Case Study: The Cola Wars Still Rage - Pepsi Facility Sponsorship and Coca-Cola-Sponsored Hallmark Events in Denver

Case study: 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