E-Malt.com News article: Canada: Labatt asks the Ontario Superior Court to toss out NHL’s new agreement with Molson Coors

Labatt dropped the gloves February, 28 in its dispute with the National Hockey League and archrival Molson Coors, saying the league negotiated in bad faith during talks on a new sponsorship deal, The Star reports.

In a notice of application filed at the Ontario Superior Court, Labatt asked the court to toss out the league's new C$375 million sponsorship agreement with Molson Coors. Labatt claims it reached a deal to renew its Canadian sponsorship agreement with the NHL in November, but that the league then turned around and signed a North America-wide contract with Molson Coors instead.

“The NHL ... in bad faith and in breach of their contractual obligations, went behind Labatt's back to negotiate an agreement with the Molson Coors Respondents for the rights Labatt has held for almost 13 years,” Labatt alleged in its filing. The filing names four arms of the NHL, as well as Molson Coors Canada, and MillerCoors (MillerCoors is a U.S. joint venture of Molson Coors and SAB Miller.)

Labatt also said its agreement with the NHL was so solid that the league told other, unspecified third parties about it before it signed with Molson Coors. None of Labatt's allegations have been proven in court. Labatt vice-president of corporate affairs Charlie Angelakos said in a statement they hope to have the case heard and determined before June 2011.

Labatt has been the league's Canadian sponsor since 1998. Its first agreement was subsequently renewed several times. Each renewal gave it an exclusive window to negotiate a new deal before existing ones expired, according to the court filing. Neither Molson Coors nor the NHL would comment on specific allegations in the filing.

“This is a legal proceeding, so it's our policy not to comment. We have a deal,” said Fergie Devins, chief public affairs officer for Molson Coors Canada.

The NHL's deputy commissioner Bill Daly issued this statement in response to the filing by Labatt:

“Obviously, we intend to defend against Labatt's claim vigorously and we are confident that our position ultimately will be fully vindicated by the court. We do not intend to comment further on the matter during the pendency of the court proceeding.”

Labatt's court filing makes it clear it still hopes to be a league sponsor, and it isn't just out to wreak havoc on its rival, one legal observer said.

“It appears as though they want to get back into this in a hurry. They're not asking for money. They want the court either to say ‘Labatt had a valid deal with the NHL,' or for the court to say ‘Labatt didn't have a valid deal, but the league has an obligation to keep negotiating with them,'“ said Bobby Sachdeva, a commercial litigation partner at Mississauga law firm Pallett Valo. Sachdeva isn't associated with either side in the dispute.

The legal fight is a win-win scenario for Labatt, according to marketing consultant David Kincaid. If a court finds they had a valid agreement with the league, Labatt and its corporate parent Anheuser Busch/InBev would have a stranglehold on the pro hockey market, Kincaid said. AB InBev also holds sponsorship rights to 22 of 24 U.S.-based NHL teams, and two of six Canadian NHL teams. If the court reject's Labatt's claim, it would mean hundreds of millions of dollars they don't need to spend on sponsorship.

“They might not be all that sad if they lose. They've all of a sudden got some savings for their bottom line,” said Kincaid, president of Level5 Strategic Brand Advisors.

Kincaid, a former Labatt marketing executive who put together the brewing company's original deal with the NHL, said AB InBev's Brazilian owners are more careful about the bottom line now. When Kincaid was with the brewery, he said there was an element of ego involved in the rush to sponsor big sporting events.

“I'm not saying that we didn't also have discipline, but there was a certain amount of ‘You have baseball? Well, we have the car race.'“

There's a good reason Labatt is going to bat for the NHL deal, says Kincaid - Canada is one of the three most profitable beer markets in the world.

“It's a cash-cow market,” said Kincaid.


03 March, 2011