The upscale food chain that turned “The Colonial” into the “Dean & DeLuca Invitational at Colonial” is on the verge of pulling out early, two years into its six-year commitment with the event.
Dean & DeLuca has notified the PGA Tour and Colonial that it may be unable to meet its financial obligations for tournament sponsorship in 2018, according to a letter from Colonial Country Club president Rob Doby to its members obtained by the Star-Telegram.
“While certainly disappointing, it is not a situation that we as a Membership and Staff are unfamiliar with,” Doby wrote.
The board is scheduled to meet with Dean & DeLuca representatives as early as Thursday about potentially renegotiating the terms of the contract, but at this point the club is preparing to look elsewhere for a title sponsor.
Doby could not be reached for comment. A representative from the public relations agency that represents Dean & DeLuca said, “We are in conversation with the PGA Tour and we hope to maintain a relationship.”
In a statement emailed to the Star-Telegram, the PGA said: “It’s important to note that Dean & DeLuca is still the title sponsor of the event, and we are in continuous conversations with them on their position with the event going forward.”
Although some Colonial board members were aware that the finances of Dean and DeLuca were not exactly ideal, the club did not see this one coming. Losing D&D would not be a devastating hit to the tournament, but it’s hardly a welcomed development. Securing a sponsor is a major pain and the price of re-branding is costly.
The PGA Tour lined up Dean & DeLuca for Colonial, which is normal for PGA events. It turns out the club got a nice, shiny lemon at a time when event organizers felt it was coming into a stable run as a solid stop just behind the majors.
Per a club source, there is no language in the contract that includes a financial penalty for a sponsor ending their relationship early. The language doesn’t exist because it does not happen.
Now, Colonial finds itself in the same position as it did in 2015 when Crowne Plaza completed its contract after eight years: Hoping a corporate angel descends from the sky with a giant check.
The PGA wants a little more than $11 million per year from a sponsor for this event, which, per multiple sources, effectively eliminates several companies from landing Colonial. The price tag is roughly $3 million too rich for many companies.
PGA events not named The Masters now more than ever need title sponsors to foot the bill for purses that draw the sport’s biggest names. That’s why the PGA told the club to prepare to sign away the name “The Colonial” to attract a title sponsor after it lost Crowne Plaza.
At the time, Colonial was hopeful to land an agreement with Toyota, which was building its North American headquarters in Plano. The timing, however, proved to be the deal’s undoing — at least that was the excuse handed to Colonial.
So the club prepared to go on its own, without a sponsor.
The PGA told Colonial and every club that holds PGA events to have a “rainy day” fund so if a club can’t land a title sponsor it can pay for everything for one year.
Dean & DeLuca agreed to the sponsorship with the stipulation that its name would be the title of the tournament. The move disappointed and angered some Colonial members who wanted to keep the tradition of the event around the club’s name. (Note to readers: columnist Mac Engel is among the club’s roughly 4,000 members.)
Shortly after announcing the deal, Dean & DeLuca president Bayani Lauraya told the Star-Telegram: “This is a perfect combination for us. We hit a grand slam on this. We’re here to be a real partner and to provide a real contribution.”
Dean & DeLuca came in and sprayed money to promote the event, which included the use of a marketing firm that helped to land actor Bill Murray, twice, at the tournament pro am.
It’s not atypical for growing companies to spend lavish sums on marketing in hopes of expanding their brand. Sports is normally a good, albeit expensive, place to do that.
It helped that Lauraya was an avid golfer. It was his suggestion to keep the name “Colonial” and the image of PGA icon Ben Hogan in the tournament’s logo. Lauraya was a Hogan fan.
The tournament looked to be in good health. But despite the initial enthusiasm and success, TV ratings for the tournament dipped, which is not endemic to Colonial. The event’s normally scheduled slot, around Memorial Day weekend, is typically not great for afternoon TV ratings.
And golf is just a sport that is struggling to grow outside its established niche status.
To compound matters for Colonial, there is uncertainty about how the new PGA schedule will play out and affect golfers. The PGA announced in early August that it’s moving the PGA Championship to May of 2019, which could affect a golfer’s schedule, and specifically the events in DFW: Colonial and The Byron Nelson in Dallas.
The Colonial in 2018 will be played May 21-27. The tournament will not know its 2019 date until the week of the tournament next year.
And, now, Colonial does not know who its title sponsor will be for 2018.
Mac Engel: @macengelprof