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SBJ/Jan. 6-12, 2014/In DepthPrint All
It’s easy to dismiss the PGA Tour’s mid-March event in Tampa as just another tournament. Tucked between two of the tour’s most high-profile events, the Cadillac Championship at Doral and the Arnold Palmer Invitational at Bay Hill, would anyone outside of Tampa have noticed if the tournament had gone away for lack of a title sponsor?
Perhaps not, but the scrambling that went on behind the scenes to save the tournament against a tight deadline suggests otherwise. From the tour’s perspective, its players like the course at Innisbrook Resort, the event has become a staple of the Florida swing, and the tour doesn’t want to lose tournaments that would shake up its calendar.
Securing a four-year deal with Valspar to title sponsor the Tampa event — and save it from peril — proved to be another testimony to the tour’s ability to not only find the funding for its tournaments, but also to inject new money into the sport.
Valspar’s exposure to sports marketing was extremely limited before this deal. The Minneapolis-based paint company had been a secondary sponsor for a Champions Tour event in its hometown for the past decade, hosting clients and customers. Other than that, Valspar sponsored the 2007 and 2008 U.S. Open tennis tournaments in a deal that lasted just two years.
So where did Valspar come from to save the Tampa stop, and how did the tour close the deal in a month’s time when most title sponsorships require a year or more of haggling?
“We must have presented Tampa to several dozen companies and we just couldn’t find the right mix,” Gambuzza said. “And then Valspar came along.”
The Tampa tournament presents an interesting case of how the tour works to find funding for its events, and what it would have done if a sponsor had not been found.
Tampa’s story goes back to 2012 when it lost its title sponsor, Transitions Optical. EverBank filled in as presenting sponsor for 2013 on a one-year deal, but no one expected that to turn into a long-term relationship.
The tournament didn’t have the money to stay on the PGA Tour schedule in 2014 without a title sponsor.
A deadline was set late in the spring to have the spot filled or else the tour would move out of Tampa. Most believe the tour had the Puerto Rico Open lined up to fill Tampa’s date on the schedule.
That late spring deadline came and went. No sponsor was on board. The tour didn’t even have a suitable lead at the time.
Ultimately, it was Commissioner Tim Finchem’s call. Finchem, in a leap of faith, granted Tampa a stay. A new deadline of Aug. 31 was established to find a sponsor, or else.
“We were already on a compressed time schedule,” said Andy Pazder, the tour’s chief of operations. “And we also had to make sure that we gave the other tournament enough time to move into that date, if we couldn’t find something for Tampa. We just decided that it would be a disservice to Tampa if we didn’t use every last day.”
After the extension had been granted, Ric Clarson, senior vice president and a 30-year PGA Tour veteran, was on the phone in late June with Hollis Cavner, whose agency, Pro Links Sports, runs a handful of Champions Tour events.
Cavner had helped Valspar buy into the Champions Tour’s 3M Championship as a secondary sponsor and knew that
The Tampa event didn’t have the money to stay on the PGA Tour schedule without a title sponsor.
Photo by:Getty Images
“Ric called and said, ‘Hollis, do you have anybody?’” Cavner said of his conversation with Clarson. “I said, ‘You know, Ric, I’ve got somebody that might be what you’re looking for.’ I knew it would be a huge leap for Valspar, but I also thought it could be something that would touch all the bases for them.”
Cavner presented the idea to Valspar CEO Gary Hendrickson in a casual one-on-one meeting and there was interest. There also was a problem. If Cavner was going to work on this deal for Valspar, he couldn’t do it until after he finished working the Aug. 2-4 3M Championship. That would leave Valspar and the PGA Tour less than a month to do a deal before the Aug. 31 deadline.
“The normal time frame to do a deal is probably 12 to 18 months,” Gambuzza said.
Title sponsorships typically go for $9 million to $11 million a year, plus activation costs. Some were skeptical that Valspar could pull the trigger on a mega-deal like that in such a short time span.
“We had a great experience on the Champions Tour and a PGA Tour title was a natural evolution for us,” Hendrickson said. But several hurdles had to be cleared.
