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SBJ/September 14 - 20, 1998/No Topic Name
Motorola opts out of Western Open deal
Published September 14, 1998
The Motorola Western Open will be no more after 1999, when the financially ailing telecommunications giant walks away from its title sponsorship of one of the PGA Tour's most lucrative stops.
Officials at Schaumburg, Ill.-based Motorola Corp., which has sponsored the Western Open since 1994, said the company will end its run as the tournament's main sponsor when its contract runs out after next year.
"In the future, we need to pursue a strategy that will provide Motorola with visibility on a global scale," said Motorola Executive Vice President Fred Kuznik. "We will diversify our sponsorship efforts consistent with our worldwide business needs."
Motorola sponsors a CART team and the Motorola 300 CART event held in Madison, Ill. The company is also the presenting sponsor of the Phoenix Open PGA stop. But in the last few years, the company has been dropping sponsorships, including the Nagano Winter Olympics, a European bicycle team and an America's Cup sailing team.
"Like it or not, when the marketing vehicle no longer fits the need of the corporation, the corporation changes its vehicles," said Motorola spokesman Barry Cronin. "But it doesn't mean that the Western Open isn't a great vehicle for a company."
Motorola poured millions of dollars into the Western Open, which is played at the Cog Hill Golf and Country Club outside of Chicago.
Under Motorola's sponsorship, the tournament's purse grew to $2.2 million from $1.5 million, making it a favorite among touring pros, including Tiger Woods, who won the event in 1997. The tournament ranks among the top 20 percent of all PGA events for both purse and attendance. Interest peaked in 1997 at about 200,000 fans, thanks in part to Tigermania. This year, the event drew 180,000 people.
Western Open officials said that total cost of sponsoring a PGA event is around $5.5 million, including purse money, television rights and entertainment expenses.
While Motorola officials said their decision to leave the event was a change in strategy, a glance at the company's recent financial reports shows that the firm might have a hard time justifying the sponsorship to its shrinking work force.
For the first six months of 1998, Motorola lost $1.1 billion, or $1.92 a share, compared to a profit of $593 million, or 97 cents a share, for the same period last year. In June, Motorola announced a layoff of 15,000 employees over the next year. The company's stock trades at about $40 a share, down from its 52-week high of about $75.
Even with Motorola's financial troubles, tournament organizers said they were surprised by the company's departure.
"It's fairly evident that they are restructuring and that may have ultimately had an effect on us, but we were a little shocked," said tournament director Greg McLaughlin. "We're confident that we'll find a replacement, but you have to have the right company and the right mix. The next three to six months are critical from a budgeting standpoint. Ideally, a Chicago-based company would be great, but we are making inquiries on both the local and national level."