SBJ/20090921/This Week's News

With title deal unsure, WTA saves

The Sony Ericsson WTA Tour is significantly increasing the size of its reserve fund to provide a buffer in the event the group is unable to secure a renewal with its financially struggling title sponsor, Sony Ericsson, whose deal expires at the end of next year.


Stacey Allaster, the circuit’s chief executive, said that while talks with Sony Ericsson began recently, the company gave no indication whether it would renew.

In part because of that uncertainty, but also because of the down economy, the tour is in the midst of bolstering its reserves from $9.2 million at the start of 2009 to as high as $16.5 million by the end of next season.

“If we get to $16.5 million,” Allaster said, “we can run the business for 2 1/2 years without much impact.”

Sony Ericsson is in the fifth year of a six-year, $88 million sponsorship.

Earlier this month, Allaster said the tour had already reached $10.6 million in reserves, with a projected $800,000 annual savings coming from reduced travel expenses.

In 2007, the most recent year for which the group’s tax return is available, the WTA listed travel expenses of $2 million.

Allaster said the tour also is saving on the salary of its CEO, though she declined to disclose her salary in that role. Allaster in July replaced Larry Scott, who in 2007 earned $1.6 million, according to the tax document.

The tour anticipates a 2009 surplus of several million dollars. Allaster expects the tour board in November will vote to plow that money into the reserves, bringing the total to $13 million. She is uncertain, however, if there is another $3.5 million of savings to be wrung out of the tour’s budget, the amount necessary to get to the $16.5 million goal.

In July, Sony Ericsson reported a fourth straight quarterly loss, $300 million, with sales down 40 percent. The company subsequently announced Bert Nordberg as a new co-president and that Howard Stringer would become chairman of the board. Allaster pointed to the executive moves as a reflection of the uncertainty regarding Sony Ericsson and the title sponsorship.

Sony Ericsson could not immediately be reached for comment.

The tour has presented research to the company that it has received more than $2 billion worth of media exposure in the five years of its deal, Allaster said.

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