Making difficult decisions on deadline is nothing that would faze Hendrickson, a Harvard MBA graduate and a former lieutenant commander during an 11-year career in the U.S. Navy.
Once the initial proposal had been presented, he quickly charted a course for Valspar to fully vet the PGA Tour deal. He put Howard Heckes, Valspar’s senior vice president in the consumer division, in charge.
As a former executive with Newell Rubbermaid, Heckes had managed brands such as Sharpie, PaperMate, Graco and Goody. Heckes looked into the PGA Tour’s demographics, the Tampa event, TV ratings and the advertising commitment that’s part of every PGA Tour title sponsorship deal.
A logo was mocked up, showing a paintbrush teeing up a golf ball. Valspar would call it the “most colorful event on the PGA Tour.”
“It was very intense,” Cavner said. “We knew there was another site that wanted that date.”
As Aug. 31 approached, the tour, Heckes and Cavner were on the phone nearly every day. Along the way, it dawned on them that Aug. 31 was a Saturday. In fact, it was the Saturday of Labor Day weekend. The next business day was Sept. 3, that Tuesday.
Again, it was up to the commissioner to extend the deadline, which he did to Sept. 3. But it couldn’t go beyond that.
Finchem stayed involved, having multiple conversations with Hendrickson to present the tour’s big-picture vision.
“As we often do when we feel like there’s a really good chance to get a deal done, we asked the commissioner to have a conversation,” Gambuzza said.
Finchem knew that Valspar was already sold on the value of golf through its association with the 3M Championship, and that Hendrickson enjoyed playing the game.
As the deadline approached, there were two final hurdles that needed to be cleared. While negotiating to be title sponsor in Tampa, Valspar also wanted an official marketing partnership with the tour.
To pull that off, the tour had to commit to using Valspar paint at all of its properties and any ancillary businesses. Gambuzza and his team worked the phones with its TPC clubs, with Innisbrook, the host club, and Salamander, Innisbrook’s parent company. They talked to the executives who oversee Copperhead Charities, the host organization in Tampa that runs the event, to find even more opportunities for Valspar to sell paint.
Larry Morgan, Copperhead Charities’ chairman, committed to using Valspar at his 12 auto dealerships throughout Florida.
It wasn’t the sort of deal point that could be put in writing, but it meant something to have so many entities committed to using Valspar product.
“This has already proven itself to be a good deal and we haven’t even had the tournament yet,” Cavner said of the business stemming from the new relationships.
The other obstacle was cost. While the tour talked to Valspar, it concurrently had negotiations with BB&T for what it calls a local presenting sponsorship, which would reduce some of the cost for a title deal. Local presenting sponsors take on some of the advertising units and help defray costs for a new company that might be hesitant to make a $40 million commitment over four years.
A completely separate sales team from the tour worked with BB&T to complete that end of the deal. Final terms were not available, but industry sources say a local presenting sponsor can help reduce costs for a title sponsor by a couple of million dollars annually.
With that deal done, Valspar was on board.
Not only will Valspar use the title sponsorship for traditional hospitality, it also will be the primary platform for its consumer line of paint, sold mostly at Lowe’s and Ace Hardware. Money from Valspar’s advertising and cause marketing budgets will pay for the PGA Tour deal.
“The tour is pretty well-known for the success of business-to-business companies, but we’re also seeing some consumer brands like Coca-Cola, Farmers Insurance, Frys.com and others doing well,” said Billy McGriff, co-head of CAA Golf, which was not part of this deal.
By the end of the day on Sept. 4, Valspar and the PGA Tour had an agreement. The tour made the call to the other event waiting for Tampa’s date and delivered the news: The tour is staying in Tampa.
An announcement was made two days later. While local organizers said publicly that they weren’t worried about the tournament’s future in Tampa, they had every reason to be concerned. Innisbrook was literally one day away from losing its date.
Gambuzza, who has worked on dozens of deals, but nothing ever like this, said the tight deadline streamlined the process.
“We were working against the clock,” he said. “This was a very real deadline. There wasn’t any, ‘We’ll take a few days to think about it and get back to you.’ We had to have all of the decision-makers around the table. Actually, it was kind of refreshing.”
