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LPGA confident of weathering financial storm

The global financial crisis is starting to put the squeeze on sports sponsorship but the LPGA is confident women’s golf will weather the storm.

Chris Higgs, senior vice president of the U.S. women’s tour, told Reuters in an interview on Monday that while the 2009 schedule would not escape the current economic downturn, the LPGA had the structure and financial muscle to tough it out.

Higgs is part of an LPGA delegation visiting the Southeast Asian city-state ahead of November’s Lexus Cup, the annual Asia v International women’s team event.

“It would be naive to say we are impervious to the world economy—there is nobody impervious to the world economy,” Higgs said at the Singapore Island Country Club.

“It doesn’t matter if you are a Premier League (soccer) team, looking at that multi-million sponsor on your jersey, or whatever—these are challenging economic times in the sponsorship world.”

Giving an example of how the LPGA was equipped to cope with the financial climate, Higgs said the $2 million LPGA Championship—the season’s second major—would no longer carry a sponsor from 2010 and would instead come back under the ownership of the Tour itself.

The move had been planned for the last two years and is part of the LPGA’s efforts to bring “key assets” under its control.

“In the past the LPGA was never in a position, either from a structural standpoint or a financial standpoint, to take on that responsibility, but it is now,” said Higgs.

Higgs, also the Tour’s chief operating officer, conceded that they had lost sponsors for next year due to the chaos in the U.S. housing market and uncertainty in the energy sector.

“An event that was on our schedule this year which won’t be returning next year is one that was sponsored by the Ginn Company, a major real estate investor,” he said.

“The one that was the most surprising to us was the SemGroup. They’re in Chapter 11 so they don’t have the option to continue sponsorship.”

Energy trader SemGroup, which sponsored the $1.8 million SemGroup Championship in Tulsa, Oklahoma, collapsed in July after suffering $3.2 billion losses on energy futures and derivatives trades. The company filed for bankruptcy in July.

In times of economic crisis, companies would naturally seek to reduce costs and sinking millions of dollars into sporting events was sometimes hard to justify.

“It’s affecting all sports, all sponsorships across the board, not specific to the LPGA or to golf,” Higgs said.

“Sports sponsorship is one of those things in business that gets carefully evaluated along with advertising, promotion and entertainment.

“We are making sure that the value we bring to sponsors is communicated clearly, so that if and when they do have to start making choices they are reviewing us in the best possible light.”

The impact of the credit crisis has been felt in the sports world, with shirt sponsorship revenue in the Premier League falling for the first time in its 16-year history to 67 million pounds ($123.6 million) from about 75 million a year earlier.

West Ham United are without a shirt sponsor following the collapse of tour operator XL Leisure Group, while sponsors of NASCAR—one of the highest drawing TV sports in the U.S. — and snooker are cutting back due to the financial crisis.

Higgs added that it was vital that sports and their sponsors were on the same page for both parties to get the best out of the relationships.

“A corporation cannot use a sport as a vehicle for conducting its business unless the sport is compatible with that company. And likewise a sport cannot create opportunities that don’t work commercially for a corporation,” he said.

“That’s the nature of professional sports now that rely on corporate sponsorship.”


October 21, 2008

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