General Motors Corp. may not renew its 25-year sponsorship of the NCAA men’s basketball tournament after this season because the automaker wants to garner customer approval after being bailed out by the government.
The company will slash by at least 60 percent on-site spending at the Final Four, even though this year it will be held blocks from GM’s headquarters in Detroit. The company is trimming dealer-incentive trips to the championship rounds and billboards downtown, said Steve Tihanyi, who oversees GM’s sponsorships.
The cutbacks come as General Motors, which has received $13.4 billion in loans from the U.S. government, reported its fourth straight annual loss yesterday. It said on Feb. 17 that it needs another $2 billion in loans next month.
“If it’s not mission critical, we’re not doing it,” Tihanyi, GM’s general director of media operations, branded entertainment and marketing alliances, said in an interview. “We can’t be stupid about how we do things here.”
Tihanyi and CBS Inc. spokeswoman LeslieAnne Wade declined to say exactly what the company will spend to advertise during the tournament. Tihanyi wouldn’t comment on how much the 60 percent cut in on-site promotion and entertainment would save.
GM spent an average $75.4 million annually for network television advertisements during the 2005-2008 NCAA men’s basketball tournaments, according to New York-based TNS Media Intelligence. GM wouldn’t confirm the numbers.
GM spokeswoman Kelly Cusinato said there are no advertising or marketing restrictions attached to the government loans or the company’s viability plan.
Marketing Cars
General Motors needs to spend to market its cars, Tihanyi said, but it doesn’t want to alienate customers by appearing to overspend, or be wasteful with U.S. subsidies.
Tihanyi said the NCAA tournament, which starts March 17 and concludes with the championship at Ford Field on April 6, is a good platform for attracting potential buyers because it reaches an affluent, educated fan base, has high visibility and is played at a time when car dealers are holding spring sales promotions.
“We’ve pulled back in all aspects,” Tihanyi said. “But we still have to market our brand. The only way to work our way out of this jam is to sell products.”
General Motors shelved a program for top-selling dealers that included tickets to the Final Four, business meetings and entertainment, Tihanyi said.
Extraordinary Times
One of the dealers who would have benefited from the program said he understands these extraordinary times.
“You work hard and it’s a nice added perk,” said Chris Haydocy, owner of Haydocy Automotive, a Columbus, Ohio-based Buick-Pontiac-GMC dealership. “But we totally realize that it’s in everyone’s best interest to get through the swamp we’re in.”
Haydocy said the company’s pullback from some of the other promotions at the Final Four is similar to its decision to stop sponsoring golfer Tiger Woods. It quiets critics, but hurts business, he said.
“It was a sad moment when I watched Tiger Woods walk up the fairway today without a Buick bag,” Haydocy said in an interview yesterday. “If GM would have renewed his contract, I bet there would be a senator from the South saying, ‘Are you telling me we are using funds so this guy who makes $40 million a year is a spokesperson for you?’ It’s a no-win situation.”
No-Win Situation
Rick Gentile, a former executive producer at CBS Sports and now director of the Seton Hall Sports Poll at Seton Hall University in South Orange, New Jersey, said the company may be in a no-win situation with the basketball tournament.
“They need to advertise more than ever because they have to sell some cars and this is the perfect vehicle,” he said in an interview. “Yet there is the risk you are alienating people because of the bailout.”
Citigroup Inc. was criticized by politicians including Ohio Democratic Representative Dennis Kucinich for the 20-year, $400 million sponsorship deal to put its name on the New York Mets’ new baseball stadium.
Since then, it has had to sell $52 billion of preferred stock to the government after a decline in its stock price led to concerns that a failure might lead to a market collapse.
“What’s happening to GM is less ostentatious than the Citigroup deal where they have a contract commitment of $400 million they can’t get out of and everyone is screaming, ‘This is ridiculous’,” Gentile said. “In GM’s case, there is a product to be sold -- they’ve got to move cars.”
Talks have begun with CBS to extend GM’s sponsorship of the men’s basketball tournament, though Tihanyi said that given the car company’s financial position, it’s unclear whether even a smaller agreement will make sense.
“We are taking a hard look at it,” Tihanyi said. “If we don’t see value in it, we won’t do it.”
(Source: Bloomberg)
