Earlier today, I spoke with PGA Tour commissioner Tim Finchem about golf and the economy and Capitol Hill's reaction to bailed out banks sponsoring tournaments.
Darren: Your sports has taken its share of beatings over the last month. Not only has sports marketing been questioned, but the value of sponsoring golf events specifically has been attacked. Defend the spending for me.
Finchem:Well, you know, obviously we feel very strongly based on years and years of experience about the value of sponsorship, particularly in our sport, because in our sport sponsorship means partnership. It means significant branding value. It means advertising value. But it also creates a business-to-business platform where companies have the opportunity to bring their customers into town for a number of days to develop relationships, be able to convey information about products and services, understand the needs of their customers and do business. And over the years, clearly as these companies have meticulously done the analytics on the cost of sponsorship and value, they receive value multiple times the cost of doing these sponsorships. It's been a very valuable partnership arrangement and it contributes to the economic impact that we have of over $4 billion a year of our tournaments and being able to raise over $120 million for charity (in 2008). So it's really a win-win-win situation.
Darren:You worked in the office of economic affairs under President Carter in the late 70's, so you are familiar with the world of politics. What do politicians understand about how this sponsorship world works, including John Kerry who believes that any TARP recipient who sponsors a tournament should pay a fine?
Finchem:Well, I think that unfortunately there are some politicians who want to take advantage of, and understandably the concern taxpayers have of seeing their tax dollars invested in private companies. And then it raises all kinds of questions about how they spend the money. And the easy thing to do is to criticize, but I think if you stand back and take the broad view and take a minute to understand what these expenditures do, this is good, solid business. These are companies that have been in business a long time, that have been very successful, that have used sponsorship to help build the quality of their business. And I think in this environment, expediency sometimes takes over. I think what we need to do on our part is do a better job to make sure that decision makers and people of influence in Washington and other places really understand not just the value of the business model, but the impact that that business model has on the quality of a tour that's dedicated to economic impact and charity and that's what we're about. Now, I must tell you that as I talk to members of Congress and I talk to leaders around the country, the public sector has a very sincere awareness of the value. You talk to mayors, people at the local level and communities where we play. If you talk to most members of Congress, they understand the value of our business model. But there are those that don't. And those are the people we have to reach out to.
Darren: There has been this reaction, and obviously some of these companies now say, like Wachovia, we're changing the tournament name to a generic name even though we're paying. What's your reaction then to their reaction of taking their name off the tournament?
Finchem:Well, that's probably a unique case because their going to re-brand the tournament anyway after the (Wells Fargo) acquisition of Wachovia. But generally speaking, obviously we're concerned about this. We think there's a gray area here. There's been a lot of rhetoric from Washington. This is one little piece of the business model, which is entertainment and its taken out of proportion and it has a chilling effect on travel and entertainment in this country. We lost 200,000 jobs in the travel and entertainment sector last year. We're going to lose 250,000 this year. This is the last time we want to be taking steps to have a chilling effect. I think it's a transition. I think that as cooler heads prevail, as regulations are adopted in terms of what companies can and can't do, that hopefully the position (of) the treasury department -- which seems to be continue to be that companies need to make marketing decisions will prevail. I don't think there's any problem with a regulation that says, look, be transparent about what you're doing. I don't think these companies have been hiding anything, so this is real value and as most things, a legitimate use of funds, of shareholder dollars to grow a business eventually will be rewarded and will be understood. We just have to help get ourselves through that process.
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