzz/2011/02/22/Coors-NHL.aspx

http://www.nytimes.com/2011/02/23/sports/hockey/23beer.html

Ooh, my wife will not be happy. The only beer she will drink is Labatt.

 

[DopeyFish]

Looks like the NHL was very unhappy about having the jets logo as the most prominent logo in the bud ads during the heritage classic - so much so that they've taken a deal that's worse than before

 

[AllByDesign]

For the first time since 1994, Budweiser/A-B is out as the beer sponsor of the NHL. MillerCoors has signed a seven year deal worth $400 million. This is the largest sponsorship deal in NHL history. It includes rights in Canada so Molson will take over for Labatt. Supposedly, the previous Bud deal was worth $75 million a year.

http://www.sportsbusinessdaily.com/Daily/Morning-Buzz/2011/02/22/Coors-NHL.aspx

http://www.nytimes.com/2011/02/23/sports/hockey/23beer.html

Ummm... some quick math makes this deal $57 mill a year... quite a reduction from the prior $75 mill a year.

 

[Dave is a killer]

that is some crap beer ... come on NHL

 

[Kebekoi]

I tought that the beer was to the choice ($) of the arena management company.

So Labatt (A-B) cannot outbid Molson (Coors) to the beer market in the new Québec Colisée?

 

[AllByDesign]

I tought that the beer was to the choice ($) of the arena management company.

So Labatt (A-B) cannot outbid Molson (Coors) to the beer market in the new Québec Colisée?

This is an official sponsorship deal, and is not binding on what is served in the facilities.

 

[Mwd711]

Ummm... some quick math makes this deal $57 mill a year... quite a reduction from the prior $75 mill a year.

You're right. It was $75 million per contract not per year. That was my error. The $75 million was over three years. It included the Labatt deal. http://www.bizjournals.com/stlouis/stories/2008/06/02/daily29.html

 

[DopeyFish]

If my math is correct(and it never is), this would attribute to a rough rise of $600,000 in salary cap alone

 

[DungeonK]

Good, Miller Coors and Molson are all better beers than Bud/Labatt

 

[Fugu]

Can anyone translate:

an estimated $100M in rights fees, $100M in activation expenditures, another $100M in media buys with league rights holders and various club spending obligations. The deal, set to be announced today, is effective July 1.

And hockey fans drink the most beer amongst sports fans?

I am a bit surprised by that, given their tech/savvy, higher income demographic.

 

[yotesreign]

You're right. It was $75 million per contract not per year. That was my error. Sadly, I haven't been able to find the length of the prior deal

I sniffed around online since the numbers didn't make sense to me either ($375-400 million/7 years is less than $75 million a year). One source said A-B has been sponsor of the league since 1994 - another said Bud Light sponsored the league since 1998.

The one article makes it sound like the $375 million is $300 million league wide and the balance is agreements with 23 of the NHL teams - I'd speculate that's for in-arena advertising and sponsorship & sales.

If this is worth twice the old deal, I'll guess the old deal was worth around $190 to $200 million over 7 years?

 

[Dave is a killer]

If my math is correct(and it never is), this would attribute to a rough rise of $600,000 in salary cap alone

2,380,952.38 per team 400,000,000/7/24

 

[jessebelanger]

Can anyone translate:



And hockey fans drink the most beer amongst sports fans?

I am a bit surprised by that, given their tech/savvy, higher income demographic.

Hmm..

activation expenditures would be the expenses related to producing spots to use the rights - creating commercials, posters, hiring actors...

media rights buys I assume would be purchase of TV and radio spots during NHL Games (from NBC tsn etc)



Sounds like the NHL is only receiving about 100 million (the "rights fees")of this 400 million dollar deal. The deal is "worth" 400 million, the NHL's haul is 1/4th of that. (quoting again for reference):

MillerCoors has committed to spending $375M over the next seven years through an estimated $100M in rights fees, $100M in activation expenditures, another $100M in media buys with league rights holders and various club spending obligations.

 

[Mwd711]

Can anyone translate:



And hockey fans drink the most beer amongst sports fans?

I am a bit surprised by that, given their tech/savvy, higher income demographic.

The rights fees are for use of the NHL logo and being the official beer. The media buys are guarantees for the NHL's broadcast partners. They will run $100 mil of ads on the NHL's media partners. The "activation expenditures" are marketing activities outside of television. I would assume that means contests, promotions, etc.

 

[DopeyFish]

2,484,472.04 per team 400,000,000/7/23

It's for both countries - revenue is counted for the league as a whole

Would be (((400,000,000 / 7) / 30) * .57) / 2 (assuming it's exactly double) = cap added

 

[yotesreign]

Can anyone translate:



And hockey fans drink the most beer amongst sports fans?

I am a bit surprised by that, given their tech/savvy, higher income demographic.

At the last Nascar Sprint Cup race I was at in November, almost every one around me had at least 10 beers. I noticed because I don't drink anymore and it's more noticeable when others do around me and I'm passing cups and cash down the row all race. At Cardinals games, there's maybe 2 guys who do that sitting by me - most every one else who has beer drinks 3 or 4. Same holds for Coyotes games.

Maybe it's different in other markets...

