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Inside the deal
Published October 22, 2001
Valero Energy signs as title sponsor of the PGATexas Open.
Five years with option to renew starting with 2002 tournament
Bill Greehey, chairman, Valero Energy; Frank Felicella, president/CEO, Golf San Antonio; Tony Piazzi, tournament director/COO, Golf San Antonio
Title sponsorship of event
Advertising inventory of ESPN tournament broadcasts (four days)
Extensive hospitality during tournament
Rights to use tournament name and marks in retail promotions
Earlier this year, Valero Energy Corp. and Ultramar Diamond Shamrock Corp. announced that Valero will acquire Ultramar Diamond Shamrock. Pending governmental approval, Valero, with 23,000 employees, will become the second-largest U.S. refiner of petroleum products. Before the deal, Valero had 82 retail stores in the San Francisco Bay area. Now, Valero will be one of the nation's largest retailers, with more than 5,000 outlets in the United States and Canada and the vast majority of locations west of Mississippi. Retail names for the outlets are Diamond Shamrock, Ultramar, Beacon and Total. It's possible the name of the event could be changed to include one of the retail brand names.
It hasn't gotten any easier for mid-level sports properties to land major sponsorship deals, but Golf San Antonio proves it can still be done. It may have taken 20 months, but it paid off for the charity group that runs the PGA Tour's fourth-oldest event. Golf San Antonio was a beneficiary when Valero Energy bought Ultramar Diamond Shamrock. Both San Antonio-based companies had been mid-level sponsors of the tournament in the past.
The acquisition of Ultramar Diamond Shamrock (pending approval of regulatory agencies) gives Valero a much larger retail presence that helps justify a $3 million-plus annual sponsorship payment. Valero can bring in partners like Pepsi to leverage the deal to drive traffic to its retail outlets. While Valero has the critical mass to make this deal work from a consumer end (there are 165 retail outlets in San Antonio), the corporate hospitality means a lot in the high-stakes oil business. It also gave Valero a chance to play the role of a good corporate citizen, as it was likely the event would have been dropped or moved if a title sponsor had not been landed.
Alan Friedman (email@example.com) is the founder of Team Marketing Report.