Who Will Face the Brunt of Sponsorship "Pull-Outs"?

While Bernanke, Paulson, Talking Heads et. all have been thinking about policies to solve the current financial crisis, I’ve been thinking a lot about how all this is going to affect sports. One of the sports industry’s biggest sources of revenue is sponsorships. We see this fact manifested in signage at stadiums, brands of shoes of feet, and types of drinks in hand. All sports depend on sponsors but who will be hit the hardest?

Darren Rovell, who pens the SportsBiz blog, says that without question it will be the PGA Tour who suffers most—and I agree. They will face the brunt of the sponsor “pull-out.”

Partly due to its squeaky clean image, but also due to the demographic which follows the game, golf has been able to attract the likes of Accenture, AT&T, KPMG etc. as sponsors. They’ve also, and now sadly ironically, been able to sign the likes of Citigroup and Wachovia as promoters. Citi, who is in dire financial straights, may pull the plug on their decision to back the Presidents Cup and the Wachovia event will be turned over to Wells Fargo. How companies such as FBR, Northern Trust, MasterCard, Zurich, Morgan Stanley, Barclay’s, Deutsche Bank—all major tournament sponsors—react to the current financial struggles will prove profoundly important for the Tour.

The PGA is probably paying particularly close attention to the Royal Bank of Scotland. Over the past week, the bank has seen more than 60% of its market value vanish. Just the other day, RBS was rescued by the British Government and if the bank uses some of those funds to continue sponsoring in the sports world there may be some discontented Members of Parliament. Losing RBS would prove damaging. RBS is the “Official” bank of the PGA of America, one of the USGA’s four sponsors, sponsor of this year’s Ryder Cup, and currently sponsors three of the four Major Tournaments on the PGA Tour. They also advertise incessantly during event broadcasts.

Now, the PGA Tour is fairly stable financially. But it will be interesting to see what kind of long term impact these landscape changes will have. Perhaps, for a short time at least, we’ll go back to the “good old days” and see tournaments named after players (Bing Crosby Pro-Am) instead of corporations (AT&T Pro-Am).