Legal news and trends for Canadian in-house counsel and c-suite executives
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INDUSTRY SPOTLIGHT By Andi Balla Changing times How economic, regulatory, and demographic shifts are affecting Canada's sports industry. The way most economists see it, the sports industry should be immune to recession. The general wisdom goes that even in hard times, people will pay to see their favourite team, but in a changing landscape where much of the growth relies on sponsorship con- tracts, athletes' public image, or the right contractual agreements — things can quickly become complicated. And while larger franchises might be able to ride the economic roller-coaster more easily, smaller teams face harder times. At Maple Leafs Sports & Entertain- ment Ltd., the company behind iconic Canadian brands like the Toronto Maple Leafs and the only Canadian team in the National Basketball Associ- ation, the Raptors, things went relatively smoothly during the recession but even there, the bad economy hit harder than expected. "We were planning for a diffi- cult economy before it hit, and certainly we didn't anticipate it hitting as badly as it did, but we expected to have some challenges and that helped us weather it," says Robin Brudner, executive vice president, general counsel, and corpor- ate secretary at MLSE. "We negotiated sponsorship agreements, for example, earlier that we had generally done be- fore in order to try to early renew and secure the sponsorships." Thanks to the wide recognition of the company's brands, Brudner says MLSE was successful in securing sponsorships even during the worst part of the reces- sion. But it required more effort than be- fore. "We have been very fortunate that we have been able to maintain our roster of sponsors by and large, but absolutely the selling process is longer, harder. The ap- proval process from the sponsor perspec- tive is greater and more involved and we have to demonstrate like never before the value of the partnership," says Brudner. According to IEG Sponsorship Re- port data, sports accounts for 68 per cent of the $17-billion North Amer- ican sponsorship market and sponsors are demanding more transparency on the return on investment. They want to see a direct revenue stream coming out of sponsorship, not just general brand awareness by association, says Michael Penman, a senior partner at Toronto's Blaney McMurtry LLP who deals with sports legal issues. But while large, well-established teams like the Toronto Maple Leafs will do fairly well in any economy, smaller brands face an uphill battle, he says. "The jewels and in the franchises, teams INHOUSE OCTOBER 2010 • 33