IEG SPONSORSHIP REPORT. ADDING VALUE New And Future Events Play Pivotal Role In Molson Coors NHL Deal

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1 February 28, / ADDING VALUE New And Future Events Play Pivotal Role In Molson Coors NHL Deal Rightsholders can add value to sponsorship packages by creating unique events and brand marketing platforms for corporate partners. Although there were plenty of reasons for Molson Coors Canada and MillerCoors, LLC to be interested in securing status as the official beer of the NHL which they accomplished through a seven-year, nine-figure deal announced last week the league s emphasis on new events and the promise of more to come was key. At an estimated $400 million, the deal is the largest in league history and allows the Molson Canadian brand to replace Anheuser-Busch InBev SA/NV s Bud Light just as A-B gets set to usurp MillerCoors sponsorship of the NFL. But in addition to the obvious competitive motivation, the deal reflects an important trend being embraced by both sponsors and major sports properties: the creation of additional events and assets beyond the standard all-star games, playoffs and championships. In just the past few years, the NHL has launched outdoor games the Bridgestone NHL Winter Classic in the U.S. and the Tim Hortons NHL Heritage Classic in Canada along with NHL Face-Off season-opening event and a live telecast from Las Vegas of the presentation of the NHL Awards, complete with A-list Hollywood star hosts and performances by big-name musical acts. The way the NHL has broadened its platform was very attractive to us, said Pat McEleney, senior director, events and sponsorship, for Molson Coors Canada. We are excited about growing the sport and the opportunity for beer drinkers to get involved with hockey in new ways. Both Molson Coors and MillerCoors say they look for ways to activate sponsorship with unique, one-of-a-kind events that afford a platform for sales promotions. The opportunity to create new assets and make big events is very valuable to us; we can translate those platforms into retail activation, which helps drive beer sales, said Ryan Luckey, MillerCoors director of sports and entertainment marketing. Continuing to create new events is integral to the NHL s growth plans, said Keith Wachtel, the league s senior vice president of integrated sales. It is critical for us not to rest on our laurels. We need to continue to engage fans at the highest level, and to do that you need the support of corporate partners. 1

