The Cola Wars still rage – Pepsi facility sponsorship and Coca-Cola-sponsored hallmark events in Denver

The Cola Wars still rage – Pepsi facility sponsorship and Coca-Cola-sponsored hallmark events in Denver

In 1999, the Colorado Avalanche of the National Hockey League (NHL) submitted a bid for the 2001 All-Star Weekend in the arena they played in at that time – McNichols Arena. During this same time in Denver, a new arena was being built to house the Denver Nuggets of the National Basketball Association (NBA) and the Colorado Avalanche (NHL). Naming rights were sold later that year (1999) to PepsiCo for US$3.4 million per year for 20 years. So what is the dilemma – Coca-Cola is the official non-alcoholic drink sponsor of the NHL. So the NHL All-Star Game, with the NHL's sponsor Coca-Cola in tow, would be held at the Pepsi Center. Here comes the new century version of the Cola Wars.

During the 1980s and 1990s, in an effort to become the No. 1 soft drink company in the United States, Coca-Cola and Pepsi engaged in mutually targeted advertisements on all media fronts and marketing campaigns. Now in 2000 and 2001, the fight over whose name would be allowed to appear in conjunction with the NHL All-Star Weekend, Pepsi as the facility sponsor, or Coca-Cola as the event sponsor. The main issues were: (1) previous partnerships are considered in negotiations, but it is one item to consider among many; and (2) despite venue exclusivity, there are permitted exceptions for certain events, including those deemed as ‘jewel events’ such as all-star games. After months of negotiations and threatened litigation, it was determined that Coca-Cola would have precedent over Pepsi for this one-time event because the contract was signed for the All-Star event to be played in the old arena, and the move to the new arena and subsequent naming rights by Pepsi did not hold precedence over the Coca-Cola event sponsorship. As a result:

·Coca-Cola forced the Colorado Avalanche and the NHL to erase the formal name of the arena (Pepsi Center) from all all-star tickets.

·The NHL required the broadcaster of the game (ABC) not to refer to the venue as the Pepsi Center. The only approved references for the arena were ‘Home of the Colorado Avalanche’; ‘Welcome back to Denver’; ‘Coming to you from Denver’; and ‘Back in Denver’. In addition, any blimp or other aerial shots had to be from the side of the facility so that the title of the arena could not be seen.

·Since Pepsi, as the facility sponsor, had pouring rights, it was still served – but in generic, NHL cups.

·Coca-Cola, still not totally satisfied, withdrew some of its financial support for the event – and the Pepsi Center had to cut the NHL an undisclosed six-figure check to host the All-Star Game to make up for the deficit created by Coca-Cola's reduction in support.

The Denver Nuggets of the NBA were keeping a close eye on this situation. They were looking for ways to host the NBA All-Star game at the Pepsi Center, but the NBA contract with Coca-Cola is even stronger than that of with the NHL. The contract between the NBA and the Sprite brand name is a 100-year global marketing alliance estimated to be worth well in excess of $1 billion. The Denver Nuggets had lobbied for years to host the event, but feared it would not be for at least 100 years because they did not believe that the NBA would want to alienate a top sponsor by bringing All-Star Weekend to an arena named after its competitor. Fortunately, the NBA decided in 2003 that the All-Star Game would come to Denver and be played in the Pepsi Center. Coca-Cola was of course not happy about it because the reverse was happening – the Pepsi Center facility sponsorship came before the event contract with the NBA. However, Coca-Cola did put some pressure on the NBA, and insisted that some mutual agreements with Pepsi had to occur. They included:

·All Pepsi signage in the arena could remain visible, but the floor where the game would be played could not say Pepsi Center.

·Sprite (a Coca-Cola product) would be the prominent presenting sponsor of the Slam Dunk competition across all media and branded on scorer's tables, judge's tables, and scorecards, and in the staging area for athletes.

·In the hospitality areas, all vending machines would be Coca-Cola products, however, if any product was brought out of hospitality into the arena, either the drinks needed to be poured in cups (for cans), or labels taken off plastic bottles. For those who did not – usher would approach the patron or media member and ask them to comply.

·During media coverage by Turner Network Television (TNT), the Pepsi Center could only be named once verbally and once via on-screen graphic during the broadcast on All-Star Saturday – the rest of the time, the event was referred to as being in Denver. For the All-Star Game on Sunday, TNT was asked to limit their use of the arena title – according to Front Row Marketing, the Pepsi Center received 12 s of on-screen graphics, five verbal mentions, and 40 s of visible in-arena signage (no blimp or aerial coverage of the front of the arena – only the side).

Suggested discussion topics

1. Considering the contentious relationship Coca-Cola and Pepsi have had over the years, do you think this type of sponsorship conflict between a sport facility and a hallmark event would happen if a similar situation were to occur between: 

a. Nike and Reebok (such as a Nike-sponsored event being played at Reebok Stadium, home of the Bolton Wanderers of the English Premier League)?

b. Federal Express (FedEx) and United Parcel Service (UPS) (such as a UPS-sponsored event at the FedEx Forum, home of the Memphis Grizzlies of the NBA)?

2. Research and discuss why the Australian Football League, with their league sponsorship of Qantas Airways, will not acknowledge the new facility sponsorship in Melbourne of the former Dockland Stadium/Telstra Dome, which is now called Etihad Stadium, after Etihad Airways of the United Arab Emirates?