SBJ/20090525/This Week's News

Prices steady for golf title sponsors

The PGA Tour and Champions Tour are holding prices firm for title sponsorships despite the pinch in marketing budgets, but they have stopped demanding once-standard annual escalators, which could bring about a long-predicted flattening of prize money.

Title sponsors on the PGA Tour generally pay in the middle to high seven figures annually in rights fees and media commitments, depending on the stature of the event. Industry sources said prices were roughly flat or increased only nominally on title sponsorship extensions signed this year with Accenture in Arizona, Travelers in Connecticut and Zurich in Louisiana.

Tour officials are also decreasing or dropping annual 5 percent escalators that once were considered a standard part of title sponsorships, said sources. Those escalators are tied to purse increases that can cost an average sponsor low to mid-six figures annually.

A lack of escalators may flatten out
prize money on the PGA Tour.

Whether the steady prices are a sign of the resiliency of the PGA Tour or just the affinity of a few existing partners remains to be determined. Multiple sources said the starting price on available title sponsorship inventory is flat with prices paid by the incumbent, suggesting they could come down slightly in negotiations.

U.S. Bank in Milwaukee and Stanford Financial in Memphis are the only confirmed title sponsors on the PGA Tour that will not return in 2010. More than a third of title sponsorships expire at the end of 2010. FBR in Phoenix will not extend, and the tour is quietly shopping titles in at least three other markets: Miami; Fort Worth, Texas; and Palm Springs, Calif.

Flat title sponsorship prices with smaller escalators mean average purses will likely flatten in the final three years of the current television deals. The average purse of an official money event on the PGA Tour this year is $5.9 million, up about $80,000 from last year. Total year-over-year prize money dropped for the first time since 1975.

Purses on the PGA Tour have more than doubled since 1999, and the number of players earning more than $1 million in a single year increased from 61 in 2002 to 104 last year.

Early returns show that the Champions Tour is also maintaining its $2 million to $3 million annual title sponsorship prices despite expectations that extensions on the senior circuit would be hit hard. The Champions Tour lost four events this year but extended or signed new title sponsorships with six of its remaining 25 tournaments.

However, tour officials are relaxing annual purse escalators in the middle of contracts when title sponsors have asked for assistance, which can save a company up to $100,000 a year.

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