PGA Tour title sponsorship deals, by year they expire
■ Accenture (Marana, Ariz.)
■ AT&T (National, Bethesda, Md.)
■ BMW (Englewood, Colo.)
■ FedEx (St. Jude, Memphis)
■ HP (Byron Nelson, Dallas); will be replaced by AT&T in 2015
■ Puerto Rico Tourism (Rio Grande, Puerto Rico)
■ Travelers (Cromwell, Conn.); company has said it will extend its deal
■ Wells Fargo (Charlotte); five-year extension through 2019 pending
■ Crowne Plaza (Fort Worth)
■ HSBC (China)
■ Hyundai (Kapalua, Maui)
■ McGladrey (Sea Island, Ga.)
■ Waste Management (Scottsdale, Ariz.)
■ AT&T (Byron Nelson, Dallas)
■ Barclays (Paramus, N.J.)
■ Cadillac (Miami)
■ CIMB (Malaysia)
■ Coca-Cola (Atlanta)
■ Deutsche Bank (Boston)
■ Frys.com (San Martin, Calif.)
■ Honda (Palm Beach Gardens, Fla.)
■ John Deere (Silvis, Ill.)
■ MasterCard (Orlando)
■ Nationwide (Dublin, Ohio)
■ Northern Trust (Los Angeles)
■ RBC (Heritage, Hilton Head Island, S.C.)
■ Sanderson Farms (Madison, Miss.)
■ Wyndham (Greensboro, N.C.)
■ RBC (Canadian, Quebec)
■ Shell (Houston)
■ Shriners Hospitals for Children (Las Vegas)
■ Valspar (Palm Harbor, Fla.)
■ Bridgestone (Akron, Ohio)
■ OHL/Mayakoba (Mexico)
■ Sony (Honolulu)
■ Valero (San Antonio)
■ Farmers Insurance (La Jolla, Calif.)
■ Humana (La Quinta, Calif.)
■ Zurich (New Orleans)
■ Greenbrier (White Sulphur Springs, W.Va.)
■ AT&T (Pebble Beach)
■ The Reno-Tahoe Open uses a consortium of sponsors to support its tournament, although the tour has been seeking a traditional title sponsor.
■ Accenture, Bridgestone, Cadillac and HSBC are title sponsors of World Golf Championships tournaments, which give them title sponsor rights at their event and secondary sponsor rights at the other WGC events.
■ Barclays, BMW, Coca-Cola and Deutsche Bank are title sponsors of FedEx Cup tournaments.
■ PricewaterhouseCoopers has “Proud Partner” status at The Players Championship through 2017.
Umbrella deals, by year they expire
■ NEC (NEC Series — PGA Tour Latinoamerica)
■ Charles Schwab (Champions Tour)
■ FedEx (PGA Tour)
■ Web.com (Web.com Tour— Path to the PGA Tour)
Sources: PGA Tour, SportsBusiness Journal research
Ever impatient LPGA Commissioner Mike Whan took about 30 seconds to admire the growth in the 2014 schedule before he looked at the next column, which listed TV coverage for those 32 events. He instantly sees a lack of over-the-air network coverage of women’s golf.
The U.S. Women’s Open will be on NBC and the Ricoh British Open will be on ESPN. NBC also televised the final round of the Evian Championship, and could again in 2014.
Don’t get Whan wrong. He loves the Golf Channel and puts the Comcast network at the top of the reasons why the LPGA has experienced such rapid growth in the last three years. But one of the most glaring holes he sees is a lack of broadcast network coverage of the women’s game. Whan would like to get to where the majors and a handful of other events are broadcast on NBC.
Golf Channel executives cite the LPGA as a staple of its live content throughout the year, but they say they’re open to considering opportunities when they arise.
“We need to continue to grow and network TV is one place to start,” Whan said. “If we were playing six or seven weekends a year on network, it would not only benefit the LPGA and our players, but it also would be great for our Golf Channel partner. We would bring back a significant amount of casual fans. That’s the next frontier for us.”
