Saturday, 21 April 2018

Losers In Lockouts

If there's one thing that looms on the horizon for the NHL and NHLPA, it's another lockout. I know it's the NHL Stanley Cup Playoffs and I should be focused on those stories, but I have this sinking feeling that we're headed for another long and bitter hockey stoppage when the current CBA expires. Seattle is looking to get rolling, there are a number of teams who are building towards a better future, and there's a pile of individual achievements to celebrate, but that large shadow enveloping the horizon is closer than it may seem to be.

Everyone talks about loss during the lockout. Owners are losing money, players aren't making money and losing time off their already-short careers, and fans complain about simply losing hockey. If there's one segment of the landscape we never mention, it's the loss for the sponsors of the NHL. We never really consider them because they can still market their products another way, but one particular group of sponsors seems to get hit really hard during a lockout: adult beverage makers.

According to IEG research, the top-five most active marketing groups during hockey broadcasts were quick-service restaurants, auto manufacturers, medical, insurance, and beer producers as of 2015-16. Their spending on marketing during NHL broadcasts was up "6.7 percent from the previous year", and totaled some "$477 million in the 2015-2016 season". As per IEG, "Anheuser-Busch replaced Enterprise Holdings as the most active non-endemic sponsor" - the industry term of non-core brands on which the sports industry relies upon - so it would be fair to say that beer marketing money plays a large part in the total marketing dollars spent during NHL broadcasts, and Anheuser-Busch had 71% of the league's teams broadcasting and showing marketing messages for them.

In Canada, we'll go back to 2012 during the last NHL lockout where Molson Coors, the Montreal- and Denver-based brewer, saw cold weather sales of their products virtually disappear when the NHL decided to go AWOL.

"Whether it's people not actually physically going to the venues and consuming there, consuming in venues around the outlet before that, or indeed having NHL sort of parties at home, all of those occasions have disappeared off the map and you just can't replicate them," CEO Peter Swinburn told The Canadian Press in November 2012.

Swinburn's right when stating that there is really nothing else that can replace the NHL in Canada in the winter months. The NBA's Toronto Raptors are more of a regional draw for southern Ontario, the NFL certainly has the same fans, but not the same marketing tie-in that beer sales have had with NHL teams, and both Major League Baseball and Major League Soccer follow the same course as the Raptors in that they're extremely regional. The NHL's affect on Molson Coors' sales is pretty clear when it comes to the importance the NHL plays in getting people to consume their product.

Swinburn told reporters "that once the lockout ends, Molson Coors will seek financial compensation from the league over the negative impact that a lack of games has had on the hockey league sponsor" and that will help to recoup some of those lost sales, but it never fully makes up for what could have been a solid increase in sales year over year had the NHL simply remained on the ice. When you consider that Molson Coors beat expectations the prior year, there was hope their reported $375 million deal with the NHL would continue to see growth, especially north of the border. Hockey was supposed to be a major driver of that growth, but share prices were already falling just two months into the last lockout.

So why should this concern you and I as hockey fans? Local bars, taverns, and watering holes feel that pinch more than the breweries do. Your favorite place to catch the game would see a loss in sales on what normally would be game nights, and that's contributing to Molson Coors seeing less product being sold.

Local watering holes in Canada rely heavily on the 82-game NHL schedule to help boost sales by broadcasting the games. There's usually a beverage deal during the game that coincides with one of the NHL's beverage sponsors, and as a result of these decisions everyone benefits. The watering hole makes money, the beer producers make money, and the NHL makes money via the sponsorship. The trickle-down of the economics would be felt hardest at the bottom where those watering holes rely heavily on walk-up traffic and regular patrons to keep their businesses afloat.

CBC spoke with Winnipeg restaurant owner Tony Siwicki about the costs that he was forced to absorb after the NHL decided to lockout the players in 2012.
Tony Siwicki of the Silver Heights Restaurant in Winnipeg said since the Jets returned last season, he has bought team gear for staff, hired extra security, and even purchased a bus to shuttle fans from his eatery to home games.

"Now we've got all this money out that we … won't get back. We have to sit on it for, [in] the worst-case scenario, for another year," Siwicki said.

"I hope they come to an agreement," he added. "A lot of people … rely on this kind of entertainment to make money, to survive, to support their families."
While I appreciate that the NHL is a business on its own where financial stability is needed in order to keep it afloat, but there appears to be a major collision coming as the players are unhappy about shared hockey revenues and not playing in the Olympics while the NHL owners certainly don't want to share any additional monies they are required to share. With money being one of the key arguments to resolve in the upcoming CBA negotiations, this is more than likely going to be another ugly and prolonged work stoppage as both sides for every additional cent they can gain.

I don't envy local business owners and Canadian brewery owners when talk of CBA unrest comes up. It means loss of business and loss of profits from normally ravenous hockey fans who indulge in their businesses and products. And while the NHL needs to get its house in order, the longer they ignore these negotiations the more hurt they're doing to their partners who make the games and players popular.

While the CBA negotiations loom, some foresight would do the NHL a lot of good when it comes to helping out the people who do a lot of the groundwork in making the NHL the number-one sport in Canada.

Until next time, keep your sticks on the ice!

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