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Trouble brewing for NHL as lockout drags on

By Steve Keating

TORONTO (Reuters) - Canadians may be depressed about the ongoing National Hockey League (NHL) lockout that has darkened arenas across the hockey mad nation but they are not crying in their beer about it, at least not Molson Coors.

As the labor war between billionaire owners and millionaire players drags on trouble appears to be brewing for the NHL with fans, sponsors, television networks and those who earn a living on the fringes of the sport angered over the prospects of losing a second season in eight years.

An Angus Reid poll released on Friday found that more Canadians blame owners for the lockout now in its 55th day and 31 percent of hockey fans polled have switched to watching the National Football League (NFL).

The tedious negotiation dance has become all too familiar for weary North American sports fans, who have been dragged a through Conga line of labor disputes by the NFL, NFL officials and the National Basketball Association in the past 15 months. Now they must watch NHL owners and players wrestle over a $3.3 billion pie.

Some of that frustration surfaced like the froth on a foamy beer on Wednesday, when Molson Coors chief executive Peter Swinburn, who signed a reported seven-year $375 million sponsorship deal with the NHL, suggested the brewing giant could seek compensation for a dramatic slump in sales in Canada.

In the first month of the fourth quarter, Molson Coors sales to retailers fell 5.1 percent in Canada, hurt by industry weakness and the NHL lockout.

"NHL is a major property for us," said Molson vice-president Dave Dunnewald. "Hockey generates a lot of beer occasions in Canada, whether it's in bars, in home, or in the venues.

"And it's a really important part of how we activate behind our power brands, Coors Light and Canadian.

"So we're obviously working to replace the hockey programming but hockey would be the premier property and on top, we lose the direct volume in the hockey venues that are ours."

Most sponsorship deals come with "make good" clauses shielding companies from calamities such as lockouts and Molson is certain to receive some relief in the form of additional marketing and advertising opportunities if the labor strife drags on but compensation is unlikely.

According to business and marketing experts, Swinburn's threat should be viewed as more of a warning shot across the NHL's bow.

"It's jawboning or whatever you want to call it," Bill Sutton, professor at University of Central Florida's DeVos sports business program and former vice-president of marketing at NBA, told Reuters. "You can check with any lawyer, I can't imagine they have any claim for the loss of any beer sales but what he is saying is, 'Hey guys, I'm going to have to put my money somewhere else or take it out of the market, if you're not back skating pretty soon, you are not going to see that money this year'."

SPONSORS CONCERNED

NHL sponsors have not been shy about expressing their concerns when it comes to the operation of the league.

Last year commissioner Gary Bettman faced the threat of a sponsors' revolt over concern of escalating violence in the game following a devastating hit by Boston Bruins Zdeno Chara on Montreal Canadiens Max Pacioretty that left Air Canada threatening to pull its sponsorship.

"They (sponsors) have some influence," Neal Pilson, head of Pilson Communications and former president of CBS Sports told Reuters. "They have a lot of stake.

"This is the fourth quarter and it would be a big quarter for whatever sponsor because this is the platform for your activation into the holiday season.

"You set up all these campaigns to activate in the holiday season and all of sudden the platform you we're going to use isn't there."

As the fans and some sponsors grumble the league's broadcasting partners have been mostly silent, stoically counting the hours of lost programming and advertising revenues.

A year ago the NHL was crowing about a new $2 billion rights with NBC that was to roll out a lineup of games this season highlighted by the money-spinning New Year's Day Winter Classic, that has already been wiped from the schedule by the labor dispute.

The U.S. rights holder to the 2014 Winter Games, NBC is watching the negotiations with double interest to see if the NHL will renew its Olympic commitment as part of the new CBA and allow players to compete in Sochi.

In Canada, where hockey is the king of all sports properties, finding ways to fill hundreds and hundreds of hours of programming will not be as easy.

The country's all sports networks have tried to satisfy the country's hunger for hockey by plugging in minor and junior games and tournaments from around the world including Switzerland's Spengler Cup and the world junior championships.

The NHL has been a ratings grabber for the Canadian Broadcasting Corp. bringing in a huge chunk of revenue for Canada's national broadcaster, which has resorted to filling its iconic Hockey Night in Canada time slot on Saturday with replays of old games.

"It's not optimal for us," Jeffrey Orridge, executive director of sports properties at CBC, told Reuters. "There is no substitute for live hockey and the advertisers that buy spots at a certain rate card because of the audience it generates.

"Hockey Night in Canada is an institution, it's not just about putting on hockey games it's about preserving a cultural institution."

(Editing by Gene Cherry)

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