Monday, August 4, 2008

Whole Lotta LPGA TV-Sponsorship News

Jon Show brings everyone up to speed on the LPGA TV situation. Remember, the last time that we talked about this topic, Show talked about the potential that the LPGA is shopping around an 8 tournament series, perhaps including the now-moving and LPGA-owned LPGA Championship and the ADT Championship, to television. They faced some major challenges in getting the series together, first. They had to identify the eight tournaments that would pay for production and media buys, etc. They also had to find a television partner(s) to broadcast the series on cable and network television.

The LPGA is trying to get closer to the first part of that situation by floating the idea of a series title sponsorship - a la what FedEx is doing with the FedEx Cup, to the tune of $35 million each year, plus extra kick ins.

The LPGA is putting a $4 million annual price tag on an umbrella sponsorship for the eight-tournament series it hopes to get on network television in 2010.

Tour officials made a presentation to a small number of tournament owners and title sponsors who recently attended a sponsor summit at the Evian Masters in Paris. Those in attendance included representatives primarily from international events, as well as executives from HSBC, Kraft Nabisco and Stanford Financial — all of whom title sponsor LPGA tournaments.

Sources familiar with the details of the presentation characterized the umbrella sponsorship as a media commitment that would be used to write down the television expenses of the tournaments participating in the series.

The LPGA is shopping the series to television networks as an aggregated time buy.

Time and production generally cost about $1.7 million per event, so each of the eight tournaments would have to kick in $1.2 million with $500,000 coming from the umbrella sponsor.

The LPGA is also selling three supporting sponsorships of the series for around $1 million a year, but it was unclear where that money would be allocated.

Tour officials did not discuss what other assets would be included with the umbrella sponsorship aside from some form of naming or presenting rights. Standard inventory such as on-site activation and hospitality are expected to be part of any deal.

This is a pretty big deal. It could indicate several things.
1. It could indicate that the LPGA Tour is finding a difficult time in getting eight events to sign up to pay almost $2 million each for better exposure on network television.

This is probably particularly true given the problems with both Ginn and SemGroup. Looking on the schedule as it stands today, we could probably find only a few events willing to get in on a season ending 8 event schedule. Two are LPGA owned - LPGA Championship and ADT Championship. Given what Show is reporting and who attended, it would appear the LPGA is interested in targeting the Evian Masters and HSBC Women's Champions events - sponsors with strong LPGA ties. CN would almost certainly get in on the action for the Canadian Women's Open, going to $2.75 million next year. They may be able to convince Safeway since they now only have one tournament to sponsor. Still, the coalition is not a cinch, but they're probably halfway there. Therefore, to defer some of the production costs - which, in many cases, are higher than the event purses - a title sponsor and subsequent sponsors may be needed. (By the way, I would bet that Ginn would not mind being title sponsor for the series for a paltry $4 million.)

2. The LPGA Tour is presenting this package as a value compared to what their real sponsorship worth probably is.

Consider that FedEx's investment is in a 33 event series for $35 million in bonus money. This deal is for 8 events - approximately 1/4 of the FEC - and is 1/9 of the cost, with no bonus money required. This sponsorship is exactly what it appears: a bridge to get to the end goal.

3. The LPGA Tour is not expecting to get one network for the series. Show reports:
Talks with NBC and CBS continue, but neither is interested in airing all eight events, meaning they would have to be split among the two. Sources said NBC is interested in four events; CBS in four to six.
4. The ADT Championship - whose sponsorship deal ends in 2008 - is likely dead with ADT as title sponsor. Again, from Show:
For an additional fee, the umbrella sponsor could also title sponsor a new season-ending event that would conclude the eight-tournament series.
That is not exactly a given because there has been serious talk of moving the ADT to the start of the season beginning in 2010, but perhaps the event will have a new title sponsor regardless of its position on the schedule.

Big developments here if you read between the lines.

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