SINGAPORE - Carmakers are the driving force behind some of the world's most lucrative golf tournaments but nose-diving demand and anemic earnings amid the global financial crisis has put the brakes on sponsorship spending.
Carmakers are the driving force behind some of the world's most lucrative golf tournaments but nose-diving demand and anemic earnings amid the global financial crisis has put the brakes on sponsorship spending.
Car sales have plunged and the 'Big Three' automakers in the United States, General Motors, Ford Motor Co. and Chrysler LLC, may need a financial lifeline from the Federal Reserve to weather the storm.
GM, which has warned it will run desperately short of cash by early next year without support, spends heavily in golf mostly through its Buick brand but deep cuts in its advertising and promotional budgets means that money could soon dry up.
"Everything is fair game right now and we're taking a hard look at it all," said Larry Peck, Buick and Pontiac promotions manager for GM. "We are looking to reduce our overall marketing expenses and our advertising and promotional budgets have been reduced, and there's continual pressure on that."
GM is the title sponsor of two PGA Tour events, the Buick Open and Buick Invitational. Both tournaments are on the schedule for 2009 and their contracts run through 2010.
Expenses cut back
"We're certainly trying to spend our money more efficiently there. In particular the Buick Invitational that's upcoming in February, really we've trimmed back all the back-of-the-house kind of stuff... no dealer contests, no hospitality, all that is cut back," said Peck.
BMW, which pumps millions of dollars into golf tours worldwide, has slashed production and scrapped earnings forecasts this month as quarterly profits tanked 60 percent.
The carmaker sponsors several big-money events in the United States and Europe but the BMW Asian Open, which was founded in 2001 and co-sanctioned by the European and Asian Tours, is a notable absentee from the 2009 schedule.
Japanese carmakers, also heavy hitters in the sponsorship world, appear set on a prudent approach.
Shares of Toyota Motor Corp. plunged this month after the carmaker warned its profits this year would hit a 13-year low amid the global economic downturn, while Honda Motor Co. is also suffering.
A Toyota spokeswoman said that sports sponsorship would be under review, due to current economic hardships. Honda, which sponsors the Honda Classic on the PGA Tour, said sponsorships were determined on a region-by-region basis and they did not have a system under which headquarters would put out a blanket directive to cut back spending.