SBJ/March 10-16, 2014/Marketing and Sponsorship

Tour title sponsors go long

The CEO of Travelers Insurance thought back to 2007, when the company first decided to title sponsor a PGA Tour event.

“We were a little unsure,” said Jay Fishman recently, speaking to a group that included PGA Tour Commissioner Tim Finchem.

Travelers Insurance extended its tournament naming-rights sponsorship by 10 years.
Judging by Travelers’ newly signed 10-year extension with the tour, a deal that runs through 2024, any uncertainty has long since dissipated.

A 10-year deal to title sponsor a PGA Tour event traditionally was unheard of. Most deals typically have covered four or five years. But AT&T broke that mold last November by signing a 10-year deal for its tournament in Pebble Beach. The length of the deal was unprecedented, until Travelers did the same thing on Feb. 27.

“We had done a couple of four-year deals before, so we went into these talks thinking another four would be fine,” said Andy Bessette, Travelers’ chief administrative officer and lead negotiator on the PGA Tour deal. “But the more we thought about what we wanted to do with the tournament, the more we thought about making a longer-term commitment.”

Both Travelers and AT&T have deep ties to their sponsored tournaments. AT&T has sponsored Pebble Beach’s Pro-Am since 1986. Travelers has been with the tournament in its corporate backyard of Hartford, Conn., for seven years.

Still, 10-year contracts simply had not been done on the PGA Tour. But the tour, riding a wave of sponsorship momentum and sales success, has started to push for longer extensions.

Other naming-rights deals around the tour stretch for six and eight years (see list).

“It just shows what a strong position the tour is in,” said Billy McGriff, co-head of golf at CAA Sports, which represents Farmers and Zurich, among others. “For the brands, the long-term commitment provides a long runway to plan activation, develop relationships with players and integrate the brand.”

Not only is the tour doing longer terms, but the rates have increased as well. The recent deals range from $9 million to $11 million a year, up from the $6 million to $8 million annually that had been the norm.

These longer-term deals provide stability for the tour’s purses, most of which come from sponsor fees. The deals also represent guaranteed advertising for the tour’s TV partners, NBC/Golf Channel and CBS, since title sponsors commit to ad buys.

“The longer terms are fine as long as you’ve got some flexibility built in,” said Tyson Webber, executive vice president of client management at GMR Marketing, which works with Humana. “It’s easier said then done, but you want to have the flexibility to shift assets from, say, tickets to more branding or more of a digital play. Over the course of a 10-year deal, there are going to be a lot of changes in the business world.”

Bessette said Travelers has language written into its contract that allows the company and the tour to work together on the purse and other elements of the deal.

“This is all we do in sports,” Bessette said. “It’s not like we’ve got to spread our money around to the NFL or hockey or whatever.”

The PGA Tour declined comment for this story because it didn’t want to get into the specifics of a deal.

Accenture’s deal to sponsor the World Golf Championships Match Play tournament expired last month, and a handful of companies have expressed interest. The tour is in talks to replace AT&T on Tiger Woods’ tournament at Congressional as well. Quicken Loans reportedly is a candidate.

BMW’s deal for its FedEx Cup Playoff event also is up this year. Talks between those two sides continue.
Industry experts expect to see the tour pushing for more long-term deals.

“A long-term deal provides a clear direction for a company’s future marketing,” said Malcolm Turner, principal at Wasserman Media Group, which works with Travelers on its golf strategy. “That’s the game plan for how a company is going to drive business.”

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