Sports Business Journal
April 27, 2009
Executives at PGA Tour headquarters are taking their most serious look yet at loosening rules that prevent spirit companies from buying tournament title sponsorships or traditional endorsements with players, said multiple sources familiar with the talks. Industry sources estimated the category could be worth up to $50 million a year in new sponsorship dollars.
The PGA Tour has considered such a move before but didn't take action because of the stigma attached to the category, said a tour source. The PGA Tour's board of directors would have to approve any change in the rules, and there is no firm timetable for a decision.
Under current rules, distilled spirit companies are not allowed to title sponsor events on the PGA Tour, sign traditional shirt sponsorships with golfers or become an official sponsor of the PGA Tour. They can title sponsor one event on each of the Champions and Nationwide tours, though neither tour has a distilled spirits title sponsor. Spirits cannot title sponsor pro-ams, but are allowed to sponsor VIP areas at tournaments, as Diageo's Ketel One and Bacardi's Grey Goose have done in recent years.
If new rules are passed, spirits would probably be limited to title sponsorships of the dozen or so events with four-round coverage on Golf Channel because sponsorships include ad inventory in tournament telecasts. Broadcast networks still ban liquor advertising, likely precluding a deal for a tournament with coverage on one of the tour's two broadcast partners.
Spirits like Ketel One can sponsor VIP areas at events; other deals are limited.
The PGA Tour is also looking at easing rules on endorsements, which state that players can do deals with liquor brands but can wear only the logos of legitimate apparel businesses licensed by those brands. For example, PGA Tour players Retief Goosen and Jim Furyk endorse and wear branding from the Grey Goose Collection and Diageo's Johnny Walker Collection, respectively.
Ketel One also has deals with golfers Peter Jacobsen and Scott McCarron, though neither wears branding on his shirt during competition. Arnold Palmer, who is retired, has endorsed the brand since 2004.
The restrictions have pushed brands that want to associate with golf to other areas. Grey Goose has a multiplatform sponsorship with Golf Channel, and sponsors the Tiger Woods Foundation and an interactive golf site run by Sports Illustrated. Bacardi's Dewar's brand does some consumer promotions with Callaway.
New rules could also open up official marketing deals with the PGA Tour. Ketel One is already the preferred vodka of the PGA Tour's Tournament Players Clubs, a supporter of tour charities and an official sponsor of the World Golf Hall of Fame.
Loosening the rules would open up a potentially lucrative category at a time when the future of other categories integral to the PGA Tour - financial, automotive and travel - are uncertain. Diageo and Bacardi now spend a combined $7 million to $10 million annually on golf in the U.S. , and brand consultants said the category could be worth $10 million to $50 million a year to the sport if rules are relaxed.
A rule change would have support among some of the largest distributors, including Bacardi and Diageo.
"We're content with our mix, but we would definitely entertain any opportunities that come up because of rules changes," said Emil Jattne, senior brand manager for Grey Goose.
The PGA Tour is one of the few remaining U.S.-based professional sports leagues to prohibit distilled spirit companies from buying some of the more prominent sponsorship inventory. The NFL will consider loosening its restrictions during owners meetings next month.
There could also be changes to the PGA Tour's rules regarding casinos in the sport. Only the hotel associated with a casino can now title sponsor tournaments or endorse players, but a source with knowledge of the tour's plans said that if a casino "were to come in at the right price for a tournament, then there would be some serious discussions."