 

[Fugu]

Hmm..

activation expenditures would be the expenses related to producing spots to use the rights - creating commercials, posters, hiring actors...

media rights buys I assume would be purchase of TV and radio spots during NHL Games (from NBC tsn etc)

Sounds like the NHL is only receiving about 100 million (the "rights fees")of this 400 million dollar deal. The deal is "worth" 400 million, the NHL's haul is 1/4th of that. (quoting again for reference):

MillerCoors has committed to spending $375M over the next seven years through an estimated $100M in rights fees, $100M in activation expenditures, another $100M in media buys with league rights holders and various club spending obligations.

Pays to read the fine print. My translation? They have the right to spend more to "get in your face"... And more of those infernal ads on the glass behind the net during games. I hope it's just behind the net......

The rights fees are for use of the NHL logo and being the official beer. The media buys are guarantees for the NHL's broadcast partners. They will run $100 mil of ads on the NHL's media partners. The "activation expenditures" are marketing activities outside of television. I would assume that means contests, promotions, etc.

It's not as bad as it sounds. The NHL can leverage this with their broadcast partner (assuming this means the new NBC/VS deals), at least that would be the hope.

 

[Sideline]

2,380,952.38 per team 400,000,000/7/24

Dopey is correct.

59.4 - 8 = 51.4 current cap mid point
51.4 x 30 = 1542 current player share of HRR
1542/0.57 = ~2705.26 current total HRR
2705.26 + 28.5 = 2733.76 annual HRR after net increase in sponsorship (assuming old deal was 25 per and new deal is 375/7)
2733.76*0.57 = 1558.245 new players share of HRR
1558.245/30 = 51.9415 new cap mid-point
51.9415 + 8 = 59.9415 new cap ceiling

59.9415-59.4 = 0.5415 or ~$541,500 increase in the salary cap.

Edit: some people above me point on the NHL doesn't necessarily get all 375 million. Adjust the math accordingly.

 

[Dave is a killer]

Dopey is correct.

59.4 - 8 = 51.4 current cap mid point
51.4 x 30 = 1542 current player share of HRR
1542/0.57 = ~2705.26 current total HRR
2705.26 + 28.5 = 2733.76 annual HRR after net increase in sponsorship (assuming old deal was 25 per and new deal is 375/7)
2733.76*0.57 = 1558.245 new players share of HRR
1558.245/30 = 51.9415 new cap mid-point
51.9415 + 8 = 59.9415 new cap ceiling

59.9415-59.4 = 0.5415 or ~$541,500 increase in the salary cap.

good to know beer deals are now paying for 4th line guys

 

[Fugu]

It's for both countries - revenue is counted for the league as a whole

Would be (((400,000,000 / 7) / 30) * .57) / 2 (assuming it's exactly double) = cap added

Look more closely. The teams don't get all of that money directly. $100m over seven years is a direct payment, so divide by seven to get the annual amount.

Here's the text again:

With the deal, MillerCoors replaces Anheuser-Busch, which had held U.S. NHL league sponsorship rights since ‘94, and A-B-owned Labatt, the NHL’s Canadian beer sponsor since ‘98. MillerCoors has committed to spending $375M over the next seven years through an estimated $100M in rights fees, $100M in activation expenditures, another $100M in media buys with league rights holders and various club spending obligations. The sponsorship, announced Tuesday, is effective July 1.


At best you can count the $100m sponsor fee, and then assume $100m is spent on the sponsor activation, but not sure if that's with specific teams who then get the money or the league is selling rights to individual team venues+promos????

 

[Mwd711]

I sniffed around online since the numbers didn't make sense to me either ($375-400 million/7 years is less than $75 million a year). One source said A-B has been sponsor of the league since 1994 - another said Bud Light sponsored the league since 1998.

The one article makes it sound like the $375 million is $300 million league wide and the balance is agreements with 23 of the NHL teams - I'd speculate that's for in-arena advertising and sponsorship & sales.

If this is worth twice the old deal, I'll guess the old deal was worth around $190 to $200 million over 7 years?

I noticed the same thing when trying to figure the prior beer deals. As I have in my edited post, the last renewal was for three years.

I think one of the confusions that those sources had was that while it was A-B holding the rights, it was two different beer brands. Bud Ice was the official sponsor in 1994. Who can forget those penguin commericals? A-B renewed it's deal but Bud Light took over in 1998 and the penguins went away as did most of the marketing that was specifically marketed towards the NHL.

The Bud Ice ads were great marketing and MillerCoors would be wise to build a marketing campaign similar to that. It seems to me that A-B never really used their branding rights to full effect except for those Bud Ice ads. Since then, they just seem to slap on the NHL logo, do a voiceover and call it a day. Those "activation expenditures" should change that. The point of the sponsorship activation is how you grow the brand beyond being the rights holder. That's something that A-B failed at during the last several years of their sponsorship.

 

[leoleo3535]

Good deal but abit odd.

Basically being sponsored 50% by the Montreal Canadians.

 

[Fugu]

Good deal but abit odd.

Basically being sponsored 50% by the Montreal Canadians.

You noticed that too?

It seems that several owners have teams and then leverage that into additional business with the NHL. It's smart business for them.

Jacobs-- concessions business, and 20% ownership of NESN
Molson-- as indicated above
Snider -- Comcast ---> VS, NBC
Anschutz -- arena management