PGA Tour in 'wait and see' mode given current economic climate
The staging of a PGA Tour event is about so much more than birdies and bogeys. The players compete on an immaculate golf course and spectators arrive to see the best in the world at what they do. But before the first tee shot is struck, months of planning is needed before a single ball can be launched into the air.
And piles of money, too.
No event can exist without the backing of a title sponsor, which is typically on the hook for between $6 million and $7 million a year, costs that cover the purse, television commitments and operations."And that's just the beginning," said Suzanne Hamm, chief marketing officer for the Stanford Financial Group, which sponsors the Stanford St. Jude Championship in Memphis, Tenn. "It's not just the cost of the sponsorship. You have to look at hospitality, the [corporate] client experience, the media perspective. There are significant costs involved. "But we also know what we're getting from it, and it makes it very easy to say, 'Yes, this is worth it.' The PGA Tour, and golf in general, is so aligned with our demographic. It's good for us. We can track the return on investment and it definitely shows a payoff. Golf is hands down a solid winner for us in terms of return. But it'll be interesting to see how the other financial-service providers react." Given the current state of the American economy, the folks in charge at PGA Tour headquarters in Ponte Vedra Beach, Fla., are no doubt buoyed by comments such as Hamm's. And they hope the majority of their sponsors across three tours feel the same way. But reality suggests this is going to be an uncomfortable time for the PGA Tour, which has 13 events supported by banks, investment firms and credit card companies. That doesn't include the Royal Bank of Scotland, which has sponsorship ties to three of the four major championships. It doesn't help that television ratings -- one of several criteria used by sponsors to see if they are getting a good return -- are down, and that the game's No. 1 draw, Tiger Woods, has been out since June following knee surgery. The good news for the PGA Tour is that every tournament on the main portion of its schedule has a title sponsor locked up through the 2010 season, with some through 2012 and beyond, according to Tom Wade, the tour's executive vice president and chief marketing officer.
Sports and the economyIf the troubled economy isn't already touching your favorite sport, it will soon. ESPN.com takes a comprehensive look at the future financial state of our games. And for more, watch archived video of "Outside the Lines" for a discussion of today's economy and how it will directly affect the business of sports franchises and sports fans across the country. • Joyce: Worst is yet to come for sports
• Tennis: Uncertainty amid market volatility
• Bodo: Tennis players underpaid?
• Golf: PGA Tour keeping close tabs
• Boxing: Boxing economy on the ropes
• Community: Share your story
• Chat wrap with Gare Joyce
"With rare exceptions, we've not had anyone asking to get out," Wade said. "Or even asking for relief. We haven't had those requests, other than one or two minor ones. Not any more than we would have had in a good year."There have been recent examples of companies getting out of contracts, such as 84 Lumber, which abruptly canceled its sponsorship of a tournament in Pennsylvania following the 2006 event; the tour quickly stepped in and replaced it with the Travelers Championship in Hartford, Conn. PODS opted out of its deal in Tampa after only two years, but tour officials were able to secure Transitions Inc., a lens company, to begin a four-year deal in 2009. The annual Atlanta tour stop was not so fortunate. The AT&T Classic was played for the final time in May, and in June the tournament announced it would be ceasing operations. AT&T has sponsorships at Pebble Beach, Calif., and Washington, D.C., and the local nonprofit company that runs the Atlanta tournament was unable to secure another title sponsor.
We are impacted by the economy and the economic challenges like everybody else. We have a lot of customers and sponsors in economic sectors that are impacted negatively by the volatility in the economy. Thus far, we have not suffered any major damage. But clearly, if the instability were to continue for a sustained period of time, we will have real challenges.
--PGA Tour commissioner Tim Finchem
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