Golf tournament seeking new title sponsor for 2018

ics and a need to realign strategy globally.”

A title sponsorship for the region’s largest golf tournament is just the latest in the list of luxuries Shell can no longer afford as it wrestles with the worst oil bust in a generation. Tuesday, U.S. crude oil prices rose above $50 for the first time in nearly a year, but they’re still far below the peak of more than $100 a barrel in June 2014.

“You’d think Shell would have the budget for something like this, but it’s just a sign of the times,” said Bruce Ross, a managing director at private equity firm OFS Energy Fund in Houston. “It’s great golf, and it’s full of oil and gas people, but everybody is cutting costs.”

Search for new partner

The PGA Tour and Houston Golf Association will begin looking for a new title sponsor immediately. The HGA has organized the professional golf tournament since 1946.

“There’s tough decisions that have to be made,” HGA President Steve Timms said. “We respect that.”

Timms said negotiations for a sponsorship extension with Shell began last fall. He said the HGA “remained optimistic through the process.”

“We know that (the declining oil economy) has an effect locally,” Timms said. “Today is the culmination of a lot of people working really hard to try to make it work. You do also kind of get to a point where there’s a decision path that has to be culminated. That’s where we are today.”

Timms declined to say when negotiations for a sponsorship extension stopped. He also declined to say how large Shell’s financial sponsorship of the tournament is under the most recent sponsorship agreement. But he said he would like the next sponsor to provide a similar level of financial backing.

The HGA hasn’t begun to evaluate whether it wants its next sponsor to be one that, like Shell, has a hand in the local economy.

“We think we have a valuable asset to the city of Houston in this PGA Tour event,” Timms said. “We think there will be a number of companies that will be interested in it.”

Millions for charities

Houston’s tournament became locally known as “The Show,” playing off its acronym, SHO. Before beginning its relationship with Shell, the tournament had four different title sponsors over 12 years.

The tournament is the 10th-oldest on the PGA Tour. According to Shell, the tournament has generated more than $64 million for local charities since its founding — more than $60 million of which has been raised since Shell became the title sponsor in 1992. That money has gone to the HGA’s charitable and youth programs.

“Beyond being one of the longest-running tournaments on the PGA Tour and having such a rich history, the Shell Houston Open has demonstrated what a valuable contribution an event can have on the local community with the longevity of corporate partnership, like that of Shell,” PGA Tour Commissioner Tim Finchem said in a statement. “While we truly regret such a wonderful association will be ending next year, we fully understand Shell’s situation.”

The 2016 Shell Houston Open posted an attendance of 125,000. The tournament is one of five PGA Tour events in Texas. Changing names and title sponsors has become a fact of life on the PGA Tour. In 2015, AT&T became the title sponsor of the Byron Nelson in Dallas. Grocer Dean & Deluca took title sponsorship rights of the Colonial, Fort Worth’s event, this year. Also this year, Dell assumed the title sponsorship of the World Golf Championships-Match Play, which moved from San Francisco to Austin after the title sponsor switch.

Coincidentally, another energy company, Valero, will be part of the new longest-running continuous tournament sponsorship relationship in Texas. Valero will sponsor the Texas Open in San Antonio through at least 2018.

History with the sport

The Honda Classic in Palm Beach Gardens, Fla., boasts the longest-running continuous tournament sponsorship relationship on the PGA Tour. That affiliation dates to 1982, and in February the tournament and Honda announced a five-year extension that will take the sponsorship through at least 2021. AT&T’s sponsorship of the AT&T Pebble Beach Pro-Am in Pebble Beach, Calif., began in 1986 and will run through at least 2024.

Shell was associated with golf even prior to its involvement with Houston’s PGA event. “Shell’s Wonderful World of Golf ” televised matches between professional golfers from 1962-1970 and then from 1994-2003.

The oil company was also the sole founding partner of the World Golf Foundation, which oversees the World Golf Hall of Fame.