The good thing about starting at ground zero for Whan, CMO Jon Podany and their team four years ago is that they had plenty of open frontiers ahead of them. With a schedule that included only 23 events in 2011, the LPGA went about redefining what it stands for and what the players’ roles are, as it pertains to sponsors. In Whan’s words, the LPGA wanted to establish a level of customer focus unprecedented in pro sports.
The LPGA has experienced tangible results from its refreshed approach. The schedule has grown from 23 tournaments in 2011 to 32 in 2014, and the number of televised hours has gone from 200 (most of which was tape delayed in standard definition in 2011) to 350 in HD this year.
The growth in events and exposure has led the tour in some unanticipated directions as well. An innovative team
The next frontier, outside of TV, is the LPGA’s desire to establish its own version of the PGA Tour’s FedEx Cup. The LPGA probably wouldn’t go with a multi-event playoff format because of the way its schedule is structured, but it could establish a seasonlong points race. Theoretically, it would culminate with a points champion at the end of the season, and golfers would have to amass enough points to qualify for the season finale.
Landing a sponsor to support the program is at the top of the priority list. “That’s the next big step for us and our players,” Whan said. “It would be nice to recognize someone who accomplished a seasonlong goal.”
Whan also would like to build a stronger profile for the LPGA’s five major championships.
“If you ask 1,000 golf fans to name the five LPGA majors, most of them couldn’t,” he said. “That tells you something. … But the good news is that the golfing world does generally stop when we play an LPGA major.”
Again, Whan said additional TV exposure could help push those majors forward.
“Tournament growth is one thing, but we’ve got a long way to go to build the scope of the LPGA relative to other sports,” Whan said. “Thirty-two events on the schedule is one milestone, but playing just once on network TV all season — we’ve got to do better if we want to attract larger audiences. Tournament growth is great, but it’s just one pillar in a series of pillars as we try to raise the house up.”
Coming off its third consecutive year of record-high viewership in 2013, Golf Channel executives say they are confident that a couple of schedule tweaks will help the channel set another record in 2014.
“You can drive yourself crazy watching ratings fluctuate day-in and day-out,” said Golf Channel President Mike McCarley. “When you look at it over the course of the last three years, Golf Channel is up 61 percent. That’s a trend that we see continuing. We’ve built a schedule [in 2014] that should rival another year of record growth.”
The channel also plans to bolster its Monday night slate by matching the show “In Play with Jimmy Roberts” with two of the channel’s popular series: “Feherty” and “Big Break.” Ratings for the Monday prime-time program block are up 42 percent from 2010, when NBC Sports Group took over management of the channel.
“There’s a rhythm to the golf season — everyone knows which month the majors play in,” McCarley said. “Similar to that, we’ve created a rhythm to our schedule. There’s a consistency to the Golf Channel’s schedule, as well, that’s made it easier for viewers to find the programs that they want to see.”
As with most sports networks, Golf Channel’s ratings are dependent on live events. The resurgence of Tiger Woods has helped the channel’s PGA Tour ratings increase by 81 percent over the past three years. Over that same time period, other live coverage has posted significant gains, including the LPGA Tour (up 46 percent), Web.com Tour (up 34 percent) and the European Tour (up 26 percent).
“Live events are the anchor,” McCarley said. “But you have to surround live events with compelling news and original programming if you’re really going to be successful.”
To that end, Golf Channel expanded “Morning Drive” to seven days a week. “Morning Drive” ratings are up 150 percent from 2010. Other studio shows have shown increases, including “Golf Central” (up 100 percent) and “Live From” (up 32 percent).
“We’re finding that golf fans know where to find us and know when to come for the shows that are important to them,” McCarley said. “But more and more of the casual golf fans are coming to us when there are big events and big stories breaking in the world of golf.”
When golfers go to GolfNow.com to book a tee time, they probably have no idea that the website is a division of the Golf Channel. Only in the bottom right-hand corner, several scrolls down, would a visitor see a small Golf Channel logo with the colorful peacock.
For a half-dozen years, GolfNow has operated as a Golf Channel property, administering online tee times for 5,000 golf courses in the United States and United Kingdom.
