Here I was just getting comfortable with value modulations when I come to learn it all comes down to value propositions.
Randell Mell reports that ADT actually might have liked to have stayed on as the sponsor of a year-end, must see, ultra cool event on the LPGA Tour. But the LPGA's increased asking price is the real culprit.
I think the countdown clock just started ticking for the Brand Lady.
Tour pros were informed by the LPGA one month ago that ADT chose not to renew because the company was pursuing different marketing objectives.
"The explanation ADT gave us for not renewing was that its marketing objectives and means of going about attracting customers was changing and the ADT Championship didn't fit into its future plans," said Mike Nichols, LPGA vice president of tournament business affairs.
ADT President John Koch said there was more to the decision.
"Basically, the change in the renewal pricing caused us to re-evaluate the value proposition of the overall program," Koch said. "You will hear various takes on that, but it is inaccurate for anyone to state that our decision was based on any form of cost cutting by our company. In fact, we have increased our marketing budget."
The LPGA made various proposals to ADT, including making ADT the umbrella sponsor of a series of LPGA events. The proposal the LPGA favored most was moving the event to the start of the 2010 season, where it would no longer compete against football and would be more appealing to TV as part of a potential package that the LPGA could sell to networks.
While ADT officials expressed concern about altering the nature of the event with a big payoff at season's start, Koch said it wasn't an overriding factor in his company's decision not to renew.
Koch would not reveal what ADT paid for its title sponsorship in the latest two-year contract extension that ends this year, but industry insiders estimate the company paid $3 million per year. While Koch also would not divulge the LPGA's asking prices, an industry expert said the tour was asking a substantial increase, prices beyond what adding weekend network TV coverage would require.
Koch said his company enjoyed a "great relationship" with the LPGA, a "good dialogue" and carefully considered all the LPGA's proposals, but ultimately decided not to accept.
"At the end of the day, there wasn't any reason other than value proposition," Koch said. "They have the right to think what the value of their tournament is. We respect them for that."
But just think, they won't have to compete with football now! Oh wait, there's no sponsor. Or course. Or date set.
Why take an established attention-getter--albeit one in November running up against the NFL--and exchange that with a year-starting $1 million event (?!?) that might happen?
And even the master negotiator himself isn't expressing much admiration for the Commissioner's work.
Donald Trump, who has been an unofficial host of the event for its entire eight-year run as owner of Trump International, was disappointed the LPGA didn't make ADT a better offer.
"Outside the U.S. Open, this has been the most important event on the ladies' tour," Trump said. "It is sad it has to end, and perhaps the tour should have made some concessions."
Perhaps? Who said The Donald isn't a kind soul?
And this from Juli Inkster:
"ADT and their people have been nothing but very supportive of the LPGA Tour and its players," said Hall of Famer Juli Inkster, a member of the LPGA's Board of Directors once sponsored by ADT. "They've done so much for us, and I was just very disappointed to hear we were losing them.
"But I don't want to point fingers. I don't know the ins and outs of what happened or what went wrong, but something went wrong. If it didn't, we would still have ADT as a sponsor. Hopefully the tour knows what it's doing and this will work out for the best."
And if they don't?
But back to value propositions. Larry Dorman takes a look at all sectors of the golf industry and frankly, I came away less bummed out than I thought I might based on his talks with various retailers. Of course, the PGA Tour's $5 million man stayed on message...nearly verbatim to previous statements. Though this value proposition business has thrown me for a loop.
Finchem runs the organization of players that many golfers aspire to become, or at least to emulate. As such, he knows the importance of sustaining what he calls the PGA Tour’s “value proposition.” That, he said, is the formula for success that includes “the demographic of decision makers that we reach, the quality of the branding we deliver, the quality of our TV platform, the business-to-business opportunities, and our long-term relationships with our customers.”
