Global Recession Hits Tournaments
Filed in archive Golf Business by Chris Henry on January 18, 2008
Wentworth, West Course. Home of the World Match Play
: HSBCgolf.comThis past week has seen world stock markets take a big hit and more and more economists talking about global recession.
When global recession strikes, the first thing that corporations cut back is marketing and promotion.
We may be seeing the first signs of that on the European PGA Tour. Some of the veteran players are concerned over the loss of several big tournaments this season.
The Smurfit Group, HSBC and Deutsche Bank have all pulled out of their long-standing tournaments, the European Open, World Match Play Championship and Players Championship of Europe. More than 18 million dollars has disappeared from the Tour although there are unconfirmed reports that Smurfit paid the European Tour that amount of money to breach its contract early.
On the other hand, there is the season long "Race to Dubai" which culminates with the Dubai World Championship and its ridiculous purse of 10 million dollars. The winner gets 2 million from that tournament alone. The total purse for the season-long extravaganza is roughly 20 million dollars.
While that money more than offsets the 18 million that has evaporated, it's coming from a single source. All the financial eggs, in other words, are in one basket.
There is every reason to believe that the same fate could befall events on the PGA Tour, perhaps later this year if the recession worsens as economists predict (they are now using the dreaded "stagflation" word in the U.S. after inflation skyrocketed to 4.1% last month).
There are simply too many golf tournaments needing sponsorship. And with the price of entry into that game almost as high as formula one sponsorship, more and more corporations are going to take a sober, second look, especially in the midst of an economic slowdown.
I can foresee the day - and I'll wager it's not that far away - when the major world tours form a single world tour to survive. Consolidation is commonplace in the global business community.
It may become commonplace in the global game of golf, too.
On the other hand, there is the season long "Race to Dubai" which culminates with the Dubai World Championship and its ridiculous purse of 10 million dollars. The winner gets 2 million from that tournament alone. The total purse for the season-long extravaganza is roughly 20 million dollars.
While that money more than offsets the 18 million that has evaporated, it's coming from a single source. All the financial eggs, in other words, are in one basket.
There is every reason to believe that the same fate could befall events on the PGA Tour, perhaps later this year if the recession worsens as economists predict (they are now using the dreaded "stagflation" word in the U.S. after inflation skyrocketed to 4.1% last month).
There are simply too many golf tournaments needing sponsorship. And with the price of entry into that game almost as high as formula one sponsorship, more and more corporations are going to take a sober, second look, especially in the midst of an economic slowdown.
I can foresee the day - and I'll wager it's not that far away - when the major world tours form a single world tour to survive. Consolidation is commonplace in the global business community.
It may become commonplace in the global game of golf, too.
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