Tournament sponsorships in a declining economy

[Nuke]

The LPGA recently cut three tour events and announced a dip in prize money due to loss of some sponsors. With the downturn in the global economy, is it likely that we can see similar problems on the horizon for pro tennis? I just can't see big companies laying off lots of employees while ponying up big money to support tennis tournaments. What do you think -- is tennis in for some hard times ahead?

[JankovicFan]

Originally Posted by Nuke

The LPGA recently cut three tour events and announced a dip in prize money due to loss of some sponsors. With the downturn in the global economy, is it likely that we can see similar problems on the horizon for pro tennis? I just can't see big companies laying off lots of employees while ponying up big money to support tennis tournaments. What do you think -- is tennis in for some hard times ahead?

It seems inevitable. So far we have AIG (Japan) and Pacific Life (Indian Wells) out of the game. There may be more I haven't seen mentioned. Unfortunately banks and insurance companies are front page news for the types of firms in the most trouble. Keep in mind though that prize money is not giving money away. It is institutional advertising, which any ongoing company will still need. The problem is being able to come up with the cash, not just credit or promissory notes.

Apparently, these arrangements take time to fully develop as well as to untangle, because the company name and logo are used everywhere as the advertising benefit. Since it is more common for sponsors to abruptly change, this may put a damper on events changing their names to match the current sponsor unless they have an endowment (prepaid for some period). Some sort of marquee sponsor visibility medium will need to be worked out.

[Nuke]

See http://www.bloomberg.com/apps/news?p...nuk&refer=home

Dec. 12 (Bloomberg) -- Six tournaments on the men’s tennis tour, about 10 percent of the total, have yet to confirm major sponsorship deals for next year, the ATP Tour said.

[NoBadMojo]

Originally Posted by Nuke

The LPGA recently cut three tour events and announced a dip in prize money due to loss of some sponsors. With the downturn in the global economy, is it likely that we can see similar problems on the horizon for pro tennis? I just can't see big companies laying off lots of employees while ponying up big money to support tennis tournaments. What do you think -- is tennis in for some hard times ahead?

already happening....the Bausch and Lomb here where live, lost their title sponsorship and moved to a new venue with a new sponsor after being here for some 28 years always well attended.

there have also been some changes in corporate tax laws affecting entertainment write offs at events like this, making sponsorships of events like this less worthwhile

[JankovicFan]

Originally Posted by NoBadMojo

there have also been some changes in corporate tax laws affecting entertainment write offs at events like this, making sponsorships of events like this less worthwhile

Writing off a company's suite lease or a company paid block of season tickets is not the same thing as legitimate institutional advertising. Advertising and entertainment are different concepts and accounting entities, each with its own rules. There may be limits on the amount as a percentage of some benchmark (perhaps sales), but I wonder if you are confusing principles here. Sponsorships would still be worthwhile, because they are intended primarily to promote a brand name, an institution. Every conceivable surface and camera shot becomes a billboard. Put enough money on the table and make a longer term commitment, and they name the event for you.