The top money man for the U.S. Golf Association says the sport has an economic recovery plan that even a government bailout can’t match -- Tiger Woods.
“He’s our own TARP money,” Pete Bevacqua, the USGA’s chief business officer, said in an interview at the U.S. Open, which begins today at Bethpage State Park’s Black Course in Farmingdale, New York.
Golf was held up as an emblem of excess by U.S. Congress members as they scrutinized the spending of banks, especially those that received money as part of the government’s Troubled Asset Relief Program. Executives of institutions that received government bailout funds didn’t want to be seen spending taxpayer money on golf.
U.S. Representative Barney Frank, a Massachusetts Democrat who is the chairman of the House Financial Services Committee, in February criticized Northern Trust Corp. after reports the TARP-assisted bank threw parties during a PGA Tour event it sponsored in the Los Angeles area. He and 17 other Democratic members of the committee said they were “dismayed and angered” in a letter to Northern Trust Chief Executive Officer Frederick Waddell. Frank’s spokesman, Steven Adamske, didn’t return e- mails seeking comment.
“What has happened has put golf sponsorship on the wrong side of public perception,” said Casey Alexander, who covers the golf industry for New York-based Guilford Securities Inc. “It’s on the radioactive list.”
Northern Trust said last week that it plans to repay $1.6 billion in bailout funds after it received authority from the Treasury to do so.
The Woods Effect
Bevacqua is among those who are counting on Woods, the three-time U.S. Open champion, to help keep the industry afloat because he draws fans to the sport. Television ratings increase as much as 50 percent when he is in contention.
Even Woods, who at the age of 33 has won more major tournaments than any golfer except Jack Nicklaus and earned more than $100 million in tournament purses since turning pro in 1996, might need some help.
The U.S. PGA Tour has felt the effect of lost sponsors; the world’s top golf circuit cut the prize money for last week’s St. Jude Classic in Memphis, Tennessee, by $500,000. And while PGA Tour Commissioner Tim Finchem notes that the schedule hasn’t lost any events, there are questions about the Buick Open in Grand Blanc, Michigan, after General Motors Corp. filed for bankruptcy three weeks ago. GM is preparing for a June 30 hearing on selling its Buick, Chevrolet and Cadillac brands to a new government-based company.
Purse Cut
The St. Jude purse was cut after Stanford Financial Group Inc., which had agreed to sponsor the event through 2016, withdrew in March as investigators probed Texas financier R. Allen Stanford’s alleged $8 billion fraud.
Ginn Resorts of Celebration, Florida, severed ties with the women’s LPGA Tour and 50-and-over Champions Tour. FBR Capital Markets Corp., the Arlington, Virginia-based real-estate investment trust, won’t back the FBR Open in Phoenix beyond 2010.
A PGA Tournament sponsorship that includes naming rights typically would cost from $5 million to $6 million.
Wells Fargo & Co., which acquired Wachovia Corp. in December, honored Wachovia’s financial commitment to a Charlotte, North Carolina-based PGA Tour event in May, although it didn’t allow executives to attend. Morgan Stanley, a sponsor of the Memorial Tournament in Ohio, canceled its hospitality efforts at that event this month.
Jobs Cut
It’s not just the banks who are suffering. Golf companies, including Nike Inc., have fired employees and Acushnet Co.’s Foot-Joy shuttered its Brockton, Massachusetts, shoe plant in April.
George Fellows, president and chief executive officer of Callaway Golf Co., is among those who say the sport has been unfairly portrayed by Congress and other outsiders.
“There were people saying things about golf that were just absurd,” Fellows said in an interview on the practice range at Bethpage. “Because of the economy, a lot of things have been demonized and demonized inappropriately.”
The USGA, which governs the sport in the U.S. and Mexico, brought the U.S. Open back to Bethpage seven years after the course helped the association reap a then-record $92.6 million in annual revenue. That year, the USGA sold 78 hospitality tents.
The tournament -- about 35 miles (56 kilometers) from Manhattan -- didn’t sell out its 42,500 daily tickets in advance for the first time since 1986. Tickets for the four competition rounds finally sold out on June 14 and practice-round tickets were still available through the week. Bevacqua cites the lack of corporate support for the ticket availability.
Fewer Tents
Because organizers sold less than 50 hospitality tents, which range in price from $32,500 for a table of 12 inside a course-side pavilion to $230,000 for an entire 40-foot-by-40- foot shelter, the USGA was left with about 1,500 additional daily and weekly ticket packages to sell to the public.
The tents that were sold remain shrouded in anonymity. There are no visible marquees because the occupants don’t want to be known.
“Everybody is afraid of being seen out here,” Bevacqua said. “Until people understand how effective a tool this is, corporations will still use this as a tool, but they don’t want to draw attention or exposure to themselves.”
At least for this week, it helps that Woods isn’t afraid of the limelight.
“If Tiger weren’t in golf, what would the impact really be?” Bevacqua said. “You can’t even measure how important he is to the game. He’s a Michael Jordan, Tom Brady and Sidney Crosby all rolled into one for us.”
(Source: Bloomberg)