2 The Molson Canadian brand will be integrated into NHL events but will not receive ownership positioning, said Wachtel, who closed the deal over a one-week period following the January 30 NHL All-Star Game. The tie builds on Molson Coors existing relationship with the sport. The company sponsors all six Canadian NHL teams, five on behalf of Molson Canadian and one, the Montreal Canadiens, on behalf of Molson Export. While Molson Canadian will take the lead role in the sponsorship in Canada and the U.S., the deal gives the two beer companies the right to involve the Coors Light brand as well. This is a unique opportunity to partner with our parent company on an alliance that works great for both of our lead brands. Molson is synonymous with hockey, while Coors Light is about cold refreshment, Luckey said. MillerCoors is a joint venture between Molson Coors Brewing Co. and SABMiller plc. Molson Coors owns 42 percent of MillerCoors. The Canadian rights portion of Bud Light s current NHL deal is managed through A-B InBev subsidiary Labatt Breweries of Canada, which apparently is not ready to leave without a fight. Labatt reportedly plans to take legal action against the league, claiming it was still negotiating renewal in good faith. Labatt recently announced new deals set to begin next season with the Calgary Flames and Vancouver Canucks. In the U.S., MillerCoors has existing ties with ten NHL clubs The company sponsors eight teams on behalf of the Coors Light or Miller Lite brands, while two deals involve multiple brands: the Detroit Red Wings (Miller Lite and Molson) and the Colorado Avalanche (Coors Light and Molson). Most of those deals are non-exclusive. A-B InBev sponsors 22 of the 24 U.S. NHL clubs on behalf of Bud Light. SIDEBAR Molson Coors Canada sponsors national governing body Hockey Canada, the Canadian Football League, five CFL teams and the NBA Toronto Raptors. NASCAR Also Emphasizing Unique Sponsorship Platforms NASCAR is following a similar path to the NHL s in terms of developing new events and sponsorable inventory. Among the sanctioning body s latest platforms: NASCAR After The Lap, a fan-focused event taking place during Champion s Week at the end of the season; the NASCAR Evening Series, a reception during Champion s Week; and NASCAR Rev d Up, a six-hour festival of concerts and racing displays prior to May s all-star race in Charlotte, N.C. The goal of the events: To increase the value of NASCAR sponsorship packages by offering unique assets that provide a point of differentiation and help foster business-building opportunities. When we are pitching a company and they ask, What do I get beyond the NASCAR logo, we can reel off ten tangible assets, said Jim O Connor, the sanctioning body s vice president and chief sales officer. NASCAR offers two types of platforms: events customized for specific partners and platforms for multiple sponsors. On the customized front, NASCAR in 2007 created the NASCAR Evening Series for Bank of America Corp. The bank uses the event which features Wolfgang Puck, Emeril Lagasse and other celebrity chefs to entertain customers and other key stakeholders. Other events feature numerous corporate partners, with some taking a lead role. For example, Coca-Cola North America ( Coca-Cola s Motorsports Guru On New Plans, Goals And Measurement, 2/7/11) has the dominant position at NASCAR After The Lap, a ticketed event for fans that features a question-and-answer session with the top 12 NASCAR Sprint Cup Series drivers. The beverage giant activates the tie by distributing tickets to bottlers, distributors and retailers, said Matt Shulman, NASCAR s director of business solutions. Coca-Cola also titles the event s Fan Zone, which features racing simulators and other activities. Source NASCAR, New York City office, Tel: 212/ MillerCoors ties include NASCAR (Coors Light); title of a Penske Racing NASCAR Sprint Cup Series team (Miller Lite); Professional Rodeo Cowboys Assn. (Coors Banquet); and 16 MLB teams and 21 NFL teams on behalf of Coors Light and Miller Lite. Sources MillerCoors, LLC, Tel: 312/ Molson Coors Canada, Tel: 416/ NHL, Tel: 212/

3 February 28, / ADDING VALUE Successful Cause Program Springs From NBA Hornets Sponsor Summit Sponsor summits can generate new ideas that benefit both properties and sponsors. The NBA New Orleans Hornets ( How The NBA Hornets Posted A Double-digit Sponsorship Score, 1/12/09) have teamed with a handful of corporate partners this season on a cause marketing platform that is raising money for three nonprofits and attracted a new sponsor to the franchise. The Believe in Blue campaign was conceived by corporate partners and team staff last summer at the Hornets second annual sponsor summit ( Why Properties Should Host Sponsor Summits, 4/26/10), illustrating the ability of such events to deliver tangible results for both a property and its sponsors. The goal of the program is to assist residents of communities impacted by last year s Gulf of Mexico oil spill, restore coastal wetlands and return the Gulf back to its original color blue. The campaign benefits America s Wetland Foundation, Friends of the Fishermen and Second Harvest Food Bank of Greater New Orleans. The idea developed organically at the June summit, said Tom Ward, Hornets senior vice president of corporate partnerships. This germinated with us sitting down with our partners in the midst of a huge crisis, he said. Every partner wanted to be involved and give back. We never would have accomplished this if we didn t have everyone in the same room. The summit agenda contained a breakout session specifically designed to develop ideas for a cause-related program, Ward said, noting that such platforms have played a key role for both the team and its sponsors since Hurricane Katrina struck New Orleans and the Gulf Coast in Summit participants came up with the campaign s thematic following a presentation on digital media by Pat Coyle, president of Coyle Media and former executive director of digital media with the NFL Indianapolis Colts. Coyle discussed the importance of owning a color associated with a cause, such as pink for breast cancer and red for heart disease, Ward said. Believe in Blue also supports the 2008 modification of the team s logo and jersey color from teal to blue, he added. Chevron Corp. is the campaign s presenting sponsor, with CVS Caremark Corp. s pharmacies, Rouses Enterprises LLC s supermarkets and Take 5 Oil Change shops as cosponsors. 3

