How PGA Tour, FedEx sized up 10-year deal
|Cup branding at Riviera earlier this year.
Some 10 executives attended the dinner, where toasts were offered by the longtime partners who worked on the pivotal deal that provides a stable sponsorship future for the FedEx Cup. But the ease over cocktails countered the challenge of negotiating a deal that extends far into the future and had dealmakers forecasting the unknown — how the FedEx Cup will look in 2027 given potential changes in the tour’s schedule, media landscape and digital strategy. The uncertainty was the biggest challenge to sealing the sponsorship, which was announced on May 9.
As the tour contemplates its TV future, it adds to that uncertainty. Next year it has the option to reopen and renegotiate terms of its CBS and NBC agreements, which run through 2021.
“What is golf going to look like on TV makes it tricky,” said David Grant, president of MKTG Sports and Entertainment, which represented FedEx on the deal. “The big challenge was wrapping our arms around the unknown. We have full acknowledgement that the assets will change and that is OK. Together we will figure out the new world order.”
While many of the core aspects of the new deal are the same, including the continuation of the four-event FedEx Cup playoffs, the new agreement will carry a more global and digital focus as well as increased flexibility for both sides to make adjustments over the length of the deal.
“The need to ensure flexibility is where we spent a fair amount of time,” Grant said.
Leaving room for that white space of unknown isn’t typical in deals as long and as complex as the FedEx Cup sponsorship, but the high degree of familiarity of trust between the tour and FedEx executives paved the way for the flexibility. The tour and FedEx have a relationship dating back nearly 30 years to when the company took over as title of the FedEx St. Jude Classic tour stop.
“This is not common in a typical deal,” Grant said. “Lawyers look for certainty and certainty is hard in these situations. Nothing is stuck in cement. The only way you do that is being together for so long.”
Talks started in earnest more than a year ago and each side had objectives — FedEx eyed an increased digital marketing strategy and the tour looked for a long-term deal for stability. Over the year, they got to a point where both were satisfied with the enhancements. Now it means constantly observing the landscape and constant check-ins on the deal.
|Tour Commissioner Jay Monahan and FedEx’s Don Colleran and Patrick Fitzgerald announce the extension May 9.
“We have a commitment on both sides to meet on a very regular basis to talk about the new digital opportunities that are there, mobile opportunities, and virtual reality and all of these things that are there,” Fitzgerald said. “I remember at one of the meetings, one of the really scary smart technical guys from the tour brought in some new technology and ways to consume it, things that were just absolutely astounding, and it’s important for us to make sure that our brand and the FedEx Cup are represented in the most appropriate ways possible with all of this new media landscape that we’re in now.”
Consider that since the original FedEx Cup began in 2007, there was no PGA Tour Live OTT, no live streaming on Twitter, or even the use of virtual reality coverage that was offered for the first time at last week’s Players Championship.
“We don’t go back and say, ‘You know what, you didn’t pay for this in the original agreement, we need to have a conversation about the value you’re getting here,’” said PGA Commissioner Jay Monahan. “We will continue to invest in the right technologies, the right way to present our sport, and as we do that, we’ll do it in close consultation with FedEx and we’ll do it in a way that’s going to build the Cup and be something that they’re comfortable and satisfied with.”
While the deal still carries with it the traditional elements in media buys, hospitality and branding at PGA Tour events throughout the 11-month season, FedEx is expected to take a more aggressive approach in creating and using digital content. It is not getting additional digital rights in the deal, but will leverage its ability on content creation and distribution.
“We are never going to own their footage but the ability to borrow it and use it is something that we will have the opportunity to do,” Grant said. “With more outlets to use content, we will rely on that lever more.”
As renewal talks intensified over the past few months, a more global structure of the sponsorship also emerged as FedEx looks to leverage golf’s international appeal as a marketing tool to help rebrand and promote European shipping company TNT Express, which FedEx acquired last year.
“We need to make sure we are supporting their investment as they evolve from working with our international media partners and building predetermined programs that help support them,” said Brian Oliver, senior vice president of corporate partnerships for the tour, who along with chief commercial officer Tom Wade led the tour’s negotiations.
FedEx and PGA Tour executives would not disclose the value of the deal. FedEx would not disclose specific data on how the FedEx Cup has affected its business, but the sponsorship includes broad activation throughout the year through hospitality, pro-ams, on-course signage, and broadcast and digital exposure as the shipping giant uses the deal to market with a heavy business-to-business focus and to build consumer awareness.
“It is across the board and business shipping is an enormous part of the business,” Grant said. “There is plenty of hospitality at the tour events and there are consumer promotions on and off line.”
FedEx’s negotiating team was led by Fitzgerald, along with Monica Skipper, FedEx vice president of brand experience.
The renewal comes during a period of soft television ratings for the property. Through May 8, the tour had seen a decline on Sunday coverage for 13 straight events. But some golf insiders dismissed the impact of current TV ratings on the renewal.
“It says that FedEx has a lot of confidence ratings will improve via a schedule change, a new TV deal or both,” said Jason Langwell, senior vice president of sponsorships and events at Intersport, which represents the tour business for Ace Hardware and Quicken Loans.
Scott Seymour, senior vice president and managing director of golf at Octagon, said he was not a surprised by the 10-year deal as the tour looked to make a statement that its biggest partner is willing to commit to the tour for another decade.
“This one was the most important to have the greatest stability for the tour,” he said.