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WEB.COM TOUR ANNOUNCEMENT
June 27, 2012
NELSON SILVERIO:Â Good morning.Â We'd like to welcome members of the media and special guests today for a very important announcement.Â To get us started today, I'd like to welcome Commissioner Finchem to the media center here at AT&T National.
TIM FINCHEM:Â Thank you, Nelson.Â Good morning, everybody.Â First of all, let me just say we're delighted to be back here in Washington this year with this tournament.Â We want to thank AT&T for their continued sponsorship of this tournament and other things across the TOUR and the Tiger Woods Foundation for their continued efforts to bring this tournament forward and stage it at the level that it is.Â We're looking forward to a great week.
This morning we have what we think is a very significant announcement to make.Â Let me do that by starting with some texture of where we are.Â I think everyone here is aware that over the last 10 months we have made a number of announcements that relate to sort of the long‑term aspects of the positioning of the PGA TOUR and our other Tours, including our broadcast agreements last fall that extend through the next 10 years; our extension with FedEx on the FedExCup for a long‑term extension; this week's announcement indicating that we would take our digital business in‑house starting at the end of this year, which includes production and sales of Pgatour.com and all of our digital platforms.Â And today with this announcement we're adding another critical element to the long‑term stability of the PGA TOUR going forward.
We are delighted to announce this morning that effective immediately, the Nationwide Tour will become the Web.com TOUR, through a 10‑year agreement, which extends through the 2021 season.Â In addition to the umbrella sponsorship of this Tour, Web.com has, as well, entered into a 10‑year agreement to become an official marketing partner of the TOUR.Â So they will sponsor the TOUR and also have a partnership directly with the TOUR.
I'm pleased to be joined today by David Brown, who is the chairman, president and CEO of Web.com, and in a moment we'll tell you a little bit more about the company.
Let me say that we think this is an ideal match for this TOUR that includes this partnership with a strong dynamic company.Â This company is leader in its space, providing internet services and online‑based marketing solutions to primarily small businesses and medium‑sized businesses all over the country.Â They are focused in the United States but have international operations, and their leadership with David has a strong international background, as well, which I'll come back and comment on a little bit later.
As a company, we know them well because they are Jacksonville based.Â They've been around since 1997.Â Under David's leadership they have grown significantly in those years, both organically and through strategic acquisitions.Â This is, as you well know, the first major foray into major brand activity of this company, and because we know that this company has prepared for this moment for a long time and looked at a lot of different options, David, we're appreciative and honored that you chose a relationship with the PGA TOUR to go to the next evolution of your company.
We know that David has big plans to activate this relationship in a variety of different ways, some of which he'll talk about in a few moments, and he and his team will be a very active partner in bringing this TOUR forward.
I'd like to just put this in context by referencing what I think are the main reasons why we at the PGA TOUR are excited about what's happening today.Â First of all, first and foremost, we think that Web.com is the perfect fit.Â They are a company that has no conflicts among title sponsors on this TOUR.Â They're a company that's well positioned.Â They're in a growth mode.Â They are interested in‑‑ because they deal with literally millions of small businesses around the United States, they are a company that's interested in every single market in this country, and so regardless of where the tournaments are on any of our tours, they have a direct interest.
They are a company that shares the values of the PGA TOUR, values of service and commitment, values of believing in core values.Â They have a great team of people.Â They are great to work with, and we love the visionary aspects of their leadership.
So first and foremost, from an umbrella sponsorship standpoint, we couldn't be more pleased.
Secondly, we're excited because the work that this company does fits very well with who we are.Â We are a collection of small businesses.Â We are about 100 tournaments, all of which are small businesses, involved with a lot of charities, which are small businesses.Â We are hundreds of players, many of whom have their own foundations, which are small businesses.Â The Tiger Woods Foundation is a small business.
And David and his team are committed to, beyond this sponsorship, providing their capabilities, solutions and expertise to all of those small businesses that make up the family of what is known as the greater PGA TOUR.Â And this has, because of the official marketing partnership, enormous possibilities and positive impact for us.
