2002: Business - Nationwide is on PGA Tour’s side
The PGA Tour and Nationwide July 12 announced a five-year partnership beginning in 2003 that will make the Columbus, Ohio-based insurance and financial services company the umbrella sponsor for what currently is known as the Buy.com Tour.
Terms were not disclosed, but a source familiar with the deal said Nationwide’s financial commitment was in the range of $40 million to $50 million.
Other details – such as the developmental tour’s new name, logo, schedule and purse levels – will be unveiled later this year.
One issue, however, is certain: The tour’s identity will be branded more closely with the PGA Tour, giving the circuit more cachet and providing Nationwide with a higher-profile product. Among the new names under consideration: the PGA Tour Nationwide Series.
A chance to strengthen the tour’s brand not only is a welcome opportunity, but a fortuitous turn of events for the PGA Tour, which had been trying to recover from its disastrous relationship with Buy.com.
A breach-of-contract suit filed in 2001 by the Internet retailer against the PGA Tour – which denied all allegations – resulted in a premature termination of their sponsorship deal early this year. Without the financial support of an umbrella sponsor, tour executives urged each of its events to find its own title sponsor. That exercise already has resulted in 14 events finding corporate partners – a number that could stretch to 20, according to Bob Combs, PGA Tour senior vice president, public relations and communications. Now, the tour finds itself in the enviable position of having several self-sufficient events and the backing of Nationwide.
The situation gives PGA Tour commissioner Tim Finchem a “green light” to seek greater recognition for the developmental tour.
“Since its inception in 1990, this tour essentially has become an extension of the PGA Tour, with an equivalent high level of play,” Finchem said. “A lot of people refer to it as the second-strongest tour in the world. It’s hard to argue with the quality that’s out there.” Officials noted that former players on the circuit have gone on to win 114 PGA Tour titles, including 12 this year.
With a new television agreement starting next year, the tour will receive expanded exposure from its exclusive carrier, The Golf Channel. In 2003, the number of live four-day telecasts of the tour will increase from 12 to at least 14 domestic events, as well as a minimum of two international events.
“This new partnership offers us a tremendous opportunity to build our brand awareness and to reach a broad spectrum of consumers,” said W.G. Jurgensen, Nationwide’s CEO.
Nationwide will be the circuit’s fourth umbrella sponsor since its creation 12 years ago, following Hogan, Nike and Buy.com.
The five-year deal with the Internet retailer – struck in 1999 during the halcyon days of e-commerce entrepreneurs – initially was hailed as a forward-thinking move that would net the Tour riches. Before the agreement unraveled, Buy.com said it had paid the PGA Tour $8.5 million in cash and 1.8 million shares of common stock. The Internet retailer also had secured a $17 million line of credit to cover future payments.
But two years later in the midst of a dot-com bust, a financially troubled Buy.com filed a suit and sought more than $45 million in damages, in part, because the Tour had signed an e-commerce deal with USA Networks, allegedly in violation of their contract. The PGA Tour denied it had broken any contractual obligations and suggested the legal actions were prompted by Buy.com’s fiscal woes.