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The 19th Hole
July 30, 2008
Win Some, Lose Some
The US economy is stagnant right now. Commodity prices – especially those for
oil – are through the roof. Bank liquidity and credit markets have proven to be
trillion dollar messes. The dollar is losing its value against global
currencies because of our large national debt and artificially low interest
rates. It is a difficult market for anyone to make sustain their financial well
being, much less make gains.
It is in this economic reality that the LPGA is trying to grow its tour, its
brand, and its purses. Since Carolyn Bivens has taken over as Commissioner of
the Tour, she has been spearheading efforts to bring in sponsors that will
commit to higher expenses, bigger purses, and larger ad buys. Bivens has been
trying to increase the profile of the Tour by holding events in larger markets
and taking significant portions of the Tour outside of the United States.
After taking over for Ty Votaw as Commissioner in late 2005, Bivens made
immediate changes. Using her leverage as head of the Tour, she increased the
annual sanctioning fee for each tournament from $18,000 to $100,000. She
effectively forced out the Wendy’s event in Dublin, Ohio, because of the
changes. Simultaneously, the Tour gained several international tour stops and
large financial commitments from leading credit and banking companies,
MasterCard and HSBC.
Looking for another stream of money, Bivens tried to amend the credential rules
for the press such that the LPGA Tour would retain rights to photography to use
for the Tour’s own purposes. She lost that battle, but did negotiate a contract
with a photography firm that would pay off the LPGA Tour.
In her pursuit of larger purses, she cast aside some events that were not
willing to compromise their long-standing dates on the LPGA Tour schedule in
favor of new events with more money. The ShopRite Classic in Atlantic City was
such an event. In exchange for the loss of such an event, she negotiated a very
lucrative sponsorship deal with the Ginn Company – a real estate firm out of
Florida – that would go on to produce two events with huge paydays: the Ginn
Open and the Ginn Tribute.
Just this summer, the LPGA has taken steps to gain ownership over more of its
events in order to generate revenue through merchandising, ticket sales, and the
other sources of money that they do not see from events they do not own. The
LPGA Championship will be owned by the LPGA Tour starting in 2010, go on without
title sponsorship, and allow the Tour to flex slightly more muscle in
negotiations with broadcast partners for the 2010 television contracts.
The point? For Bivens, she has won some battles and she has lost some. Despite
the resounding criticism of her during the 2006 season, last season seemingly
produced results for the Tour. This week, though, was another example of how
Bivens may be having a losing year for many reasons out of her hands.
SemGroup, an energy company, filed for bankruptcy protection after the SEC
conducted an investigation of the company. The Ginn Company also indicated this
week that they would no longer sponsor the event hosted by Annika Sorenstam –
the Ginn Tribute – because of financial difficulties attributable to a $25
million commitment to golf sponsorship. Both events boasted purses on the high
end of those offered on the LPGA Tour schedule.
Other tournament sponsorship appears to be in question, as well. Earlier in the
year, Safeway pulled out as sponsor of the Safeway International in Arizona. An
extremely popular event with fans and players, the long-standing tournament is
struggling to find a new title sponsor. Fields, the sponsor for an event in
Hawaii, is also unlikely to remain a title sponsor and the status for that event
is seriously in question. Speculation is rampant regarding up to a handful of
other LPGA Tour events.
All of this comes during one of the most crucial seasons in the Tour’s history.
Annika Sorenstam is stepping away from competitive golf at the end of the season
to pursue other interests. The biggest draw in women’s golf – other than
Michelle Wie – is leaving the game with a certain heir in Lorena Ochoa, but a
significant gap for the way the Tour is marketed in the mainstream. The rise of
Asian players and their increasing tally of victories may be leading to problems
with an American sporting public that loves to root for the red, white, and
blue.
The Tour is in the midst of a television negotiation that will dictate its
viability for financial and fan growth in the next four or five years. It is
yet to close a deal on a cable partner, but signs point to the Golf Channel.
Bivens seeks a contract in which the LPGA Tour will be paid for broadcasting
rights of its product – something the Tour has never enjoyed in the States.
With the biggest draws in the game either leaving or dormant, though, that
negotiation may prove to be more difficult than it was just a year prior.
In spite of all of the bad news, though, the Tour remains a strong brand
overseas. The Tour announced a partnership with Grand China Air to present a
limited-field event in October with a $1.8 million purse. There is talk of an
event in Dubai. Grander still is talk of turning the LPGA Tour into a global
circuit with more invitational events and rebranding the Duramed Futures Tour
into a women’s golf version of the Nationwide Tour.
It is uncertain how the Tour will look after this season. With at least two
events already declared dead or on life support, the schedule will certainly
have a different feel. If more rumored struggling events fall, then the Tour
may face serious financial difficulties in trying to present a full schedule –
particularly with a $500,000 sanctioning fee for new events.
With a string of good news and sponsorship overseas, though, the LPGA Tour could
evolve in the opposite direction of the PGA Tour. The PGA Tour has made strong
efforts to become more Americanized in its presentation. Few official money
events are contested outside of the United States, and just one out of North
America and the Caribbean. The World Golf Championships are a mockery of the
title in that they are played only in this country.
Meanwhile, the LPGA Tour may have to move significant portions of its operations
outside of the United States in order to grow. Asia and the Middle East present
a lot of interest and a lot of capital that the LPGA Tour may not be able to
turn from in the coming years. At the risk of alienating a fan base that has
been incredibly loyal the product over the years, financial realities may
dictate to a Tour that seeks to grow will have to follow the money. In the end,
tough, is financial growth worth potentially sacrificing the fan base?
Ryan Ballengee is the operator of The Golf News Network and host
of The 19th Hole Golf Show and LPGA on GNN.
Having graduated from the University of Maryland
in 2004 and 2006, Ballengee brings the perspective of the younger golf fan to
the microphone and his columns. Over the nearly five years he has been
broadcasting and writing, Ballengee has developed a reputation for a unique
interviewing style that asks both the difficult and fun questions. He
can be reached at
ryan@thegolfnewsnet.com.
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