On the latest episode of the 31 Thoughts The Podcast, Elliotte Friedman and Jeff Marek discussed the idea of players being able to be sponsored individually to increase their earnings. For example, why couldn’t Budweiser sponsor a goalie like David Rittich to paint his pads to look like their red beer cans?
The objection that they raised was what happens if he signs a deal with one firm, but is then traded to a team like Montreal, which is owned by the Molson Family. How would that deal work? Competing sponsorships between different parties can create a sticky situation. This was once a major issue in the Czech Extraliga in the mid 2010s.
As we have previously written about, the Czech Extraliga is made up of 14 teams spread across the Czech Republic. In order to increase revenue to allow the league to grow, it entered into an agreement with Radegast Beer, a subsidiary of Pilsner Urquell, to be the sole supplier of beers in all the arenas in the league. Like the slogan for Radegast: “life is bitter, thank god”, this created a very bitter situation.
While the deal was fine for most teams, it was not for HC Motor Ceske Budejovice. Located in a city of just under 100,000 people, the team played out of Budvar Arena which has a capacity of about 6,500 seats. The City Council of Ceske Budejovice entered into a sponsorship deal with Budweiser Budvar Brewery for the naming rights to the arena built in 1946 (but was significantly renovated in 2002). A bitter rival of Anheuser-Busch and their Budweiser Beer, the agreement allowed Budvar the exclusive right to sell their beer in the arena bearing their name.
Both sides were unwilling to give in.
Radegast threatened to fine the team one million Czech Koruna (about $58,000 CAD) for each game they were unable to sell their beers in the arena up to a maximum of 15 million Koruna, which would financially ruin the club. Because of the conflict, there were numerous proposals to move the team, which seemed to be the best option.
The city of Ceske Budejovice offered to cancel the sponsorship deal for 14 million Koruna ($820,000 CAD) and if the team guaranteed it would play in the city and in the Czech Extraliga for the next two seasons. However, the Extraliga is a relegation league, and while the team had been a mid-table team in the years leading up to the dispute, this was something that the team simply could not guarantee.
The dispute got increasingly heated, with rhetoric on all sides becoming tense. The team’s Chairman and Vice Chairman both resigned in an effort to calm tensions, but it accomplished little. The next chairman made it clear that the objective was to keep the team in Ceske Budejovice, but with limited support from the city and league, it seemed unlikely.
The vitriol continued. Some suggested that the real issue was not the sponsorship, but rather that the team was using this as an excuse to cover the mountain of debt that it was currently facing. The team counter back, arguing that it was playing in the only Czech city that did not support their local team. In an attempt to mend fences, the team offered the city the option to buy a 50% stake in the team in an effort to keep it in town, but the mayor rejected the proposal
The team ended up moving to Hradec Kralove and taking the name Mountfield HK, otherwise known as HC Hradec Kralove. There was talk of the city becoming a part owner of the merged group. A new team was formed in Ceske Budejovice, starting in the Chance Liga, but currently playing in the Extraliga.
The moral of the story is this: any attempt to increase revenues by adding another avenue for sponsorship needs to be clearly thought out and explored within the current framework. While the prospect of a goalie like Thomas Greiss rocking pads with the Lil’ Caesar’s logo on them, the idea may lead to more legal costs and bad blood than actual revenue.