Over the last few years, though, GolfNow has been trying to transform itself into a full-fledged technology and software company capable of doing much more, like eliminating the need for golfers to go into the clubhouse and check in.
The site, owned by the Golf Channel, has rolled out software that can handle all facets of the golf-day experience.
It’s not a typical line of business for a TV channel, but it’s one that Golf Channel is backing with ample resources. By the time GolfNow completes another flurry of hiring this month, it will have a total of 300 employees across the country, including 150 in sales and support, and the rest in technology and marketing. That’s almost half of the 700 total employees for the Golf Channel.
McIntosh and Jeff Foster, senior vice president of new media, are the two Golf Channel executives spearheading the division. They plan to unveil a new suite of products in 2014 that, they hope, will move a game steeped in tradition and antiquated practices into the age of the tablet.
GolfNow calls this software G1 and a soft launch last year generated about 30 sales. They’ll begin a more aggressive rollout this month and through the rest of 2014.
G1 enables any golf course to completely serve the customer from the booking of the tee time, to the check-in at the course, to food and beverage, and future marketing.
Many public golf courses will work with anywhere from six to eight different vendors for tee-time booking, food and beverage, accounting, pro shop inventory and other revenue lines. G1 is attempting to become a solution for all of those lines of business.
The way Foster and McIntosh envision G1, the golfer will make a tee time and pay online through GolfNow, as he has done in the past. But through G1, that user profile will now extend from the online experience to the golf course.
The golfer will drop off clubs and be greeted at the curb by a course employee with an iPad. If the golfer hasn’t paid yet, he will be able to swipe a credit card with the iPad. The golfer is checked in there — no need to go into the pro shop or carry the receipt out to the starter.
With a card on file, the golfer can buy food and beverage on the course without cash and buy merchandise in the golf shop. Through all of these activities, the software will develop a profile of the golfer for the course operators.
“They’ll know everything from what kind of beer you like to what kind of ball you play,” Foster said. “Our vision is to take revenue centers where you need staff and arm them with the technology to make them much more efficient and more profitable.”
While a technology division doesn’t seem to be a natural extension of a TV network, in this case it works. It’s in Golf Channel’s best interests for more people to play golf and enjoy the game.
“We’ve just got to get golf courses to embrace operating their business a little differently, and to understand what the new tablet technology can do for them,” McIntosh said.
At least one sponsor has found value in reaching golfers through Golf Channel’s evolving technology platform. GolfNow never accepted online advertising in the past, but a new agreement with Cleveland/Srixon is breaking new ground for a longtime Golf Channel sponsor that is willing to test this form of nontraditional media.
Cleveland/Srixon beginning this year will be the official equipment provider for GolfNow’s loyalty program.
Cleveland/Srixon’s stable of professional golfers, like Graeme McDowell, also will play rounds of golf with promotion winners. Another division of the Golf Channel, its amateur tour, also will feature Cleveland/Srixon as its official club and ball.
“It’s nontraditional media, but it’s a great way to get a brand involved,” Foster said.
Lagardère shook up the golf world with several aggressive moves to expand its golf business, including the acquisition of Crown Sports Management. Former IMG executive Andy Pierce is said to be “getting the old gang back together” by hiring Charley Moore to work on consulting and Jay Danzi as an agent, among other former IMGers. By bringing in Crown’s Mac Barnhardt and Jimmy Johnston, Lagardère immediately becomes one of the most powerful agencies in the sport. Putting it all together was the easy part. Pierce’s toughest task remains ahead of him in 2014 as he begins to integrate all of the agents under one umbrella, especially considering that most of them are veterans who are set in their ways. Lagardère’s growth comes at a time when the agency landscape is undergoing major shifts. Wasserman Golf is a much bigger player domestically and is looking to grow more internationally. The sale of IMG to WME is expected to propel IMG’s player representation business. And CAA Golf, under co-heads Billy McGriff and Ben Gannett, continues to have a strong roster of consulting clients on the sponsor side. Will consolidation be the trend in 2014?
