KHL Can Learn From NHL's Sponsorship Strategy
There are moments when the difference between first and second place is miniscule. Like in Olympic sprinting, where the difference between a gold medal and a silver medal can be less than a tenth of a second, or in politics where a "too close to call election" can come down to just a handful of votes.
But there are moments when the difference between first and second are more pronounced. Where the gap between a market leader and a market challenger cannot be reduced to luck, but is instead an output of a meaningful strategic competitive advantage. The worldwide market for the game of hockey is one of those environments, where no international league comes close to the reach of the National Hockey League. Unlike sports like football (soccer) where global viewership is fragmented across a number of popular domestic leagues, the NHL is clearly and definitively the world's leading hockey sponsorship property.
Across the pond in Eastern Europe, often referred to as the "second best hockey league" in the world, is the KHL (Kontinental Hockey League). Founded in 2008 after the rebranding of the Russian Super League, the KHL has 28 member clubs across 7 countries (Belarus, Croatia, Finland, Kazakhstan, Latvia, Russia and Slovakia).
Fundamental to each league's respective growth has been the role of corporate sponsorship. Estimates from sponsorship research and consultancy firm IEG say that sponsorship revenue for the National Hockey League and its 30 clubs totaled approximately $400 million in the 2013-2014 season, a number that far eclipses the KHL's sponsorship revenue. There are a variety of reasons why the NHL has attracted such significant brand investment in comparison the KHL:
1. History: Relative to the NHL, the KHL is a league still in its infancy. The NHL is a more developed/prestigious product, takes proactive steps to create value for partners and provides the necessary support/infrastructure to support activation plans,
2. Talent: The best players in the world play in the NHL, elevating the quality of the product and leading to large and sustained viewing audiences. While some top local talent has chose to stay in the KHL, the majority of the world's best play in the NHL.
3. Infrastructure: The NHL has invested in new sponsorable assets such as large-scale events and digital / social assets that have led to net-new revenue streams.
4. Economic Conditions: Sponsorship is discretionary spend, and the falling Russian ruble has forced many KHL sponsors to reevaluate their investment decisions.
But beyond the sources that have fueled the quantity of corporate sponsorship in each league, there have been fundamental differences in how each hockey league has built and developed its sponsorship strategy.
Thinking Outside the Arena:
The insight from which the National Hockey League has developed their sponsorship strategy in the past five years has been "if you build it they will come". The NHL has invested significantly in their own brand, new content channels and jewel programming, all platforms for future sponsorship investment. The NHL understood that building out the property was crucial to demonstrating proof of concept for corporate sponsors to be named later.
This investment in itself has primarily materialized by developing sponsorable inventory outside the arena. The NHL has made a concerted effort to develop "marquee moments" throughout the NHL season that corporate sponsors could own and rally around. Starting with NHL Face-Off during the opening week of the NHL season, continuing through the season with large-scale events like Winter Classic and the NHL All-Star weekend, and even extending the season for corporate sponsors by turning off-season properties into valuable fan engagement opportunities (ie: NHL Draft, World Cup of Hockey coming in September 2016).
It is a strategy that has created spikes in reach for NHL sponsors and increased opportunities for invested brands to demonstrate their association with the league and its member teams.
By contrast, the KHL is in a separate life stage. It is a seven-year old league primarily focused on its operations, player recruitment, and gaining its foothold in Eastern Europe. While the KHL does have events additive to regular season play ( Gazprom Neft Cup KHL International Kids Hockey Tournament, All-Star Game, Gagarin Cup, etc.), there focus on developing sponsorship opportunities for brands has been an "inside the arena" approach.
Whereas the NHL has been hesitant to create too much clutter inside stadiums through assets like jersey sponsorship, in-ice logos in neutral / offensive zones, and helmet branding, the KHL has embraced an increased sponsor presence inside the arena.
Building out opportunities for sponsor presence inside arenas is low-hanging fruit and there are in fact many reports that NHL is moving towards this model, at least through jersey sponsorship. However, it is a strategy that is finite. There are only so many brands that can live in the ice or on a jersey before all sponsors have their value diluted. By focusing on building property extensions outside the arena, the KHL will not only increase its reach and relevance in core markets, but will allow sponsors the opportunity to do the same.
What Else Can the KHL Can Learn from the NHL?: Beyond the variance in how each league has developed its sponsorship inventory, there are a variety of other insights that the KHL can glean from its North American counterpart, the National Hockey League.
1. Build Equity in Superstars:
The KHL is a league that was built on the vision to challenge the NHL has the world's top hockey league, partially through incentivizing superstars to come to (or stay in) Russia for above-average salaries. The KHL can support their brand positioning as a superstar-driven league by telling the story of the league through the eyes of its players. NHL Sponsor GoPro released various videos filmed with the companies first-person camera technology, highlighting the world-class talent of its players. The NHL has also developed the "off-ice"story of its players, humanizing NHL athletes through content like HBO 24/7. Leagues have a role to play in providing their players a chance to appear more marketable and will in turn benefit from sponsor interest.
2. Help B2B Sponsors Tell Their Story: Some of the KHL's largest sponsors include state-owned organizations like Gazprom, ERIELL, and OJSC Severneftegazprom. These brands have massive category leadership positions, are non-consumer facing, and have very little incentive to activate. However, even B2B brands have a story to tell. The NHL recently partnered with B2B technology solutions provider SAP, who will be revamping how statistics are displayed on the NHL.com website. The KHL could potentially work with an Energy/Gas sponsor to tell consumers the story of how the league and its teams are "powered by" a certain sponsor.
3. Develop Synergies with Grassroots Hockey Properties: Professional sports leagues are in many respects aspirational properties. There are natural opportunities for sponsors to leverage a pro sport league to demonstrate their commitment to that particular sport's grassroots level. Tier-1 NHL sponsors like Tim Horton's (Timbits Hockey Program), Scotiabank (sponsorship of 5000 youth hockey teams), and Kraft (Kraft Hockeyville helps fund arena infrastructure projects in Canadian communities) all leverage their NHL partnerships to tell this story. The KHL can invest in partnerships with the minor hockey establishment in each of its operating countries, providing sponsors with an opportunity to activate through a community-focused lens.
Narrowing the Gap: KHL commissioner Alex Medvedev recently announced plans for a new league development strategy in a year where the league is expected to turn its first ever profit.The KHL may never truly catch up to the NHL in the race to become to world's top hockey league, and how sponsorship fits into the strategic direction of the league is just one piece of the puzzle. But in its quest to optimize how corporate sponsors can leverage an association with the "2nd best hockey league in the world" in order to meet their brand and business objectives, the league would be best served to look forward at the NHL, currently leading the race. In that they must just find somebody to chase.