General Motors to Drop Sponsorship: Goodbye, Buick Open
By Stephanie Wei under General

Ah, more chatter about golf sponsors. This week’s Buick Open in Grand Blanc, Michigan, will be the last. Sources have reported that General Motors Co. is pulling out of its longtime sponsorship of the PGA Tour — one that dates back more than half a century.

Shocking. I’m surprised this wasn’t openly discussed earlier. Of course nobody wants to see the loss of a highly prized Tour stop and one that is valued by the community. But it’s no secret GM has been having financial problems for years.

On May 31, GM filed for Chapter 11 bankruptcy. A few weeks prior, the company announced the closing of 2,600 American dealerships — or 40% of its total — by 2010. While it is keeping the Buick, Cadillac, Chevrolet and G.M.C. brands, it’s ridding of Saturn, Hummer, Saab and Pontiac. By the end of 2010, there will be 34 plants compared to 47 in 2008. And at the close of 2009, GM expects the number of layoffs to total approximately 27,000.

Only several weeks ago they emerged from bankruptcy and the majority owner is now the US government. So even if they’re not using government bucks to pay for the tournament, they essentially are (or it’d be perceived that way). It’s tough to justify spending $6 million to $8 million to sponsor a golf tournament when thousands of people are losing their jobs.

The demise of the Buick Open is sad. But it makes absolute sense from a public relations standpoint. While I know holding an event brings money and jobs to the local community — not to mention millions in charity contributions — the sponsor doesn’t necessarily receive the same benefit. Imagine you are a GM executive for a moment — would you want to explain to one of your employees on the assembly line that while the company is putting the line on a mandatory three-month furlough, it somehow has the money to be the title sponsor of a golf tournament? From that standpoint, it seems absolutely absurd. Nothing is cut and dry, of course, but I think most people would find it frivolous and irresponsible at the very least.

Imagine the backlash. Oh, wait…

Rewind back to February. Northern Trust was slammed for hosting extravagant parties, including a Sheryl Crow concert, and lodging clients in posh hotels — all in connection with their tournament. Worst of all, the company had received $1.6 billion in bailout funds. When TMZ, a totally legitimate source, “broke” the story, lawmakers immediately chastised the firm for its “abuse of taxpayer money while the country is on the brink.” While a spokesman for Northern Trust said no government funds were used for the event, it still looked terrible – for both the company and golf industry.

It’s even worse because golf is considered an upper-crust sport. And people “blame” the same demographic for the economic downturn in the first place. People in finance made money at the cost of the average American, lending money they shouldn’t have. Even though Northern Trust didn’t technically do anything wrong, the debacle only drew more negative attention to the already carefully scrutinized sector and served as a warning to other sponsors.

Deutsche Bank has learned from that example. It was reported last week that the firm is cutting back the spending on its golf championship in September. There will be smaller hospitality tents and fewer advertisements. Again, it comes down to saving jobs and face. Whether Deutsche can afford to spend the extra bucks isn’t the issue, it’s about erring on the side of caution. You bet the government and press are watching carefully for any slip-ups or “lavish” spending.

Frankly, it sucks to lose GM’s long term sponsorship and the Buick Open, but the fact of the matter is that the company has to save its ass. At the end of the day, Deutsche and GM are making the right decisions; there’s no need to add fuel to the fire in a period like this.

This post also appeared on the Huffington Post’s Business section.