Two big companies are already kicking the tires of the Grand Prix of Toronto for title sponsorship rights because of the financial uncertainty engulfing Steelback Breweries, says the race's president.
Charlie Johnstone, president of the Grand Prix Association of Toronto, revealed yesterday the unidentified "blue chip" firms contacted race organizers and expressed interest soon after Steelback, this year's title sponsor, moved under court protection from creditors last month.
"We are actively pursuing those opportunities," Johnstone said in an interview.
Title sponsorship gave Steelback naming rights, extensive promotional opportunities and exclusive control of beer sales at the event and other accompanying festivities.
Regardless if Steelback pulls out, Johnstone said, it will not jeopardize the marquee summer event on Toronto's western waterfront.
Wasanda Enterprises, which has financed money-losing Steelback Breweries and related beverage producer D'Angelo Brands Ltd. since 2002, gained court protection from creditors for the two companies under the federal Companies' Creditors Arrangement Act.
Earlier, Johnstone said Steelback's new management had assured the Grand Prix that it was business as usual for the event next July 4-6. Steelback secured title sponsorship of the race last March under a four-year deal. Financial terms were not disclosed.
But new information concerning Steelback's plight and operating restrictions under court protection could affect Steelback's sponsorhip for a second year, Johnstone said.
"There is some question mark," he said. "I think realistically you have to look at the numbers and make the proper business decisions. Right now those numbers don't look good."
Johnstone expects to meet soon with members of the Sherman family who control Wasanda to discuss Steelback's sponsorship.
Ontario court filings showed Steelback and D'Angelo have piled up more than $120 million in debt and interest to Wasanda in the past five years.
Jonathon Sherman, Steelback's new chief executive, said in one filing that the brewing company has cut staff and marketing costs and stopped production of four of its lowest-selling beers.
But Sherman added those efforts are not enough and the company "must be substantially restructured."
Officials have not identified which marketing and advertising programs would be cut at the two companies. The cost of those programs had exceeded beer revenues, according to the filings.
However, a CBC spokesperson confirmed Steelback has cancelled television advertising on one of the network's most popular programs, Hockey Night in Canada.
An official for Mintz & Partners, the accounting and advisory firm that is monitoring the two firms in its restructuring under court protection, could not be reached for comment on cuts in Steelback marketing.