The third reason is that they are a well‑respected leader in the digital space, and as I mentioned just a moment ago and as I've talked to you all about over the last year and a half, the digital space is a major priority for the PGA TOUR in a wide range of activities right now, punctuated by the fact that we're bringing our online business on Pgatour.com in‑house.
Having a partner with this expertise and reputation is going to help us significantly grow in that space and make sure we make the right decisions and execute in that space.
Lastly, you're all aware of the changes that are coming next year with respect to the qualifying system for the PGA TOUR, changes that are designed to give us the best system of identifying the best players for the PGA TOUR, but also a system that can do a better job of bringing profile and focus to the young players who are going to be the stars of the next couple years.
As we've discovered over the last couple years, the fan base is really focused on the young players coming up, now much more than ever before, and having an aggressive partner that can really bring that story effectively through the Web.com TOUR as well as the finals, which are positioned to take advantage of our relationship with NBC and The Golf Channel with the final event being sandwiched right in the middle of the Playoffs is a major step for us to get our fan base focused on these players from the get‑go as they become exempt to come out to the PGA TOUR.
Lastly, I'll just take a moment and thank Nationwide Insurance for their commitment over the years.Â They have been a great partner.Â They're going to be a great partner and are already a great partner in Columbus with Jack's event, The Memorial, and we appreciate all their efforts.Â We have every belief that Web.com is going to provide the same level of commitment and resources in kind of a different shape but a shape that's really going to take us to the next level with this TOUR, and with that, I'll turn it over to David Brown, the CEO, to talk more about the company.
DAVID BROWN:Â Thank you, Tim.Â I'm really delighted to be here with you today.Â It's a very exciting time in the life of our company, not just because of this announcement, which is going to be heralded throughout our 1,800 employees today as they get this message, but by the small business world that is desperately looking for assistance and help on the internet.Â One of the key messages that I want to leave you with that we looked at when we analyzed this is what does the TOUR do.Â The TOUR essentially helps aspiring young golfers to achieve their potential.Â What's Web.com's mission?Â It's to help small businesses leverage the internet to achieve their potential.
So first point, our alignment of mission is perfect.Â We essentially see the TOUR as a collection of small businesses and as a wonderful way to reach the United States and ultimately the international market so that we can get our message across, which is we're here to help you.Â We're here to help you navigate in the internet.
Most of the tournaments and most of the professionals are, in fact, small businesses as well as the charities that stand behind them, and those are our clients.Â One of the things that you'll find in this marketplace is that businesses are really hard to reach.Â You need to find a way to crack through all of the busy‑ness and the distraction and sometimes even the risk aversion.Â That brings me to the second point.Â Why have we done this?
Well, we really looked long and hard at where we could get alignment of mission and where we could get positive reputation.Â We don't just want to be known, we want to be known in a positive way.Â There's no better venue in sports today than golf to be known in a positive way, and through the PGA TOUR association, we'll be seen; we'll have literally hundreds of millions of impressions throughout the world.Â So it's okay that you don't know the Web.com name.Â That's by design.Â We've been a very quiet company up to this point.
But we believe that mass adoption of the internet by small businesses is happening now, so now we think it's time to strike, and we looked through all the different opportunities, and we felt that the PGA TOUR was the best opportunity not only to create voice in the marketplace but to create positive voice.Â That professionalism, that integrity, that dedication that is associated with PGA TOUR, that's what we are, as well.Â And we want that to rub off on us as we build our brand in the marketplace.
Now, just some background on Web.com, we've been around since '97 as Tim said, went public in 2005, and when we went public, we had a whopping 50,000 customers.Â Today we have 3 million customers that we serve each and every day, and it's a growing population of customers.Â When we went public, we were about a $30‑million‑in‑revenues company.Â Today we're about a half a billion dollars and growing very rapidly.Â The company has doubled in size each of the last two years.Â So this is a company that's taking advantage of the opportunity of a mass adopting market, and we've chosen this moment to begin our branding campaign.
Through this sponsorship, you'll see us begin‑‑ you'll know the name soon.Â Soon your friends will know the name Web.com, and they'll actually feel pretty positive about it because we'll get some of the halo of the PGA TOUR and the golfing profession on us.
