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Court battle continues between NHL beer sponsors Labatt and Molson

Tuesday, 07.12.2011 / 12:38 PM / News

The Canadian Press

TORONTO - There's a new twist in the legal battle over which beer giant gets to sponsor the National Hockey League for the next few years.

A judge's ruling that blocked the NHL's $375-million agreement with Molson Coors Canada was overturned Tuesday by Ontario's Court of Appeal.

But Labatt Breweries, which owned by multinational brewer Anheuser-Busch InBev, countered by announcing that its Budweiser beer will become official sponsor of three Canadian NHL teams — the Vancouver Canucks, the Calgary Flames and the reformed Winnipeg Jets — starting Oct. 5.

"Hockey remains an important aspect of the Budweiser brand and we will continue to reinforce our relationship with hockey through programs we have in place and ready to implement at both the grass roots and professional team levels in Canada," said Labatt vice-president Charlie Angelakos.

The three team-sponsorship deals — the first in Canada for Labatt — are part of a heated contest between it and Molson Coors, the country's two largest beer sellers.

Earlier Tuesday, a three-judge panel of the appeals court tossed out a lower court's ruling in Labatt's favour, saying that the NHL and Molson weren't given an opportunity to address the conclusion reached by the judge.

Justice Frank Newbould ruled last month that the NHL and Labatt had reached a binding sponsorship agreement in November and that, as a result, the league wasn't free to enter into a similar deal with Molson in February.

However, the appeal court said the judge's central conclusion "was not anchored in the pleadings, evidence, positions or submissions of any of the parties."

"Indeed the application judge recognized this when he said in his reasons: 'I realize that this result is not exactly what either side contended.' As such, it was procedurally unfair, or contrary to natural justice, for the application judge to reach this conclusion on this record."

The panel went on to say that Labatt never said it had a binding sponsorship agreement with the NHL on Nov. 12, 2010.

"Labatt argued only that on Nov. 12 the parties had reached 'Terms of Renewal', which it asserted was something less than a binding sponsorship agreement, and that as a result the NHL was obligated to continue negotiations toward a binding sponsorship agreement," the court said.

The appeal court said that the matter should be sent to a different judge if further proceedings are required.

Labatt indicated later that it wants to pursue the matter further.

"The Court of Appeal found there was a procedural error made by the Superior Court and has sent the case back to the Superior Court of Ontario for a rehearing. Based on the merits of the case Labatt will pursue its legal rights vigorously. Labatt negotiated, in good faith, terms for the renewal of its sponsorship of the NHL for the 2011-2014 seasons," Labatt said.

Molson Coors (TSX:TPX.B) said it was vindicated by the appeal court's ruling and was ready to move ahead on its agreement with the league.

It means a lot to us, we're very excited. We're looking to continue to build on [our] top core talent of young players. It's just a great opportunity for us to really build high.

— Panthers vice president of hockey operations Travis Viola after Florida won the No. 1 pick in the NHL Draft Lottery