4 The Hornets and sponsors are raising funds for the campaign through a series of events and promotions throughout the season, including donating ticket sale proceeds from the team s Tip-Off Luncheon presented by Chevron and auctioning game-worn player jerseys outfitted with a commemorative Believe in Blue patch. The program also includes the sale of $2 Believe in Blue wristbands, available at the sponsors retail locations, the team s Hornet s Nest store, and through a dedicated microsite on the Hornets Web site. The campaign is promoted through multiple channels, including PSAs and in-game promotions. For example, Chevron distributed 18,000 Believe in Blue T-shirts at the team s first home game of the season. Since being announced in August and fully launching with the start of pre-season play in October, the campaign has raised roughly $80,000, Ward said, noting the team and its partners will divide the money evenly among the nonprofits following the Hornets last home game on April 11. United Way for the Greater New Orleans Area will distribute the funds. The Hornets attribute the promotion to securing a new corporate partner: the Louisiana Seafood Promotion & Marketing Board. Friends of the Fishermen is the officially endorsed fund of the board. The board has signed a first-time, multiyear contract with the team, which centers on a concession stand in New Orleans Arena. The seafood stand is a huge success and one of the highest performing stands in our arena, Ward said. Source NBA New Orleans Hornets, Tel: 504/

5 February 28, / SPONSOR PROFILE Farm Bureau Grows Sponsorship Portfolio Regional and local properties that draw young adults should include Farm Bureau on their prospect list. While big guns in the property/casualty insurance category such as Allstate Insurance Co. ( Sponsorship Remains Fertile Ground For P/C Insurers, 2/22/11) and Farmers Group, Inc. ( Farmers Sponsorship Strategy Stretches Beyond Farmers Field Deal, 2/22/11) have recently announced high profile sponsorships, sellers should not overlook some of the smaller players in the industry, many of whom are increasingly using the marketing medium. Case in point: Farm Bureau Insurance is allocating more money to sponsorship as a platform to raise its profile, connect with consumers and generate leads. The brand focuses its sponsorship activity on regional and local properties. While the American Farm Bureau Federation serves as a lobbying group for the agricultural community, its state Farm Bureau offices serve as independent membership organizations that spearhead their own marketing initiatives and provide insurance coverage. Those offices use sponsorship to promote both the Farm Bureau and Farm Bureau Insurance brands. For example, Virginia Farm Bureau last week announced a three-year naming rights deal to the former Virginia Beach Amphitheater. The venue now called Farm Bureau Live at Virginia Beach adds to an extensive sponsorship portfolio that includes nearly every college and minor league baseball team in Virginia. In addition, Texas Farm Bureau this year plans to build on its existing ties to Texas A&M University and Texas Tech University with six more schools. Those deals will add to a portfolio that includes the Houston Livestock Show and Rodeo, Triple-A baseball s Round Rock Express and every other minor league baseball team in Texas. The key sponsorship driver: Raising the profile of the Farm Bureau Insurance brand. While most consumers are aware of Farm Bureau, many are not aware the company sells insurance to consumers outside the agricultural community. We have a pretty big brand identity issue. Most people think Farm Bureau is a government organization that is not relevant to their life. We re constantly trying to overcome that challenge, said Matt Smith, director of marketing & change strategy for Virginia Farm Bureau. 5