You'll also see a major new advertising campaign rolling out by our company later in July that will also bring home the point that we're here to serve small businesses, we're here to help you navigate the internet.Â We think that's an important part of our message.
Now, it's not just about branding, it's not just about getting our name recognition out there.Â We generally do want to help, and helping small businesses is mostly at the local market.Â So this gives us unparalleled access to every major market.Â When you think about the Web.com TOUR, the PGA TOUR and the Champions Tour, they operate in practically every metropolitan market in the United States, and we will be there helping to educate and helping to teach and helping small businesses through our educational forums, through our support of charity, and through our support of the civic organizations.
So that's a major part of our contribution here.Â It helps us reach a market that would be virtually impossible to reach.Â It opens doors for us to mayors, to civic leaders that we otherwise wouldn't be able to get.
We now have the scale to do what we're doing, so often times my board asks the question, why are we doing this now, you've been such a quiet company for so long, why the change.Â Well, at our size and at our level of profitability and with mass adoption occurring, now is the time to strike, and we have the actual ammunition to make it work.Â We generate the profitability and the desire to be able to go into all the major markets of the United States and execute on our plan.
It's something that we've been talking about.Â For those of you who are on the investor side, if you've listened carefully to me for the last three quarters, you've heard me running up to this particular day.Â We've been telling the market that now is the time to strike, now is the time to build a brand, build a positive brand, a serious brand and a brand that will resonate with the marketplace.Â So herein lies our announcement today of the Web.com TOUR umbrella sponsorship.
The PGA TOUR gives us more exposure, both in the United States and in the future increasingly important internationally than we could get from any other venue, and we've looked at all of them.Â And again, as I've said before, not only do you get exposure, but it's positive exposure.
We'll be dealing with decision makers, professional golf players and the whole ecosystem that surrounds the golf industry, helping that industry.Â And one of the things that you can know about our company, 15 years in business, partnerships with every major technology company in the industry, Google, Facebook, Yahoo, Amazon, eBay, across the board.Â We know what we're doing.Â Our customers get good service.Â We'll be bringing that to the TOUR.
The ability to grapple with mobile, the ability to really use Facebook and Twitter to reach a population that is adopting, that's something that we do every day with our 3 million customers.Â We're excited to bring that to the TOUR and to all of its constituents.
Quite frankly, the PGA TOUR has the reputation that every business should aspire to have.Â It's one that we have in a very quiet way.Â The market will just know about it in a much more strong way.
Although the national exposure is very important, I don't want to underemphasize our local grassroots efforts.Â We will be in every market educating small businesses, bringing them to the tournaments, helping them understand not just how to have a website but how to make sure that that website gets found when people search or when they search how to make sure when they come to the site they actually see what they're looking for so they convert into a business.
We have a real passion.Â For us, I've used the term business many times.Â But the way we think about our business is it's our mission.Â Our mission is to help a very large part of the market that really doesn't have a lot of good players helping it today, and now is the time to make sure that they know in the United States that there is a company out there that's looking to help them.
We expect to be a very dynamic player here.Â This is a 10‑year deal.Â I can't even predict to you today how our activation will change over a period of time.Â I can tell you that we'll pay as much in activation as we are paying for our sponsorship because we're committed to those local markets and to all the things that make putting money up important.Â That's real activity.Â That's real action in the local markets.
And I think this is the optimal time for us to do it.Â I get this question a lot:Â Why would you do it now?Â Well, first off, mass adoption is occurring now.
Secondly, we have the wherewithal to make it happen.
Third, the TOUR is going through a restructuring and needs a sponsor, and we need a way to reach a market in a very positive way.Â So we're not big believers in waiting until tomorrow.Â Tomorrow may not come.Â So we will act now, and you'll see us be very aggressive through the rest of this year, and 2013 will, of course, be our true coming‑out party as the restructuring changes and we get our sea legs under us.
We'll benefit from all this heightened awareness of the changes and the restructuring, all these young aspiring golfers now having to come through the Web.com TOUR.Â We think that'll be beneficial not just to the sport but to our efforts to build our brand.
