The economic recession hits golf---LPGA Tour. What gives with Buick?

[PEZGolf]

As we all know, professional sports are NOT immune from the ups and downs of the national economy. Yesterday, the LPGA Tour announced that 3 tournaments have been cut from the schedule for 2009, the ADT Championship will NOT be held next year, and total purses will be reduced by $5 million. As Cristie Kerr said, this is NOT unexpected.

Now, the PGA Tour says that Buick will continue to sponsor its TWO tournaments and Wells Fargo will continue to sponsor the Wachovia. Buick will CONTINUE to sponsor two tournments?? AND that company is a division of General Motors, whose CEO, Rick Wagoner, has been in front of both Houses of Congress, with the CEO's of Ford and Chrysler BEGGING for a Federal loan or they will run out of cash and be UNABLE TO MEET PAYROLL??
And BUICK will CONTINUE to sponsor TWO tournaments?? And Rick Wagoner, Bob Nardelli, and Alan Mulally WONDER why Congress officials and US Senators have received emails and letters and phone calls overwhemingly AGAINST loans to the BIG THREE?? THEY JUST DO NOT GET IT. The old days are gone. If YOUR banks and YOUR stockholders will NOT cough up the money, and they KNOW you and they HAVE AN EXISTING STAKE in your survival, then WHY should the Federal government provide money when YOUR banks and YOUR stockholders will NOT DO SO?

File Chapter 11, nullify the existing labor contracts, slash executive compensation, close dealerships, and CANCEL Buick's sponsorship of TWO PGA tournaments, and CANCEL Buick's contract WITH TIGER WOODS!!! It is simple, people---------------------IT IS CALLED CUTTING COSTS!!

[Trav]

You're right, they don't get it.

On the other hand, they have to promote their product or they have no chance with or without re-structuring. Question is whether there is any ascertainable benefit from such sponsorships. I have no idea is this is the case or if ad benefits are all smoke and mirrors. Maybe I watched too much Mad Men.

Also, there may be contractual commitments in place that are cheaper to let run through the scheduled expiration. They can't just cancel the contracts with the tournaments or Woods or anyone else without being subject to damages, unless they go into bankruptcy.

I DO think those financial firms so prevalent in golf advertising - let's face it, golfers may be a small market, but it's a high concentration of the desired demographic - will be reducing their tournament sponsorships.

Gotta run, my private jet is leaving.

[Shindig]

While I am also against the bailout/loan/whatever, and I think these companies need to cut costs themselves, it doesn't mean that they shouldn't sponsor golf tournaments. We do not know how their balance sheets reflect because of this - we see the money they put out, but we don't see how much, if any, profit they make from this. It's a form of advertising. Expenses are not the same as losses.

[tm22721]

Instead of cash purses, they could start giving away cars since they can't sell them.

[ganjagolfer]

looks like the americans are going to have to play on the korean tour to earn a living. hopefully they won't have to learn how to speak the language.

[mirv]

there was a write-up (i'm sorry, i don't have the link handy...) a few days ago about the big three going to washington to ask for money. they were chided by both parties due to the fact that they all flew into washington on the company jets. one congressman asked them "why didn't you fly coach? why didn't you pool together and fly on one plane if you're so stripped for cash?" another member of congress asked if they'd be willing to sacrifice a year's pay to save their companies, given that they average around 20 *MILLION* a year. none of them would give up their paychecks. it was also asked if they'd consider selling their private jets to try to shore up some money - none of them wanted to do that, either.

in short, they have enough money to own private jets and make jaunts all over the countryside, and they feel they're "just fine" as one of them put it with their current salary situation. they're also okay with not trimming costs such as sponsorships for golf tournaments - which i hate to say that, i sure don't want to see any golf tournaments get dropped - but that's one place they could very likely cut the corner and save some cash.

[golf_junkie27]

They won't give up their jets because it's a "company perk written into the contract language." IE, "I'm entitled to it."

We've seen these same companies struggle for years and not change their business practices. That won't ever change if you keep infusing them with cash. Just today, GMAC tried to get their leasing department classified as a bank so that they can tap into the $700 billion dollar bailout money.

Personally, they should go under. The taxpayer should not foot the bill for a car company that is inefficient and refuses to change their business practices. You want to benefit from capitalism? Deal with the consequences.

People want government to "mind their own business." I agree. Goodbye Ford and GM. If you're dumb enough to continue to make cars that cost you $2000 more than the average competitor spends on the same car, then, shame on you and good riddance. They also produce something like 10 less cars a day. Basically, they are inefficient in their process and costly. Two big no nos.

[PEZGolf]

They won't give up their jets because it's a "company perk written into the contract language." IE, "I'm entitled to it."

I agree with you. The managements and the UAW are at fault, as well as the stockholders and the Boards of Directors. Let THEM loan the money. They have a lot at stake here so they should step up and protect their vested interests.

[tm22721]

The economy can no longer sustain the 17 million cars sold annually during the bubble years. The auto industry will need massive consolidation to survive on 11 million cars a year.

All automakers are in trouble and especially high cost producers like the big 3.

Profits during the bubble years papered over their problems but the gig's up.

But then again the auto industry is just the most visible of our economic problems. This depression will go so deep as to destroy 40 years of built up illusions.

[PEZGolf]

The economy can no longer sustain the 17 million cars sold annually during the bubble years. The auto industry will need massive consolidation to survive on 11 million cars a year.