6 Consumers must pay a $40 annual membership fee to purchase Farm Bureau insurance products, he said. The role of sponsorship has grown in importance for Virginia Farm Bureau over the past several years as a result of the increasingly competitive insurance category, Smith said. State Farm, GEICO and other companies are spending millions of dollars on TV and radio, which has become a cluttered space. We can t cut through the clutter with our marketing budget, so sponsorship and special events have become a more viable solution. In addition to gaining visibility, Virginia Farm Bureau uses sponsorship to accomplish the following objectives: Reach young consumers. With the majority of Farm Bureau customers over the age of 50, the organization is using live music, college athletics and other events to reach younger audiences. Acquire leads. Virginia Farm Bureau typically activates sponsorship with online ticket sweeps, a platform it uses to acquire leads for follow-up marketing. For example, the organization is activating Farm Bureau Live with a sweeps dangling two gold circle passes, VIP club passes and parking to one concert. Consumers enter the contest at FarmBureauLive.com. SIDEBAR Farm Bureau NASCAR Program Fails To Bloom While a handful of state Farm Bureau offices are increasing their use of sponsorship, some have learned it is better to sign deals on their own than partner with other affiliates. Case in point: Farm Bureau s NASCAR program. In 2009, 13 state Farm Bureau offices teamed up with Joe Gibbs Racing to serve as the primary sponsor of a NASCAR Sprint Cup Series entry for six races. Farm Bureau Insurance gained primary status on cars driven by Denny Hamlin, Joey Logano and other JGR drivers at races located in states where six of the Farm Bureau offices are located. The joint program did not work as expected due to the affiliation with multiple drivers, said Matt Smith, director of marketing & change strategy with Virginia Farm Bureau, one of the 13 state offices that participated in the sponsorship. The reason: NASCAR fans follow individual drivers, not team owners, he said. The tie was driven by Southern Farm Bureau Life Insurance Co., which sells life insurance policies through the Farm Bureau offices involved in the NASCAR program. The Jacksonville, Miss.-based company in 2007 teamed with JGR as primary sponsor of a NASCAR Nationwide Series car for six races. Kyle Busch, Hamlin and Logano split the driving duties. Source Virginia Farm Bureau, Tel: 804/ In addition to tickets, the company frequently tries to include behind-the-scenes experiences in its sweepstakes. For example, Virginia Farm Bureau has activated its Virginia Tech partnership with a sweepstakes offering tickets to a home football game, an autographed lunch pail and the opportunity to attend pre-game events. We try to create experiences you can t get any other way, said Smith. Virginia Farm Bureau also promotes sweepstakes and other promotions on its Facebook page, he added. Drive branch traffic. Virginia Farm Bureau also looks for opportunities to drive branch traffic. For example, the nonprofit leveraged its branding on Virginia Tech athletic tickets with a cross-promotion with McDonald s Corp. that offered a coupon for a free cheeseburger to fans that brought a ticket stub to one of its 113 offices. If fans visit our offices, they ll remember us, said Smith. Gain member perks. In addition to building visibility and leads for its insurance products, the organization also uses sponsorship to access perks that it can share with members. Virginia Farm Bureau will activate Farm Bureau Live by offering members 1,000 tickets to seven shows. The organization will distribute the tickets on a first come, first served basis, Smith said. 6

7 The office also offers members tickets to minor league baseball games, college basketball games and other sponsored events, added Paul Sinkmon, president of Knox Sports Marketing, a sponsorship consultancy that helps Virginia Farm Bureau negotiate and activate deals. Other States Grow Their Sponsorship Portfolios In addition to Virginia, other state Farm Bureau offices are increasingly adding sponsorship to their marketing mix. The increased activity is driven in part by Smith, who shares sponsorship best practices with associates in other state offices. That networking has prompted Farm Bureau offices in Florida, South Carolina and Texas to retain Knox Sports Marketing for assistance. Most offices focus on college athletics, state fairs and other types of community events. For example, Georgia Farm Bureau sponsors Macon, Georgia s Int l Cherry Blossom Festival; Idaho Farm Bureau sponsors Boise State University athletics; while Farm Bureau Tennessee sponsors the Tennessee State Fair. Sources Virginia Farm Bureau, Tel: 804/ Knox Sports Marketing, Tel: 813/