And finally, last but not least, one of the things the TOUR does so well that we admire so much, and frankly we want a part of it, is they give back, they serve.Â We are, after all, a service company.Â People think of us as a technology company, but we're really just a service company.Â We help small businesses with solutions.Â We want to be helping communities.Â We also want to participate in the charitable aspects.Â It is a dying art, and it's one that we want to play in the resurrection of.Â So this charitable component is very important to us.
So we're very much looking forward to it.Â We're ready to get to work right now.Â We've had a great experience, very rapid experience in working with the TOUR, and we're ready to get to work right now, and with that I'm going to turn it back over to Nelson.
NELSON SILVERIO:Â Thank you, David.Â I'd like to turn it over now to the president of the Web.com TOUR, Bill Calfee, for some remarks.
BILL CALFEE:Â Thank you.Â I'll be very brief.Â I've been at the TOUR now for 22 years, had the privilege to lead the Web.com TOUR now for 12 years, and I can tell you, this is the most exciting time that I can remember in certainly the evolution of this TOUR.Â The restructure that we've talked about, I think a lot of you know a lot about that, will position us in a very unique and different way and will closely connect us to the PGA TOUR, and clearly the partnership that we've just talked about here with Web.com will certainly position us for years to come, will give us the financial stability and continuity that we need.
We have our tournaments here, I just want to recognize those in the back of the room, we have all of our tournaments, basically our domestic tournaments are here to share this moment with us, and I think they're excited about what's going on, as well.
You know, we talk about small businesses.Â We are a group of small businesses, but we have very big impact, and I think with the announcement today and the restructure, we're going to continue to have an even bigger impact as we go future.Â So the future is very bright for the Web.com TOUR.
We're excited about our partner, and we're excited because a couple things that I think Tim mentioned earlier.Â Web.com, there's really no conflict in terms of sponsors that we currently have or prospects for our tournaments in terms of title sponsors or presenting sponsors, so that's a very big positive.
But I think the other thing, the biggest piece, is the fact that this is a company that's going to help us, help our players, help our tournaments and help the TOUR grow our business long‑term.Â So we're excited about this new relationship.Â Thank you, David, for your commitment to us.
NELSON SILVERIO:Â Thank you, Bill.Â At this point we'll open it up to questions.
Q.Â Mr.Brown, you mentioned the restructure.Â How much did that factor into your decision, the changes to the Q‑school and the Nationwide Tour process, and Tim, if you would answer, as well.
DAVID BROWN:Â I'll take it first.Â Certainly we think it's very beneficial, but that decision had already been made by the TOUR when we engaged.Â So it was nice to have but not a fundamental part of our decision‑making process.Â Frankly the reputation of the TOUR and its‑‑ I call it ubiquitous presence throughout the United States and international was more important to us and our ability to reach the markets, frankly every major metropolitan market, were the major driving factors for us.
TIM FINCHEM:Â I agree.Â I don't have much to add to that.Â We were way down the road before these discussions began.Â I think because of the things that David said, though, that going forward the way the structure will be starting next year is more of an integration with the PGA TOUR, which is kind of what prior sponsors of this TOUR have always talked about.Â They'd like to see a closer relationship.Â David saw that given the restructure, and it's something that'll be part of where this TOUR is now.
But these negotiations had little to do with the direction of the restructure.Â This has been going on for 16 months.
Q.Â I have one questions as an Ohioan.Â Was Nationwide out of the picture 16 months ago?
TIM FINCHEM:Â Yeah, we actually announced last year that they were not going to renew; they were going to become the presenting sponsor of the Memorial.Â You know, and just to embellish on that, so you know, the Nationwide Company is the title of the children's hospital in Columbus.Â That's also the recipient of the charitable dollars from The Memorial.Â They've always been very close to The Memorial.Â And when Morgan Stanley elected not to continue, they asked us whether they could transition.
That's just too perfect a marriage.
But Nationwide was a great partner and contributed an awful lot to this TOUR, and we're delighted that they're still going to be a partner of ours.
