Yet Another Hurdle for the PGA Tour To Overcome in This Tough Economic Climate

As if the dismal US Economy were not already providing the PGA Tour with a grim outlook in terms of title sponsors, last week brought to light one more very large obstacle the PGA Tour might have to deal with in the coming years.

That obstacle, believe it or not, is the United States Government.

Like virtually every other bank in America at the moment, Northern Trust Inc. has received money from the government’s TARP fund.

Following the Northern Trust Open in Los Angles, several members of congress and the senate lambasted Northern Trust Inc. for their sponsorship of the Northern Trust Open.

Representative Barney Frank, the chairman of the House Financial Services Committee, co-signed a letter with 17 colleagues demanding that Northern Trust return money spent on the event.

Senator John Kerry stated that he was “sick and tired of picking up the newspaper and reading about another idiotic abuse of taxpayer money while our country is on the brink.”

Democrat members of congress and the senate co-signed a letter sent to Northern Trust CEO Fredrick Waddell insisting that the company immediately return the equivalent of what they spent on lavish events around the Northern Trust Open to the Federal Government.

“We came to the conclusion that no public purpose would be served by canceling the Northern Trust Open and related events,” Northern Trust Chief Executive Officer Frederick Waddell said in a statement on the company’s Web site. 

The government’s initial reaction appeared to clearly reflect their disapproval with Northern Trust’s sponsorship of the Northern Trust Open.  But, they later cooled their tone and, as politicians do, reversed their direction to focus more on the lavish parties and hospitality the company held around the event.

Even though the government has now redirected their outrage towards the lavish parties and hospitality Northern Trust ran at the tournament, their initial reaction could very well be an ominous forbearer of things to come.

Northern Trust Inc. is actually one of the few banks that are paying back taxpayer's investment in the company to the amount of almost $20 million per quarter.  So, obviously Northern Trust's sponsorship of the event or their hospitality around the event is not negatively affecting their ability to pay back TARP funds.

Around 40 percent of the PGA Tour’s current title sponsors hail from either the financial or auto industries.

The way thing are going right now, most banks and auto industry companies will fall into one of two categories in the coming years.

They will either be completely owned and operated by the government, or, the government will own such a large portion of these companies through the exchange of TARP funds for stake in the company that they will clear out the executive staff and replace them with executives that will be more or less the federal government’s puppets.

Either way is bad news for the PGA Tour because as we have already seen all too clearly, there is no way that the federal government will approve of expensive PGA Tour sponsorships.

One of the main appeals for a company to sponsors a PGA Tour event is the opportunity to entertain hardworking employees, which builds good moral in the company, and the opportunity to so thank you to their best clients and customers through the use of hospitality tents.

In industries such as the financial and auto industries, relationship building is the business. 

Financial companies must build relationships and trust with big-time investors, particularly in this day and age where people are two steps away from literally hiding their money underneath their mattresses.

Auto industries need to build and foster relationships with their massive supply chains as well as the thousands of dealers around the country who they rely on to push their automobiles.

In this dire financial situation, it is highly unlikely that any of the current auto or financial services industries would renew their expensive PGA Tour sponsorships beyond the 2010 season.

Now that the government is clearly beginning to get involved, the outlook for renewing any of these current sponsorship deals is looking even grimmer.

The PGA Tour, in what might seem like an absurd notion, might actually have to hire a lobbyist to lobby congress and the senate to allow for at least some of their companies to sponsor PGA Tour events.

Maybe Tiger Woods could even take a trip to Capital Hill, because with the way things work in Washington, Woods could probably offer private lessens to congressmen and senators in exchange for votes to allow TARP recipients to sponsor PGA Tour events.