Not to pile on in this current financial
crisis correction, but I noticed several bits of news that are bound to have a financial impact on the Tour.
First, it appears that SirusXM Radio is headed for bankruptcy. SiriusXM is the host of the PGA Tour Radio Network. From The Washington Post:
Sirius XM Radio said yesterday that the company may file for bankruptcy as early as Tuesday if it cannot find a way to renegotiate its debt payment of $175 million.
The nation’s only satellite radio provider said it is trying to strike a deal with its debt holders to refinance, or find investors to shore up the company.
“These transactions may not be successfully consummated,” the company said in a statement.
It was the first official word from Sirius on its race to save itself. In recent days, investors have reacted to a flurry of speculation over the fate of the satellite radio provider that hosts shock jock Howard Stern and domestic diva Martha Stewart.
The company’s stock, which was trading near $4 a share one year ago, closed yesterday at 10 cents.
The company has $3.2 BILLION in debts, and has never been profitable. But how could it be, when it pays $100 million each year to Howard Stern, and lord knows how much to Oprah Winfrey and Martha Stewart. It’s likely that in bankruptcy, they will break their contracts with Stern, et. al. Note that Stern’s annual salary alone represents most of the debt due next week.
As for PGA Tour radio? Who knows. But it can’t be good news for the Tour.
More significantly, perhaps, is the news that Stanford Financial—sponsor of the St. Jude in June—is under Federal Investigation. From The New York Times:
Several federal agencies, including the Securities and Exchange Commission, the F.B.I. and the Internal Revenue Service, have spent “many months” looking into the business activities of the Stanford Financial Group, which is based in Houston, and Mr. Stanford’s bank based in Antigua, which issues high-yielding certificates of deposit, according to two individuals briefed on the investigations who were not authorized to speak publicly.
The focus of the investigations appears to be how the bank could issue C.D.’s that pay interest rates that are more than twice the national average.
The suspicion seems to be that Stanford has been running a ponzi scheme of the sort that Bernie Madoff. A recent wrongful-termination suit filed against Stanford Financial seems to imply that the company’s assets are overstated.
Lets hope that there’s only one Bernie Madoff out there. But if I were PGA Tour Commissioner Tim Finchem, I’d have a backup plan for this year’s tournament. If the Feds act, or Stanford Financial melts down, the event will be without a title sponsor. The Tour’s “ironclad” contracts will be worth no more than the paper they’re written on.
I’m also wondering about future PGA Tour sponsorships. Finchem says that the Tour has “ironclad” contracts through the end of this year. But with the Obamessiah’s bailout package, Congress increasingly is telling corporations what they can and cannot spend money on. Will the financial and auto companies that the Tour has relied on be banned—by law—from sponsoring PGA Tour events? Obama already has smacked down Las Vegas conventions, saying ““You can’t get corporate jets, you can’t go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer’s dime.”
That’s caused a number of companies to cancel their Sin City events, and has led to the Mayor of Las Vegas to demand a presidential apology:
The mayor of Las Vegas told President Barack Obama in a letter that his criticism of companies using taxpayer money to visit Sin City is harmful to the tourist-dependent destination.
Las Vegas Mayor Oscar Goodman didn’t directly ask the president for an apology and retraction in the letter obtained Wednesday by The Associated Press, as he did in interviews.
“I expect him to address it and to correct it,” Goodman told the AP.
“When you make a casual, although not malevolent remark, it can have ramifications which affect the industry as well as all of the citizens who live in southern Nevada,” he said. “It’s affecting some of these people’s lives.”
So here’s where Finchem’s plan of dumping long-standing (if less profitable and less glamorous), sponsors and tournaments in favor of rich glitzy ones is going to bring about his downfall—something I’ve been writing about for a couple of years now. The BC Open wasn’t fancy or rich, but it had people who were willing to keep it going, year in and year out. Ditto some of the others that have gotten the short end of the stick from the Tour. I think Finchem has pursued short term gain at the expense of history and long-term stability.
What sense did it make to replace the venerable Western Open with the FedEx Cup’s limited field BMW? The Western Open would have provided a PGA Tour stop for perpetuity. BMW is a car company and its sponsorship might not survive the current global auto company meltdown. LIke all companies, BMW is suffering from slumping sales.
We all know the reason for the PGA Tour changes: Tiger Woods. Finchem is doing everything he can to tempt the Great One to play more tournaments: killing off—or rendering insignificant—Tour stops that Tiger won’t play and throwing money at Tiger by raising minimums until the old line Tournaments give in to big money Johnny-Come-Lately supercorporations. How did that Ginn contract work out for you, Tim?
The thing is, Tiger isn’t going to play any more (and likely less) than he already is. He doesn’t need the PGA Tour, and I don’t think he’s loyal to anyone but Tiger. Look at how he’s treated the Tournaments that gave him his start, like the LA Open (now the Northern Trust, at Riviera), and the Greater Milwaukee (now the US Bank). He got what he wanted, and hasn’ t been back since. Tiger plays Tournaments he’s used to winning, and none more. By my count, he has 89 professional victories, but only 24 different trophies. Six of his fourteen Majors have come on just two courses. In contrast, as of 2008, Vijay had won 33 times at 23 different events.
I don’t blame Tiger. Everyone has to look out for number one. And he has no obligation to act as a one-man charity. But I do blame Finchem for putting a single player at the center of the Tour’s plans. Tiger should have been viewed as a nice bonus, rather than as the centerpiece of the Tour. Rather than catering to Tiger, he should have been planning for what the Tour would do in the absence of Tiger. The Tour is just a third child, another knee blowout, or (God Forbid) a Payne Stewart plane crash away from being Tigerless. And what then?