Can Tiger Woods’ absence and a weak economy be advantageous for a regional company desiring to become the title sponsor of a PGA Tour tournament?  Unequivocally, yes!  

Three PGA Tour tournaments are without a title sponsor in 2010, with 13 on the hook for a sponsor in 2011.  Television ratings for this year’s first two tournaments have paled in comparison to previous years.

Title sponsorship vacancies open up cost-efficient opportunities, otherwise not affordable, for regional companies if negotiated at the optimal time.  Case in point: Farmers Insurance Group paid about $3.5 million to title sponsor this year’s tournament at Torrey Pines, which was 50 percent less than what GM paid for title sponsorship of the same tournament in 2009.  The one caveat: Farmers Insurance Group signed the deal just 10 days prior to the start of the tournament, leaving little prep time.  

Regional companies can use an identical strategy to conserve funds and bypass paying a hefty premium for national media that has significantly less value compared to national companies.  National media coverage can make up over 50 percent of the total cost of a PGA Tour tournament title sponsorship.  Agreeing to become the title sponsor a few weeks before the tournament would likely enable regional companies to negotiate a favorable price, thus offsetting a premium that would otherwise be paid on national media coverage.   

In addition to cost savings, there are benefits to regional companies that forge title sponsorships with PGA Tour tournaments days before the start of the event including: 

  1. Maximize Value-to-Cost Ratio: By negotiating a 50 percent reduction off the original price, you are eliminating the premium paid on national media coverage that is a waste. Thus, the sponsorship cost is more in line with the marketing value received from audiences in your geographic footprint.
        2. Enhance Brand Image: Associating your brand with a reputable event among nationally-recognized brands will enhance your brand's image.
        3. Leveraging the "Savior" Factor: The closer a tournament comes to being pulled from the tour schedule, the stronger the affinity that your audience will have for your company by becoming title sponsor of the event.

Check back next week as I will discuss best practices for implementing a title sponsorship in two weeks or less as well as outline the possible pitfalls.

Sources:
Futterman, Matthew.  "The fallout continues: PGA Tour faces a shortage of ticket sales due to Tiger Woods extracurricular activities".  The Wall Street Journal 2010