Jul
3
2009
The LPGA Moving Forward Despite the Times
By Stephanie Wei under General

On Tuesday, a presser announced that the LPGA’s Kapalua Classic scheduled for October had been canceled. The organizers of the tournament, Kapalua Land Co., withdrew from its five year contract with the Tour. Because of financial troubles, the company can’t be the title sponsor as it was in 2008, the inaugural year of the event and a replacement sponsor couldn’t be secured.

The LPGA’s tournament schedule has been shortened to 28 tournaments this year, 6 fewer than 2008. For the most part, the events were dropped because of the sponsors’ economic problems. The SemGroup filed for Chapter 11 bankruptcy last July. Ginn Resorts breached its contract with the LPGA when the company pulled out of all its professional golf sponsorships. Last fall, Stanford Financial took over as the primary backer for the LPGA Tour Championship, and well, we’ve all heard about the fraud charges against Allen Stanford.

On Thursday, Beth Ann Baldry wrote an article questioning Carolyn Bivens’ leadership:

LPGA commissioner Carolyn Bivens wanted a substantial amount of tournament contracts to expire simultaneously so that she could better orchestrate an unprecedented deal with Golf Channel. The risky move placed a dark cloud of uncertainty over the tour.

First of all, it’s unfair to assign the blame to Bivens and/or the LPGA. Unfortunately she is the voice of the brand that people can most easily attack rather than the relatively unknown LLCs responsible for the sponsorships. The economic downturn has created a void – one that makes it difficult for companies to commit $2 million to $4 million to sponsor a golf tournament. There’s just a ton of “uncertainty” across the board at this point.

On the other hand, the deal with the Golf Channel will be financially beneficial for the Tour. Starting in 2010, they will receive profits for broadcasting rights. Also, a partnership was made with J Golf for the Korean TV rights – which in turn, severed the long-term relationship with SBS. But the upshot is earnings of at least $4 million annually for five years (according to sources). So, if there isn’t a title sponsor for a tournament, like, say, the LPGA Championship, then the income generated from these contracts will allow the Tour to cover those costs.

For the next several years the Tour’s schedule will probably be less than ideal. It’s likely there will be fewer domestic events and more internationally. But it’ll only be a temporary situation. I’m going to assume the economy will begin to improve next year and then firms will be lining up to sign or renew contracts. Consider this as the time to lay the foundation for future prosperity.

There’s no need to press the panic button. Things aren’t perfect right now, but it’s tough financially for all the tours, not to mention other sports. The LPGA is a very strong product with plenty of room to grow. The worst thing we can do is drive more negative attention and “scare” fans and sponsors. The perception of problems is sometimes greater than the reality. Let’s be real, the LGPA isn’t going to “fail.” We need to have confidence in the strength of the brand, so it will continue to prosper when the economy improves.