SBJ/Jan. 6-12, 2014/In Depth

Valspar paints by numbers with PGA Tour

How the PGA Tour found new money and created a sponsorship masterpiece

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.

The last time that happened was in 2012 when a second-tier event at Disney lost its sponsor, Children’s Miracle Network. Keeping those losses few and far between is “a massive point of pride,” said Norb Gambuzza, the tour’s senior vice president for business development.

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
the company was looking for a more substantial marketing solution for its consumer lines of paint. Valspar is a 200-year-old company, but the consumer paint brand has been around since only 2007. It needed a national marketing platform.

“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.

Whirlwind talks

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.

The tour’s Gambuzza, Pazder and Clarson visited Valspar’s Chicago office, where Heckes is based, in early August, and the stage was set for a whirlwind month of negotiating.

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

2014
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

2015
Crowne Plaza (Fort Worth)
HSBC (China)
Hyundai (Kapalua, Maui)
McGladrey (Sea Island, Ga.)
Waste Management (Scottsdale, Ariz.)

2016
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.)

2017
RBC (Canadian, Quebec)
Shell (Houston)
Shriners Hospitals for Children (Las Vegas)
Valspar (Palm Harbor, Fla.)

2018
Bridgestone (Akron, Ohio)
OHL/Mayakoba (Mexico)
Sony (Honolulu)
Valero (San Antonio)

2019
Farmers Insurance (La Jolla, Calif.)
Humana (La Quinta, Calif.)
Zurich (New Orleans)

2021
Greenbrier (White Sulphur Springs, W.Va.)

2024
AT&T (Pebble Beach)

NOTES:
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

2014
NEC (NEC Series ­— PGA Tour Latinoamerica)

2015
Charles Schwab (Champions Tour)

2017
FedEx (PGA Tour)

2021
Web.com (Web.com Tour— Path to the PGA Tour)

Sources: PGA Tour, SportsBusiness Journal research

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