Sponsorship Agreement with Molson Breweries to Launch

"Toronto's Own Beer"

The Strategic Policies and Priorities Committee recommends the adoption of the following report (January25,1999) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

The purpose of this report is to obtain authorization for City to enter into an agreement with Molson Breweries for the endorsement of "Toronto's Own Beer".

Funding Sources, Financial Implications, and Impact Statement:

The details on the projected revenues that would accrue to the City will be specified in the agreement. The proposal involves a minimum of $150,000.00 to be paid annually by Molson Breweries to the City during the term of the agreement for promotional fees for the City's endorsement of the "Toronto's Own Beer" product.

Recommendations:

It is recommended that:

(1)City staff be authorized to enter into an agreement with Molson Breweries regarding the matter set out in this report, in a content satisfactory to the Commissioner of Economic Development, Culture and Tourism and form satisfactory to the City Solicitor;

(2)the Commissioner of Economic Development, Culture and Tourism be requested to report to the Economic Development Committee on how the funds accruing from the sponsorship agreement for the "Toronto's Own Beer" product will be spent on water parks or other park and recreational projects in the City of Toronto; and

(3)the launch of "Toronto's Own Beer" take place at the City's Winterfest Carnival on February12, 13 and 14, 1999.

Background:

At its meeting of November 16, 1998, the Economic Development Committee received a presentation from Mayor Lastman on the proposed partnership with Molson Breweries. The presentation respecting the launch by Molson Breweries of "Toronto's Own Beer" was well received by the Committee. The Committee requested the Commissioner of Economic Development, Culture and Tourism to report to the Economic Development Committee with details of the proposed agreement with Molson Breweries as it relates to the provision of funding for the construction of new water parks in the City of Toronto.

Comments:

As has been reported through the Economic Development Committee, Molson Breweries has approached the City with a proposal for a beer product that is "Toronto's Own". In return for the City endorsing "Toronto's Own Beer", Molson Breweries will contribute a percentage of the profit made on the sale of the beer to the City as a promotion fee, to be used by the City as it sees fit.

Molson Breweries requires the City to enter into an agreement with it setting out this arrangement. It is hoped that "Toronto's Own Beer" can be launched at the City's Winterfest Carnival which takes place on February 12, 13 and 14, 1999. It is, therefore, important that City Council authorize entering into the necessary agreement at its next meeting of February 2, 1999.

It is proposed that the agreement be for a maximum term of 5 years and provide the City with a right to terminate without cause on reasonable written notice.

Under the agreement, Molson's will provide the City with an initial payment of $150,000.00 upon signing the agreement which will then be credited toward the fee to be paid to the City for the sale of the product. Molson's will pay the City a fee equal to $1.00 per 12 bottles of "Toronto's Own Beer" for the first 150,000 twelves sold in each year. A fee of $.75 per 12 bottles will be paid on each of the next 50,000 twelves sold and a fee equal to $.50 per 12 bottles will be paid in excess of 200,000 twelves sold in a year. An equivalent payment formula will be used for the sale of any "Toronto's Own Beer" draught beer product.

In exchange for receiving the promotional fee from Molson's, the agreement will require the City to participate in the marketing, advertising and promotion of ":Toronto's Own Beer". The agreement will require the City to make "Toronto's Own Beer" available at all City functions where alcoholic beverages are available. However, it will not require the City to promote the product at such functions, nor will it restrict the City's ability to make other products available, including products from other breweries. Also, the agreement will not restrict the City from promoting Molson's or any other competitor brewery in other types of economic development ventures or as good corporate citizens.

The City's participation in the promotion and marketing of the product will require the City's prior approval, which will include the approval of the Mayor or any Councillors or City officials involved in such a promotion.

It is recommended that the Commissioner of Economic Development, Culture and Tourism be the City's principal contact, subject to the foregoing comments respecting promotional activities, for the purposes of this agreement.

With respect to the request by the Economic Development Committee that a report be submitted detailing how the money will be spent for the construction of new water parks, a further report will be submitted on how this money will be spent once the agreement is signed by the City and Molson Breweries. It is important that the City not be bound by the agreement as to how the funds are allocated to water park or other types of park and recreation facility projects.

Contact Name:

Diane Stevenson, 392-8692.