For all of the evidence that Tiger Woods is back competitively, there’s little to suggest that Woods has regained even
Photo by:Getty Images
LPGA Commissioner Mike Whan and his team have given new life to the ladies tour. When Whan came in four years ago, the tour was struggling with 23 events. Since then, the LPGA has expanded to 32 events, its total prize money in 2014 will be at an all-time high of $56 million, and the International Crown team event is set to launch with its inaugural event this year. What’s more, the LPGA is on its way to establishing a seasonlong points system to determine an annual champion. Don’t expect a FedExCup-style playoff at the end of the season, but the points will be awarded for performance, and the points system presents a unique umbrella sponsorship opportunity for the LPGA to sell.
Photo by:Getty Images
The next time Golf Channel analyst Brandel Chamblee sits on the set of “Live From” during a major championship, will he be the same outspoken and candid observer he’s been in the past or will he take a more conservative approach after his dust-up with Tiger Woods? In the fall Chamblee, writing as a Golf.com columnist, gave the world’s No. 1-ranked player an “F” for the season because of a series of rules incidents. As is often the case in golf, where TV analysts border on cheerleaders, the backlash was swift. Tiger’s agent, Mark Steinberg, even suggested a legal response for Chamblee’s sharp criticism, and Chamblee apologized. Chamblee, a former PGA Tour player, has brought a refreshing perspective to his analysis of golf on TV. It would be a shame if Tiger’s stare-down works and Chamblee backs off his opinionated approach.
Master of its domain
Berckmans Place at Augusta National, a spectacular 100,000-square-foot permanent structure, has turned into the new standard in on-course hospitality. Weekly badges, going for $6,000 apiece, quickly sold out two years ago and the club already is looking at ways to expand. Word is that four restaurants within the structure were up and running last year, and Berckmans has the capability to expand to seven different restaurants with their own unique menus. Given the way Augusta National has bought up so much real estate around the southwest perimeter of the club, near Berckmans Road, the question going into 2014 is when will they break ground on their next version of Berckmans, and what will that mean to all of the outside agencies that run weeklong hospitality along Washington Road?
PGA of America CEO Pete Bevacqua took about a day to settle into his new job a year ago, and then went about shaking up the association like few before him. So what does he have planned for an encore? At the top of the list is the PGA’s exploration for an overseas site to hold a future PGA Championship. Taking the season’s final major outside of the U.S. seemed like a far-fetched notion when Bevacqua first proposed it, but more and more it appears that he and President Ted Bishop plan to go through with the idea, which would give the PGA an international presence and appeal that it’s never had before. More new events are said to be up Bevacqua’s sleeve in 2014, and we can expect them to take the PGA into uncharted ground, based on year one.
The U.S. Golf Association will hold its two biggest championships, the men’s and women’s U.S. Open, at the same site for the first time this year. Historic Pinehurst No. 2 will be the venue for this USGA first. Most notably on the business side, the back-to-back Opens will enable the USGA’s hospitality sales to be combined across both events, providing guests with premium access for both tournaments. Interestingly, the USGA has not planned any further men’s and women’s doubles like this in the future. This year also will provide something of a referendum on holding a major championship outside of a major market in the post-recession era. Pinehurst is more than an hour from Raleigh and Charlotte, and finding enough corporate housing might be a challenge.
Golfers have been known for their mostly emotionless and conservative approach to publicity. Social media is
Give and take
ESPN’s “Outside the Lines” took the PGA Tour and its events to task for not giving enough money to charity. Just as the tour is about the celebrate hitting the $2 billion mark in total giving early this season, critics say the percentage of contributions compared to the tour’s total revenue doesn’t add up. Now that the tour has been put on high alert, how will it react? Will tournaments, which are run by local organizing groups with their own budgets, be pressured to give more? Or will they continue to operate with the autonomy to give as they see fit? Each tournament is different. Some reinvest heavily in their own events, but a byproduct of that is that donations take a hit. Meanwhile, charities often benefit from the free exposure provided by a major sporting event in their backyard. Either way, this issue has been put front and center and isn’t likely to go away in 2014.