The "economic downturn"---severe recession or depression, depending on how you define these terms---is massive, and you are right. There are two really sad aspects of these hard times. First, the human cost is going to be represented by anguish, psychological depression, and many tears for many people. Already, the suicides by good family men has begun. I have two articles, one about a former broker with Bear Stearns who lost his job, could not find another, and took an overdose and then jumped to his death in New York City. The next was a broker in England who stepped in front of a train and left his wife and young son to survive him. The second is that this could have been avoided and we should have seen it coming. Peter Bernstein and others have written books and articles over the past five years warning about excessive debt by everyone (especially bankers making mortgage loans to people who would have trouble making the payments) AND the securitization of mortgage loans and other loans to create "new" securities to be sold everywhere. Alan Greenspan is NOW right-----the managements of financial companies could NOT be trusted to be careful and "manage risk" properly. They thought they could "get away" with loose lending practices and speculative manipulations. The abolition of the Glass Steagall Act in 1999 set the stage to let the "genie out of the bottle", and now we ALL will pay the price. SO---the guilty parties ARE being punished as Bear Stearns failed, along with Lehman Brothers, Washington Mutual, etc. BUT----------------innoncent people, who had no hand in CAUSING this massive downturn are being clobbered as well. The next two years will be ones of great difficulty even with a new Administration and a new Secretary of the Treasury---Timothy Geithner.

[PEZGolf]

I see on the news today that the Buick Division of General Motors and Tiger Woods agreed to termination of their contract by "mutual agreement". This is no surprise, given the bad financial condition of GM.

[iacas]

I see on the news today that the Buick Division of General Motors and Tiger Woods agreed to termination of their contract by "mutual agreement". This is no surprise, given the bad financial condition of GM.

Bit late to that. We already had a thread.

[Fraser]

Instead of cash purses, they could start giving away cars since they can't sell them.

But seriously who wants to own a GM?

there was a write-up (i'm sorry, i don't have the link handy...) a few days ago about the big three going to washington to ask for money. they were chided by both parties due to the fact that they all flew into washington on the company jets. one congressman asked them "why didn't you fly coach? why didn't you pool together and fly on one plane if you're so stripped for cash?" another member of congress asked if they'd be willing to sacrifice a year's pay to save their companies, given that they average around 20 *MILLION* a year. none of them would give up their paychecks. it was also asked if they'd consider selling their private jets to try to shore up some money - none of them wanted to do that, either.

Whilst I can understand that flying to Washington to beg for government money in a private jet is like begging on the street in a Brioni suit I get it.

The pay these guys are on means that the time saved by turning up at a private jet and going on your own schedule means you can earn those extra costs back in productive time on the ground and onboard the flight. My company used private jets regularly (I was fortunate enough to travel on them a few times on business) and it was ultra efficient. We'd arrive at the hangar 5mins (that was almost playing it too safe!) get on the plane and off we went. No security hassles, no baggage concerns, no liquid nonsense. We'd be met by car or executive coach on the apron and would be right off into the city, avoiding any of the main terminal buildings. Buying 90mins-2hrs per person onboard was easy, and more if it meant you could fly into airports that were less prone to delays. The money we generated to the company paid for the flight.

[pittpanther]

The pay these guys are on means that the time saved by turning up at a private jet and going on your own schedule means you can earn those extra costs back in productive time on the ground and onboard the flight.

These are corporate CEOs, not billable-hour attorneys. They're going to get their $20M/year regardless of how many hours they actually work.

The only reason they are on corporate jets is because they could get away with it when they negotiated their employment contract. No argument for "efficiency" will stand up under scrutiny. Just like the rest of us, if they need to work a full day then they should get up at 4AM for the 5:30AM flight, or take the late flight and get to their hotel room after 1AM. Unless you want to convince me that these guys work every waking moment of the day...

[Fraser]

Unless you want to convince me that these guys work every waking moment of the day...

The only guy I've known who was a CEO of a decent sized company (DAX 40 listed) worked harder than pretty much anyone I've ever known, alas he didn't have a corporate jet at his disposal. He was based in the UK but went to Germany twice a week with daytrips to South Africa (overnight LHR-JNB, then a day meeting, then overnight back to London) every other week plus other regular travel within Europe and elsewhere. This was in addition to being a NED for a couple of other companies and being part of government committees dedicated to his field of work and such.

I understand that CEOs aren't billable by the hour but their time is more valuable than to be dicked about by the TSA and the BS of commercial travel. There's little point in paying them high salaries if you can't give them the tools to do their job to the best of their abilities within reasonable limits. To me private jet travel is reasonable but I can understand why it has caused an uproar. Personally if I were Mullaly or Wagoner I'd probably have flown commercial to make a point. I did read an interesting story that the CEO of Japan Airlines (9th biggest airline in the world by passengers carries) has recently insisted upon taking a pay cut, to earn $90,000/yr! That's pretty astonishing to me, and rather humbling!

[PEZGolf]

These are corporate CEOs, not billable-hour attorneys. They're going to get their $20M/year regardless of how many hours they actually work.

Here two questions for Rick Wagoner, Allan Mulally, and Bob Nardelli:

1. You say that you arrived by corporate jets. Did all three of you fly together on ONE in order to save your companies money, or did you fly in separately? In other words, did you "car pool" to save on fuel? 2. Did you ever hear that appearances mean EVERY THING when you are begging for money from the representatives of the taxpayers, and these elected officials pay attention to the angry emails and phone calls they get? Would it NOT have made a better appearance if you drove a used Chevy, Ford, or Chrysler from one of your auto plants or car dealers in Virginia or wherever, and did NOT use a chauffeur? Would it NOT have made a better appearance if you came in dressed in "business casual" or "business blue collar"----jeans and a flannel shirt to show that YOU personally are willing to make sacrifices? See my post in the Grill Room on this golf forum about Bob Nardelli's response, vs. those of Mr. Wagoner and Mr. Mulally if he is willing to work for a salary of ONE DOLLAR a year (for him, that would be a RAISE).