The first sponsorships have not proven to be a lasting phenomenon on the PGA Tour, and the new chief executive of the PGA Tour says he’s not concerned about them transforming as some had predicted.
Hearing that some players were likely to dump their mega-sponsors – Pernod Ricard, TBS and Titleist/Konica Minolta are among those sponsors who have declined renewed agreements after the new millennium – Keith Pelley said Tuesday the business model worked well enough to tempt him to join the PGA Tour.
“At the moment, I don’t see that as a possibility,” Pelley said, when asked whether he’d have considered the switch had he been hired five years ago. “There’s so much churn in the industry, and companies are reducing costs.
“When you come to this sport in a professional capacity, you’re going to take a hit on your cap,” Pelley said, a reference to sponsorship. “The cap for everybody is relatively high. The players get paid enough. You have to be creative.”
Under a recent sponsorship agreement signed by the PGA Tour and its first female captain, Catharine MacKenzie, in September, the home maker Lumber Liquidators is the primary sponsor of the LPGA Tour. A senior executive for the firm said there would be a “trend away from sponsorships and more toward associations” in the LPGA, also played on the women’s circuit. Pelley noted, however, that Lumber Liquidators had been a sponsor of the PGA’s flagship event, the Masters, since 1955, and was looking at further extensions.
In this respect, the PGA Tour is in line with the American sports business system – even if Pelley said the endorsement system for professional golfers was different than that in Major League Baseball or the NFL. After all, baseball and football players could make a living from their endorsements at age 28, while there wasn’t much to do for the PGA Tour golfers at that age, unless they turned pro.
“For a period of time, after the baby boomers left, golf had a void in the marketplace,” Pelley said. “But that void was created by sponsors coming in and continuing to invest, as well as growing the tour. There’s a lot of money in the golf world, and it doesn’t become an issue of players chasing sponsorship dollars – it becomes an issue that sponsors chase them.
“As an individual, you need a job, and you have to go to work,” Pelley said. “You have the other things that happen along the way, like the life cycle of players, which keeps you focused.”
Two years ago, when NBC was in contract negotiations with golf, the NBC Sports Group president, Mark Lazarus, said the golf business could be reinvented if it stayed based on junior golf. ESPN is a regular sponsor of the U.S. Women’s Open.
“There were billions of dollars at stake and the financial returns were enticing for companies that sponsor,” said Burt Flickinger III, an expert on golf sponsorship. “That was a feel-good factor. Maybe Pernod Ricard put too much pressure on them, for more sponsors than Pernod Ricard is even a 1 percent stakeholder of the golf industry.”