Corporate sponsorship getting sticky? You can bank on it
CHARLOTTE, N.C. -- Wonder what the shareholders and all those euphemistically "downsized" employees will say when they find out?
Or, rather, if they find out?
The title sponsor of the Wachovia Championship on Friday disclosed that it has extended its deal with the PGA Tour through 2014, a newsworthy development that was announced with zero fanfare.
In fact, using the term announced is overstating the case.
Let's first compare and contrast, shall we?
Last week in Dallas, when EDS, the longtime title sponsor of the Byron Nelson event, announced an extension of its deal, tour commissioner Tim Finchem and the CEO of the company turned up to trumpet the new arrangement, shake hands, kiss babies, slap a few backs and spew forth all the traditionally self-aggrandizing tour-speak and spin.
This week, any notion of holding a formal news conference was prudently dismissed. Instead, a 2½-page news release was quietly placed on a table in the back of the media center with no further comment or elaboration.
Thus, a sensitive message was delivered loud and clear.
Given the disastrous state of the banking industry, spending roughly $7 million to put your name on a PGA Tour event would be considered an unnecessary flight of fancy by some stockholders, who, in the case of Wachovia, have been absorbing some brutal economic news already.
From an April 14 Reuters report: "Wachovia, the fourth-largest U.S. bank, sold shares at a discount after boosting its reserves for credit losses 16-fold to $2.83 billion, and writing off $1.56 billion of debt, largely tied to the nation's housing slump and strained credit markets. Wachovia will cut 500 corporate and investment-banking jobs this quarter."
I have no idea what that means, other than the Charlotte-based company appears to be swimming laps in a pool filled with red ink and floating employee corpses. Experts predict that the U.S. housing collapse won't hit bottom until next year at the earliest, after the dust from thousands of home foreclosures settles nationally. The company is reportedly seeking $7 billion in loaned cash to help put out the fires.
That's billion, with a decidedly capital 'B.' That's capital, as in big money.
With the U.S. economy in the toilet, convincing companies to re-up or sit tight on deals with the pro tours is going to be increasingly harder, especially those with ties to banking or real estate, like the Ginn Company, a realty development firm which sponsors events on the PGA and Champions tours and two on the LPGA.
