SBJ/20101025/This Week's Issue

Comeback Caddy? PGA Tour, GM near deal for WGC event

General Motors and the PGA Tour are in the final stages of negotiations to put the Cadillac brand on the World Golf Championship event at venerable Doral Resort and possibly other tournaments, industry sources said.

GM, which declared bankruptcy in June 2009, was absent from the golf sponsorship scene this year as it restructured and repaid $6.7 billion in TARP funds to the U.S. Treasury.

But an agreement with the PGA Tour that could span multiple tournaments would send a strong signal that the automaker is ready to spend again. Cadillac, the company’s luxury nameplate, has a history in golf that included endorsement deals with Fred Couples and several other golfers until the end of the 2008 season.

“The luxury auto brands can’t be expected to stay away from golf forever,” said Rich Luker, a trends research and marketing consultant. “I think it’s a great fit. Cadillac is not going to sell cars to the middle class, they’re going after the market that needs to be encouraged, the professional types that are willing to help revitalize industry in the U.S.”

The GM brand most synonymous with golf used to be Buick, which was the tour’s official vehicle from 1984-2009 and title sponsor of as many as four tournaments in a season. Buick also had a long-running endorsement deal with Tiger Woods through last year, but with that brand looking to market to a younger audience, industry sources say, Cadillac is now considered the better fit for the PGA Tour.

GM’s return to golf also would be a boon to Doral’s network partner, NBC, because $3 million to $4 million of the money spent on a title sponsorship goes toward media. Each title sponsorship typically comes with more than 30 ad units each on the network — NBC or CBS — and Golf Channel, at least half of which must be used during the event’s broadcast.

Ed Whitacre, GM’s interim chairman, is on
the PGA Tour Policy Board.

While GM has been among the biggest spenders on golf advertising in the past, it has not been among the top 10 this year, according to The Nielsen Co.

“We’ve seen a serious pickup in spending by the autos this year, really dating back to March Madness,” said Jeremy Carey, U.S. director and media buyer for Optimum Sports. “It’s really exceeded expectations. Golf would be the next reasonable space for the autos.”

Hyundai and Chrysler were also among the automakers that have had discussions with the tour about the Doral title sponsorship, but those talks never led to a deal.

Other automakers with a significant place in golf include BMW, title sponsor of a FedEx Cup playoff event in Chicago, and Honda, sponsor of the spring tournament in Palm Beach Gardens, Fla. Outside of the tour, Lexus is a U.S. Golf Association sponsor and Mercedes-Benz is a partner with the PGA of America.

“Golf has been part of the solution for car companies for a long time in their relationship-building efforts,” said Malcolm Turner, principal for Wasserman Media Group consulting, which is not involved in the talks. “A return will only revalidate its effectiveness.”

GM’s past financial woes are not an impediment to new marketing relationships, said a spokeswoman for the automaker, which has posted two straight profitable quarters for the first time since 2004 and is preparing an initial public offering for possibly later this year.

The company would not comment specifically on a return to golf, but did say it will spend money as needed to market its products. For one of GM’s first big purchases after bankruptcy to come in golf wouldn’t be a surprise.

Ed Whitacre, GM’s chairman through the end of the year, serves on the PGA Tour’s Policy Board. The board is made up of nine members who serve as the board of directors for the tour.

Whitacre was named to the tour’s board in 2007, and has been the chairman at GM since June 2009 (he later added the CEO title). He resigned as the CEO on Sept. 1 and his run as GM’s chairman will end Dec. 31.

It remains to be seen just how deeply GM will embed the Cadillac brand in the PGA Tour. WGC title sponsorships typically go for $10 million to $12 million a year, and GM could spend more if it sponsors other tournaments.

PGA Tour events seeking a title sponsor include the Heritage in Hilton Head, S.C.; Bob Hope Classic in La Quinta, Calif.; the Reno-Tahoe Open; and the St. Jude Classic in Memphis.

There are also proud partner positions available on The Players Championship, the tour’s marquee tournament at Ponte Vedra Beach, Fla.

“While the whole temperature of the relationship between sports and companies has been in flux, the persistent reality is that golf continues to be an affinity that plays well with dealer and supplier networks for relationship-building and other benefits,” Turner said.

GM’s financial troubles led it to end the PGA Tour official deal last year, as well as two title sponsorships on the Buick Invitational at Torrey Pines and the Buick Open in Grand Blanc, Mich. The Torrey Pines event picked up Farmers Insurance as the title sponsor, while the Grand Blanc event was replaced by the Greenbrier Classic.

Miami-based Doral has been the site of a PGA Tour event for nearly 40 years. The tournament was previously sponsored by software manufacturer CA, which announced last spring that it would not return.

Since its inception in 1962, the Doral tournament has been one of the signature events on the PGA Tour’s Florida swing each spring. In 2007, it became one of the four WGC events that are co-sanctioned by the PGA Tour with the professional tours from Europe, Asia, Japan and South Africa.

Staff writer John Ourand contributed to this report.

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