News & Opinion

Tour protects FedEx, but would it stand up in court?

PONTE VEDRA BEACH, Fla. – What started in 1985 as a tournament title sponsorship in FedEx’s hometown of Memphis, Tenn., has grown into the PGA Tour’s biggest deal in history.

On Tuesday at TPC Sawgrass, the Tour announced a new 10-year contract with FedEx as umbrella sponsor of the season-long FedEx Cup.

Unlike the first 10 years for FedEx, the second decade will begin with what Tour commissioner Jay Monahan called “moving parts.” But one aspect to the agreement that is firmly in place will be protecting the FedEx brand on Tour for the life of the deal.

“When you're in business with someone for 30 years and you're about to commit to 10 more, you do some things to protect each other on a long?term basis,” Monahan said Monday in a small roundtable discussion about the agreement. “That's what we've done in this agreement, and our players know that. Our players understand it. Our players think so highly of FedEx and what they've meant to them in terms of playing financial opportunities, so we do everything we can to protect our partners.”

Such a provision didn’t exist in the previous agreement, which launched the FedEx Cup in 2007, and presumably for the first time puts a sponsor in a preferred role that had not existed on the PGA Tour.

Agents and players had been approached weeks ago by the PGA Tour to explain the agreement, with the brand-protection provision emerging as one of the deal’s most interesting aspects.

Chubby Chandler, the founder of ISM, a player-management agency based in England, represents two players, Louis Oosthuizen and Lee Westwood, who have endorsement agreements with UPS, which competes worldwide with FedEx.

According to Chandler, Oosthuizen and Westwood have been grandfathered by the PGA Tour in its agreement with FedEx. Both players will be under no restrictions in using UPS-branded clothing and gear.

“I’m very grateful that the two guys are all right,” Chandler said Tuesday after Monahan’s public comments on the deal. “I understand why they have done it, but it actually opens up a bag of worms.”

Chandler said the European Tour once provided brand protection for the London-based bank Barclays. Golfers on the European Tour were prohibited from wearing headwear promoting a competing bank. The prohibition ended after a few years. 

“You’ve got to provide support when you're spending 650 million (dollars),” Chandler said of the rumored amount of the FedEx deal. “When he (Monahan) says FedEx underpins the Tour, you can't get away from that, can you?”

Brand conflicts have been around as long as sponsorship itself. In 1995, Mark O’Meara won the Honda Classic, backed by one of the longest-running sponsors on the Tour. At the time, O’Meara was sponsored by Toyota, with the name of the Japanese carmaker on his hat. After O’Meara won the tournament, he removed his hat for photography and the trophy presentation.

“I did it for respect for Honda at the time,” O’Meara said of the ninth of his eventual 16 Tour victories. “There is a point you try to be somewhat diplomatic.”

The relationship between Lexus, a Toyota brand, and O’Meara endures today.

When Jason Bohn won the 2010 Zurich Classic of New Orleans, the victory was marred by a conflict between Mutual of Omaha, one of his long-time sponsors, and Zurich, a competing insurer. Bohn was asked to remove his hat for pictures with Zurich’s chief executive and wear a PGA Tour hat instead. Bohn was so excited after the victory, his second and most recent on Tour, that he never restored the Mutual of Omaha hat.

“I should have said, ‘I'm sorry, but I'll take this photograph, but it will be with my sponsor's hat on,’ ” Bohn said Tuesday. “That was my fault. It was a sad moment, because that's what I remember from winning the event, and that shouldn't be the case.”

Bohn agrees that the FedEx situation is different than what he experienced with his sponsor.

“I believe that FedEx being a title sponsor and the amount of revenue that they're going to bring to the PGA Tour to all of us is significantly different than an individual tournament sponsor,” Bohn said. “So, if they are requesting that some guys moving forward don't engage in sponsors that compete with their brand, I understand it.”

Chandler, O’Meara and Bohn questioned whether the Tour legally can prohibit players, who are independent contractors, from honoring certain sponsor agreements.

“It's actually not up to me to challenge it because we're already (grandfathered),” Chandler said. “It's actually up to somebody that's got a player that thinks they can get into UPS to then find out whether they can change the rules. But legally, I can't see how it works, because the guys are independent contractors, aren't they?”

In meetings with UPS on Friday, Chandler confirmed that the Atlanta-based delivery company is concerned only with the biggest tournaments: the four major championships and four World Golf Championships, all of which are not run by the Tour.

“If they're all right with people playing in majors and World Golf Championships with the UPS logo, they [UPS] will sign two or three guys that they hope to get to those events.”

Alex Miceli is the founder and publisher of Morning Read. Email: alex@morningread.com; Twitter: @AlexMiceli