8 February 28, / ONE-ON-ONE Naming Rights Drought? Don t Tell That To AEG Sports and entertainment giant sees increased demand for naming rights deals. From most perspectives, the market for seven- and eight-figure annual naming rights deals for sports and entertainment facilities took a major hit over the past several years, primarily as a result of economic conditions. But multi-property rightsholder AEG has been bucking that trend. In the past year alone, the company has sold naming rights to more than ten new and existing facilities spread across the U.S., Europe and Asia. They include Best Buy Theater in New York City; Mercedes-Benz Arena in Shanghai, China; and 02 World in Hamburg, Germany. Most recently, AEG sold Farmers Group, Inc. ( Farmers Sponsorship Strategy Stretches Beyond Farmers Field Deal, 2/22/11) title sponsorship of a proposed NFL stadium in Los Angeles. Sponsorship deals are overseen by Todd Goldstein, president of AEG Global Partnerships, and Shervin Mirhashemi, the business unit s chief operating officer. IEG SR spoke with Mirhashemi about AEG Global Partnerships, the state of the naming rights market, the company s less is more sponsorship strategy and other topics. Below are edited excerpts from the conversation. IEG SR: What is AEG Global Partnerships function within AEG? Mirhashemi: AEG has more than 120 assets, including facilities, teams, music tours and festivals. Sponsorship revenue and premium seating revenue falls into one division, AEG Global Partnerships, which does close to $500 million in annual revenue. IEG SR: AEG owns a number of events such as San Francisco s Bay to Breakers footrace and Amgen Tour of California cycling race. Do you oversee sponsorship sales for those events as well? Mirhashemi: Yes. Our businesses are tied into two groups. One is hardware, such as venues, arenas, stadiums, theaters and clubs, and on the flip side, content. That includes sports teams, events and music acts driven through AEG Live, our live entertainment promotion arm. IEG SR: There has been a lot of discussion within the industry about whether fees for facility naming rights hit their peak a few years ago. From AEG s perspective, what is the state of the naming rights market? 8

9 Mirhashemi: We have had a lot of naming rights inventory come on the market over the past year with new facilities or facilities that will be opening soon. We have sold ten naming rights deals in the past 14 months alone. The past two or three years have been good to us, and we are finding even more interest from more companies in more categories. IEG SR: Your new partnership with Farmers Group and Farmers Field is groundbreaking from a number of angles, including for AEG, is that right? Mirhashemi: Farmers Field is our first entry into the NFL. We are not typically in the stadium business. Most of our assets are in closed arenas, theaters or clubs. We have not traditionally dealt with stadiums, especially in North America. That being said, we do have stadiums with soccer teams. We had Toyota Park in Bridgeview, Illinois when we owned the MLS Chicago Fire, and we are building a new home for the Houston Dynamo. We also have the Home Depot Center, which is home to the Los Angeles Galaxy and Chivas USA. The approach we typically take with facilities is no different than Farmers Field. We find a naming rights partner, and then eight to 12 founding partners that will be exclusive in specific categories. We take a less is more strategy by focusing on a select number of partners, each of which receives an affiliation with key assets. That strategy serves us well, and more importantly, our brand partners. IEG SR: Farmers Field also is unique in that you sold naming rights to a proposed facility as opposed to an existing facility or one that had been committed to. Mirhashemi: That project is no different than any other; it just has a longer runway. It s not a two-year process; it will be three to five years before the stadium is built. We got in front of it fairly early in the process. IEG SR: Apart from Farmers Field, are there any other recent partnerships that are especially noteworthy? Mirhashemi: The Mercedes-Benz Arena in Shanghai. China is a new frontier and Mercedes-Benz is the first significant naming rights deal done in that country. We are having fairly good success, not only with that facility but with Beijing s Mastercard Arena as well. Mercedes-Benz opened up the marketplace and they are blazing a new frontier. The same thing happened in Europe ten years ago, which has now become a mature sponsorship environment. IEG SR: AEG puts a lot of focus on migrating existing partners to larger deals. Can you discuss how you do that? Mirhashemi: 02 is the best example. They came on board with the 02 Arena in London, which they expanded with 02 World in Berlin and 02 World in Hamburg. The Coca-Cola Company is another example. We have a relationship in Los Angeles, and we have taken Coke to China and London. For us, it is about partners that are global in nature. Being able to create relationships with those companies and create a value proposition to migrate them to larger relationships is key to what we are trying to do. Source AEG Global Partnerships, Tel: 213/