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PGA sponsorships: In the rough
Aug 5, 2009
By David Phelps | Star Tribune
Blame it on the economy. Or on government bailout funds. Or on TMZ.com.
The fact is, corporate involvement at the 2009 PGA Championship is down for the Hazeltine event next week.
Organizers expect to turn a nice profit, but it will be with less help from the private sector, as financial considerations force some companies to downsize their presence on the lush country club grounds in Chaska or to get out of the hospitality business entirely for the seven-day championship.
The Minneapolis law firm Dorsey & Whitney, for instance, will not have an enclosed "chalet" during the week. Instead, it's offering clients daily tickets to let them walk the grounds on their own. Dorsey earlier this year laid off 7 percent of its administrative staff because of depressed revenue and cut the salaries of some staff attorneys by 10 percent.
"The bottom line is, these packages are expensive and it's difficult to know if you get the bang for the buck," said Dorsey's Bob Kleiber. "You've got to weigh the benefits, particularly in this economy."
Six-figure chalets
Corporate-sponsored chalets on the course range from a 50-person covered facility in the sold-out Tony Jacklin Village along the seventh fairway for $115,000 to a 150-person venue near the second, eighth and 18th holes that goes for $375,000.
And don't forget, the corporate host also has to pony up, on average, a little more than $100 a person each day for catered food and drinks.
"It's been a challenge, but we've seen sales coming in consistently," said Shannon Loecher, regional director of sales for the PGA. "A handful [of companies] went from 100-person chalets to 50-person chalets. Some companies are partnering with other companies, and some have gone from chalets to [10-person] tables."
Each glistening white chalet comes with a raised patio. Or a client and a host can watch the golf tournament inside on a big-screen TV in a furnished, air-conditioned setting that includes a buffet and bar.
Loecher said about 35 companies ordered chalets, compared with more than 40 in 2002. She said total corporate participation is down from 140 companies in 2002 to about 110 this year.
"Companies want to be part of the event but are holding off for economic reasons and perception," Loecher said. "But when you do the math, the cost is very comparable to entertaining in arena suites and stadium boxes, and executives are very familiar with that."
Wells Fargo entertained guests at its own private chalet in 2002, the last time the PGA championship was played at Hazeltine. This year, it's sharing a chalet with an unidentified client.
U.S. Bancorp said it is hosting a 100-person chalet, down from a 150-person unit that it hosted in 2002, when Piper Jaffray was part of the company and co-host for the tournament.
General Mills said it would have a corporate presence at the championship similar to its chalet presence in 2002, but it declined to say how big the chalet will be. "We don't typically discuss these plans," said company spokeswoman Kirstie Foster.
Securian Financial Group will have a 100-person chalet, the same as it had seven years ago. "As one of the major employers in the Twin Cities, Securian has had a presence at the U.S. Open and the PGA Championship, because we believe these are opportunities for our region, because so much attention is focused on the event," said Maggie Jensen, spokeswoman for the St. Paul-based company. "It also serves a business purpose by bringing in clients to show our appreciation."
Concerns about appearance
But not every business is eager to showcase its presence at the championship.
Loecher said a few corporations are participating but do not want any identifying signs on their chalets. "We're happy to honor that," she said.
In February, gossip-entertainment website TMZ.com created a stink in the financial world when it reported on lavish parties thrown for Northern Trust bank clients as they attended the Northern Trust Open in Los Angeles. TMZ.com reported guests and clients of the bank were put up in swank Beverly Hills hotels and attended concerts featuring Chicago or Sheryl Crow.
Timing of the bash was particularly bad for Northern Trust as the golf outing came on the heels of the Chicago-based bank's acceptance of government bailout money to clean up its troubled balance sheet. Members of Congress were outraged and demanded repayment for the golf event, which the bank said was a contractual obligation paid for out of normal operating funds. Northern Trust eventually announced it would repay the entire $1.5 billion it received in government assistance.
Concerns about the appearance of wild spending at prestigious sporting events amid a struggling economy have companies reining in marketing budgets and pinching participation in several PGA events this year.
"It's an extremely tough environment," said Darin David, an account director for the sports marketing firm Millsport. "If companies have to cut back their marketing dollars, one of the first places they cut is sports sponsorships. If you're laying off people, it's harder to have hospitality tents at golf tournaments or other sports events."
The dangers of downsizing
But David said downsizing can be counterproductive.
"One executive explained that his firm gets $10 in business for every $1 spent on sports," David said. "If you're managing your sports investments the right way, it will drive business. If you do it for ego, that won't work."
Jennifer Wendt, a spokeswoman for U.S. Bancorp, said the Minneapolis-based financial giant gets involved for two reasons: "for client hospitality and serving our community by bringing these events here."
In a statement, Wells Fargo spokeswoman Peggy Gunn said, "Customer events such as the PGA Championship help us build existing client relationships and attract new clients, which keeps our company strong. ..."
Liz Panich of the Marketing Arm, a sponsorship consulting firm in Chicago, said the unique structure of a golf outing -- the fact that it lasts virtually all day and can run into several days -- makes it conducive to business meetings.
"What's neat about the PGA Championship is that it's not held at the same site every year. On top of that, Tiger [Woods] will be there, as will that 17-year-old Japanese golfer [Ryo Ishikawa]," Panich said. "But are corporations going to be doing what they are used to doing, chalets for 100? Probably not."
Patrick Hunt, a member of the 2009 PGA Championship executive committee who headed sales and advertising efforts for the 2002 version, said that while the economy may be hurting corporate sales this year, in 2002 the PGA Championship had to make corporate sales calls in the aftermath of Sept. 11, 2001, and still turned in a financial success.
Ticket sales for this year, Hunt said, will be the biggest for a PGA Championship since the 2004 event in Wisconsin at Whistling Straits golf course. Tournament officials expect 300,000 spectators.
"You always want to do better, but I've been pleasantly surprised," Hunt said about the 2009 sales and marketing effort. "It's remarkable how passionate people here are for golf."
