SBD/Issue 229/Sponsorships, Advertising & Marketing

JPMorgan Chase To Cut Back Corporate Hospitality For U.S. Open

JPMorgan Chase Will Operate Its Corporate
Hospitality For Only Six Days Of '09 U.S. Open
JPMorgan Chase & Co. will "operate its corporate hospitality at the U.S. Open Tennis Championships for only the final six days of the two-week event this year," becoming the "latest example of a bank minimizing its entertainment in sports," according to sources cited by Daniel Kaplan of SPORTSBUSINESS JOURNAL. JPMorgan in '07 signed a six-year, $90M extension of its Open sponsorship, and the company "long has been the largest consumer of corporate hospitality" at the tournament, "entertaining thousands of clients in what is the bank's backyard" (SPORTSBUSINESS JOURNAL, 8/17 issue). 

SIGN OF THE TIMES: In N.Y., Ken Belson noted JPMorgan Asset Management in an internal memo in July "told employees in its Institutional Americas division that 'in light of the current regulatory environment,' they would not be allowed to entertain clients" at the U.S. Open. Meanwhile, a JPMorgan spokesperson said that employees are "permitted to accept tickets" to sporting events "on a case-by-case basis." However, "legitimate business" has to occur. Belson wrote not only are companies "cutting their entertainment budgets" due to the downturn, they also are "facing increased scrutiny from regulators, shareholders and politicians -- pressures that have forced workers even at healthy firms to avoid being seen at sporting events." Corporate compliance departments and the IRS are "doing more to ensure that the business entertainment taking place at games is tangible, not tangential." Former New York State Society of Certified Public Accountants entertainment and sports committee Chair John Lieberman: "The seats behind home plate, no one wants to be seen there. There's a perception that you're throwing your money away. Politically, it's like car company executives taking private jets from Michigan to Washington." An exec at one firm said, "A lot of people have gotten hurt by this stuff, so it's easier to just not do it. More than the price, it's just the nature of the environment out there, so it's not worth the risk" (N.Y. TIMES, 8/16).

PGA HOSPITALITY DOWN: PGA of America CEO Joe Steranka said that corporate hospitality at last week's PGA Championship at Hazeltine National Golf Club was down 20-25% compared to '02, when the PGA Championship was last held at Hazeltine. In Milwaukee, Gary D'Amato notes AmEx and Mercedes-Benz USA "were visible partners, but there appeared to be fewer corporate structures and less signage than in recent years." Kohler Co. CEO Herb Kohler, who owns '10 PGA Championship site Whistling Straits, said, "You don't see an overwhelming number of corporations out there with their names on their foreheads, but there are a lot of people here, and a lot of those are probably corporate guests that are in disguise." D'Amato reports the economy "has forced the Kohler Co. to temper expectations for 2010 but only to a point" (MILWAUKEE JOURNAL SENTINEL, 8/17).

Corporate Hospitality Sales At Weekly PGA
Tour Events Down By As Much As 20% In '09
POISED TO BOUNCE BACK? SPORTSBUSINESS JOURNAL's Jon Show reports corporate hospitality sales at weekly PGA Tour events are "down by as much as 20[%] from last year," and NASCAR tracks have said that their revenue from hospitality is down 20% this year. Corporate hospitality also is down 15-25% for packages "sold on the secondary market by agencies like Premiere Corporate Events and RazorGator to events such as the Super Bowl, Final Four, BCS games and golf majors." Show notes "most people predict single-digit percentage increases in the next" 12-18 months, while "some suggest a full recovery by 2011." Still, officials for the '10 U.S. Open at Pebble Beach are "scaling back sales forecasts in corporate hospitality for the next 12 months." Also, NFL Senior VP/Events Frank Supovitz said that he expects Super Bowl XLIV will "sell out of hospitality packages," though the league has "fewer signed contracts at this point than it had in recent years" (SPORTSBUSINESS JOURNAL, 8/17 issue). Milwaukee World Festival President Don Smiley: "A lot of sponsors have hit the reset button. They might have spent 'X' two years ago but in 2008 and 2009 decided to pare down their expenditures. I think it will be more years than in the past for companies to get back to that original level. Sponsors are really picking and choosing, and they do have the pick of the litter at this point. It's their checkbook" (MILWAUKEE JOURNAL SENTINEL, 8/16).

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