Archive | November 23, 2015

Ambush Marketing Strikes Again at Rugby World Cup

November 23, 2015

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By Emily Raven – Thompson Rivers University 2L JD Student

One of the largest sporting events in the world had its final match a few weeks ago. With over two million people in attendance and many more at home, it is safe to say that the 2015 Rugby World Cup provides very lucrative marketing opportunities to its official sponsors. This year corporate giants such as Heineken, Coca Cola and MasterCard were among the event’s official sponsors. But what about other companies hoping to get a piece of the action without the price tag?

Ambush marketing is a term used when a rival company tries to associate itself and its products either directly or indirectly with an event that it does not officially sponsor. This marketing strategy is very commonly used at large sports events. As you can imagine, this style of marketing is quite controversial and can be very frustrating for organizers and paying official sponsors of these events. Some events such as the 2012 London Olympics and the 2014 Commonwealth Games in Scotland passed bespoke legislation to protect its sponsors from ambush marketing. However, the Rugby World Cup did not, relying on existing laws and regulations to prevent ambushes.

One of the methods used by the organizers of the Rugby World Cup to protect against ambush marketers involves intellectual property rights. The event organizers held a number of copyrights in relation to the Rugby World Cup including: Rugby World Cup, RWC 2015, Rugby World Cup 2015, England 2015 and many others. Non-official corporations attempting to use these registered trademarks could face an infringement suit. Logos, photographs and event footage also fall under copyright protection, which could be relied on in a lawsuit.

Apart from trademark or copyright infringement, event organizers could also attempt to bring a claim under the tort of passing off. A successful claim would have to prove that: a) the Rugby World Cup has an established reputation, b) the non-official company made a misrepresentation that it is related to the Rugby World Cup, which caused confusion amongst the public, and c) the event organisers suffered damages.

Despite these measures, the Rugby World Cup still saw a few attempts at ambush marketing. O2 gave away 50,000 branded t-shirts to fans to wear while cheering on England in their “wear the rose” campaign. UK power company SSE also attempted to hand out branded megaphones outside of the stadium, but all megaphones were confiscated by security. Samsung, another non-sponsor, also grabbed attention with its “School of Rugby” campaign which featured British celebrities and former England rugby team players in humorous videos about rugby. Beats by Dr Dre also got in on the action by running an ad titled “the game starts here” starring the New Zealand All Blacks captain Richie McCaw.

One company that had a unique position to ambush market the event was Guinness. The brand already has a history of sponsoring rugby events and is often associated with rugby in the minds of consumers. There is really nothing that the Rugby World Cup organizers or official sponsors can do to prevent Guinness from maintaining this connection from previous sponsorship. Guinness did this with a direct marketing strategy aimed at pubs featuring ads of real life stories of rugby legends.

Guiness ambush tweetsA marketing report released at the end of the tournament examined the number of times a brand was mentioned in a tweet with the hashtag #RWC2015. The report found that Guinness was tagged more times than Heineken throughout the tournament. This shows that sponsorship does not end when the contract terminates. Having a previous sponsorship relationship with an event connects a brand to the sport giving it a strong opportunity to ambush market in the future.

Above are a few of the tweets about Guinness and the Rugby World Cup. Overall, the ambush marketing at the World Cup was rather modest in comparison to previous sporting events of its size. Although being criticized for its lack of legislative bite, in the end managers of the RWC succeeded in protecting their sponsor’s exclusive rights.

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NHL Geographical Expansion – Does Relocation Require Unanimous Consent?

November 23, 2015

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By Aasim Hirji – Thompson Rivers University 3L JD Student

On June 24, 2015, Commissioner Gary Bettman announced that the NHL is officially exploring expansion plans. The window for applications was to be between July 6 and August 10 with the application fee being $10 million, $2 million of which was non-refundable. At the time, Bettman noted that the expansion fees would be at least $500 million.

The Board of Governors of the NHL control the expansion process in the NHL, as governed by the Constitution and ByLaws of the NHL. Article 3.3 of the Constitution states that there must be a vote of 3/4 of the Board of Governors in order to allow a new member into the NHL.

Only two markets sufficiently followed the NHL protocol to continue on to the next expansion phase, Quebec City and Las Vegas. Surprisingly, no expansion team was bid on in the Greater Toronto Area.

In the NHL Constitution, in Article 4.3, there is a “veto” right to member teams. “No franchise shall be granted for a home territory within the home territory of a member, without the written consent of such member.” The implications of this clause are very important. It would mean to infringe on the Toronto Maple Leafs’ rights, it would require the Maple Leafs consent for another team to come in that region. Article 4.1 defined the territorial rights as being within fifty miles of that city’s corporate limits.

In Re Dewy Ranch Hockey LLC, where Jim Balsille attempted to sidestep the process, Article 4.3 was challenged as a potential antitrust issue. Gary Bettman, Commissioner of the NHL stated that they are not enforcing that provision, rather relying on bylaw 36, which states that approval of 3/4 of the Board of Governors would ratify a transfer. Bettman also stated that there have been no objections to the league not enforcing Article 4.3, despite a letter dated November 29, 2006 from the Maple Leafs to the NHL stating that they believe a unanimous vote would be required, thus giving the Maple Leafs a veto.

The Canadian Competition Bureau (CCB) analyzed the NHL’s policies in 2008 regarding potential antitrust issues with the relocation policies. The Competition Bureau aimed to determine if the 50-mile home territory rule was an undue restriction of competition. The CCB believed that the veto rule has not been in effect since 1993, precisely what Gary Bettman had stated in Dewy Ranch. Without the veto rule, the CCB determined that there is no legal issue with needing 3/4 of approval from the Board of Governors.

The NHL has not been tested on enforcing Article 4.3 should 3/4 of the Board of Governors agree to relocate a franchise within the territorial rights of another. Relocation and expansion fees can be as high as $500 million, which gets distributed amongst the member teams. As a team in the Toronto region would be incredibly valuable, the fee could even be higher. There may be incentive for certain markets to vote in the affirmative due to receiving a share of the expansion or relocation fee (a 1/30th share).

In the United States, in LA Coliseum 1, the NFL was found to be violating the Sherman Antitrust Act by preventing the Raiders from moving to LA from Oakland. On appeal, the court vacated the damages and offered clarification on the result from Coliseum 1. The court stated that due to the unique nature of professional athletic leagues, territorial restrictions may be required. The court further stated that “objective factors such as population, economic projections and the like would be more likely to pass antitrust scrutiny”. These factors were included in the NBA franchise relocation rules after the San Diego Clippers moved to Los Angeles.

It is clear that infringement of territorial limits would likely lead to long and complex legal cases, whether it be for the Leafs or any other franchise. Since the 2006 letter, the Leafs have unequivocally stated that they believe infringing on territorial limits requires unanimous approval, thus giving every team a veto.

Should a franchise attempt to move into the Toronto area, based on precedent, the Leafs are unlikely to be pleased with the result. There is a significant benefit for other owners to allow a team into the GTA, as there is revenue sharing in the NHL. It is unlikely that the courts would allow the Leafs to exercise a veto, based on the US cases of Coliseum and San Diego Clippers. Even when looking at objective measures outlined in these cases, there is sufficient population, and strong economic projections to launch another team in the GTA.

 

 

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