2000: Sponsor turnover an annual problem
Wednesday, November 30, 2011
JCPenney announced in October it was ending its relationship with the LPGA Tour. The nation’s No. 5 retailer and longtime golf booster was pulling out as title sponsor of the 2001 kickoff tournament in Orlando, Fla., breaking a two-year contract before it began.
JCPenney’s last-minute decision wasn’t an isolated incident. All three major tours – the PGA, Senior PGA and LPGA – had title sponsors withdraw financial support only months before tournaments were to begin.
PGA Tour officials say the decisions were based more on companies’ poor financial situations than dissatisfaction with golf sponsorship. In fact, the PGA Tour insists that the title-sponsor climate couldn’t be healthier.
“We have far more people wanting to get involved in sponsorship than we’ve ever had,” said Bob Combs, senior vice president of public relations and communications for the PGA Tour.
All three tours will increase average purses to record highs. The LPGA will average more than $1 million in prize money per event. But having title sponsors – who usually pay the purse as well as television production and operating costs – withdrawing from tournaments after signing contracts can cause major problems.
The LPGA also lost longtime sponsor Oldsmobile, which decided to end its long-term relationships with the tour. LPGA commissioner Ty Votaw said the decisions by JCPenney and Oldsmobile “had nothing to do with the LPGA.”
After 23 years as a staple in Tampa, Fla., the mixed-team championship known as the JCPenney Classic, which paired LPGA and PGA Tour players, played its final round in November 1999. While Tampa filled the void with a PGA Tour stop (sponsored by Buick), JCPenney wanted to continue its relationship with the LPGA, signing a deal to sponsor the opening tournament in 2001.
But in early October, JCPenney pulled its commitment. The company reported third-quarter net losses of $30 million, forcing the retail giant to cut 2,000 jobs and close stores.
“It’s been a difficult year, a difficult four years,” said Wynn Watkins, director of communications and public affairs for JCPenney. “We felt it was best to concentrate on the core business.”
Watkins said JCPenney still will pay the purse for the 2001 tournament, now called the LPGA.com Classic. “We felt that was the right thing to do because of the timing,” said Watkins, who believes that the LPGA still is a strong marketing investment.
Unlike JCPenney, Oldsmobile didn’t break a contract with the LPGA; instead, the automaker put the brakes on its title sponsorship with the Oldsmobile Classic in East Lansing, Mich., after nine years.
“(Oldsmobile) is focusing its efforts on a different market,” said Stephanie Hall, executive director of the LPGA’s Tournament Sponsors Association.
The Oldsmobile Classic was not one of the LPGA’s stronger events, with its purse ($750,000) among the lowest on tour. This year’s event had other problems, including no television deal and a field that featured only two of the top-10 money winners.
The Oldsmobile 2001 schedule slot has been filled by the Bank of Montreal Classic, the tour’s only stop in Canada following the demise of the du Maurier Classic, a major championship since 1984.
Votaw said the LPGA is moving toward a “quality over quantity” approach, and even with the sponsor turnover, the tour will be stronger in 2001.
The LPGA’s 42 events in 2000 paid an average purse of $935,714, an increase over the $841,860 average paid in 1999. The 2001 average purse will top $1 million for the first time and more than half of the events will increase their purses. Votaw said turnover is nothing new. The Safeco Classic in Seattle did not return in 2000 because of Safeco’s falling stock prices, cost-cutting measure and because they committed to buying the naming rights to the Seattle Mariners’ new stadium. Areaweb.com also didn’t return in 2000 because of funding problems.
“Not only do we replace tournaments, we replace them with stronger tournaments,” Votaw said.
Du Maurier, a brand of Imperial tobacco, was forced to give up sponsorship because of restrictions on tobacco promotions.
“Another example of something out of our control,” Votaw said. “I can’t do anything about a business running into financial difficulties. I can’t do anything about Canada’s legislation. I deal with things I can impact.”
The 2000 season-ending PageNet Championship was another situation out of Votaw’s control. PageNet filed for reorganization under the U.S. Bankruptcy Code. Arch Communications, a wireless communications company, assumed PageNet’s title for this year. The contract is up and the LPGA will look for a long-term sponsor of the Tour Championship as well as a new venue because of the closing of Las Vegas’ Desert Inn.
The LPGA also is looking for a title sponsor of the Harvey Penick Invitational, the tour’s only stop in Texas. Philips Electronics, the title sponsor for the first two years, did not renew its contract despite the tournament’s rising attendance and network TV package.
Hall said the tournament is healthy enough to return even without a title sponsor.
“Not long ago on the LPGA Tour if you lost a title sponsor, you lost the tournament,” Votaw said. “That is no longer the case.”
The City of Hope in South Carolina went three years without a title sponsor and will tee off this year even if one is not found. The 2000 event was the Kathy Ireland Greens.com LPGA Classic.
Greens.com, a company that spent itself out of existence before ever its Internet tee-times service had a chance to succeed, has the dubious distinction of having failed both the LPGA and the PGA Tour.
The PGA Tour was forced to drop Greens.com as the title sponsor of the Reno-Tahoe Open when the company missed a payment just a few months before the tournament began in Reno, Nev. The tournament played on but the search is on for a new sponsor.
“The company ran into financial problems, but we are now looking at two or three proposals for the future,” said Henry Hughes, chief of operations for the PGA Tour. “When the PGA Tour has had openings, we have filled them quickly.”
Hughes said there are “some very active candidates for sponsorship in Reno,” whose 2000 field included Sergio Garcia, Bob May, John Daly and Jean Van De Velde.
The Senior PGA Tour has had some movement as well, but nothing out of the ordinary, according to Jeff Monday, senior vice-president and chief of operations of the Senior PGA Tour.
Nationwide Insurance and Financial Servicesannounced in May that it would not renew its sponsorship of the Nationwide Championship in Alpharetta, Ga., ending a decade-long relationship. The insurance and financial services organization cited changes in “demands on business resources.”
That decision sparked some movement on the Senior Tour. LiquidGolf.com withdrew its sponsorship of an event in Sarasota, Fla., and signed on as the title sponsor in Georgia.
The Senior Tour also is looking for title sponsors for the NFL event in New Jersey and the Gold Rush Classic in Sacramento, Calif. The Gold Rush Classic was saved by the Gavin and Joe Maloof, owners of the NBA’s Sacramento Kings, after grocery-store chain Raley’s pulled its sponsorship on Feb. 29, creating a $1.4 million shortfall for the October event. The Maloofsstepped in to save the event just days before the deadline. A search for a title sponsor continues but the Maloofs have promised that the tournament will continue even if one is not found.
The Senior in nearby Napa, Calif., will be looking for a new sponsor following the 2001 Transamerica.
“It’s not uncommon to have turnover,” Monday said. “We have extended a number of long-standing commitments (MasterCard, Kroger, Enterprise) and have a good cross section of companies that we’ve had for a long time.”
These sponsor veterans have helped all three tours raise the stakes. State Farm Insurance, like Corning, Nabisco and McDonalds, is a longtime sponsor of the LPGA Tour. The insurance company sponsored a nine-event series with the LPGA and was pleased with its investment.
“It’s difficult to measure, but we’re very happy with our first season,” said Tom Nelson, State Farm’s vice president of advertising. “We focus a lot of our advertising towards women’s athletics and believe the LPGA is the strongest of women sports.”
Many executives would agree that golf is money well spent.
“TV ratings are up,” Hughes said. “Attendance is up. The purses are up. Golf is very healthy right now.”