BILL CALFEE:Â They are going to continue to sponsor both The Memorial and the Nationwide Children's Hospital event at Ohio State.
Q.Â When you talk about branding and name recognition, given how long the Nationwide Tour has been the Nationwide Tour, is the hardest job you're going to have, to get people to stop calling it the Nationwide Tour?
DAVID BROWN:Â Well, I think we'll leave that up to the fine mechanics that exist within the PGA TOUR.Â I've already seen their handy work.Â I think that'll go very effectively.Â I think our biggest initiative will be getting people to understand what that name means, and you'll see our efforts in that regard on the ground in every local market, and you'll also see it in our TV ad campaigns and some of our other media.
Q.Â Mr.Brown, I wonder if you could give us a general idea or ballpark figure on financial investment in this TOUR.Â How much are you putting up for this?
DAVID BROWN:Â None of the details of our deal other than it's a 10‑year deal are disclosed.Â It's all subject to confidentiality.Â But I can tell you that we'll invest a significant amount both in the umbrella sponsorship and in activities on top of that to make sure that it's worth our while to have done it.
We're going to be sending staff into every local market, running educational forums for small businesses and civic loaders and charities so they understand how to get the most out of the internet.Â We're going to be inviting customers‑‑ think about it, we have 3 million customers and probably 3,000,001 right now, so it's a growing company, and we need a big footprint to be able to talk to our customers and entertain them and have hospitality.Â So you'll see us at every tournament, both the Web.com TOUR tournaments, as well as PGA and Champions events because they're in cities that are important to us.Â We're across the United States.
Q.Â Mr.Brown, obviously there's a TOUR event available in Florida needing a sponsor, which is in Tampa.Â Did you look at that at all?
DAVID BROWN:Â We looked at the option of sponsoring a PGA TOUR event in one local market over one week versus the opportunity to sponsor 27 tournaments across an entire year, across 27 markets, and get the opportunity to be at every PGA TOUR event and Champions Tour event, and we just said for our mission profile, which is U.S. wide and international, far better for us to be doing the Web.com TOUR umbrella sponsorship.Â So yeah, we did look at it.
Q.Â Your share value has almost doubled over the last year.Â How do you sell what you're doing here today to analysts to be able to grow your business?
DAVID BROWN:Â For several quarters now we've been telling analysts and investors that we were going to take the growing profitability of our business above‑‑ we're the most profitable business in our sector by far, and we've said we're going to take some excess profitability above a predetermined limit and we're going to invest that in building a brand so that we can grow even faster.Â After all, if the market is adopting and no one knows you exist, you're not taking advantage of the opportunity.
You've seen our stock price grow up, and largely it's a result of that commentary, the market understanding that we're not only in a good position right now but we're going to be in a better position as we find smart ways to invest money to build brands.Â I think to a large extent that's what's been driving our stock price up, and we expect it'll be very beneficial over the long run for us.
Q.Â Can you keep us updated on how you think the cell phone policy is going?
TIM FINCHEM:Â I'll just answer quickly and come back and make a follow‑up comment to the previous question.Â But we're committed to the policy.Â We knew‑‑ we tried it at four or five tournaments before we committed to it.Â We know from going in that there's work to be done.Â We have to rely on our tournaments, our marshals to make sure we're in front of the fans.Â We have to assume the possibility that once fans get comfortable with having phones maybe the discipline that they're showing in these tests gets eroded.Â We've got to be careful about that.Â We have to maintain an atmosphere that allows for the integrity of the competition.
So we have work to do, but we're very pleased generally with how it's worked so far.Â That's not to say there haven't been a couple of issues.Â There have been some issues, and we have to make sure all hands are on deck.Â If it's properly executed, we still believe that it'll work well.
Let me just go back to David's previous comment because I think one of the strengths we have as an organization is we are benefitted by the leadership of the variety of companies that are involved with us to provide us expertise, counsel, advice, and David Brown is a great addition to that list.Â I think you can already tell that.Â So it's just one more benefit that we get from this new relationship.
David, we look forward to working with you for the next 10 years, at least.
NELSON SILVERIO:Â Thank you very much.
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