While humans can never say for certain what the future holds, it’s pretty clear that the financial industry is facing serious problems. The U.S. government is buying 700 billion dollars worth of bad loans, and similar problems face Europe. Iceland may be the worst hit. The government has taken over all of the banks, and shut down the stock market for a week. Icelandic banks were paying higher interest rates than most other countries, to attract foreign money. Due to the high interest rates, many Icelanders were encouraged to take out car or mortgage loans in foreign currencies. When the government seized the banks, the Icelandic currency dropped to half its former value in the course of a week, and many Icelanders will have to pay twice as much to make their car or mortgage payment. Hopefully, the crisis has been averted for the rest of the world, but what might a recession mean for the golf industry?
Golf is a hobby for most people (or maybe an obsession), but if there are tough economic times, it may be one of the first extras in many people’s lives to get cut. People may not be playing as much golf, buying the golf clubs they had their eye on, or traveling to play as much as they have. Of course this may become a serious problem for local golf courses who have to spend a lot of money to maintain the course and pay the salaries of their employees.
The PGA is tied into the financial industry, with 13 tournaments sponsored by credit card companies, banks or investment firms. For instance, Wachovia Bank sponsors the Wachovia Championship. Wachovia is pretty much gone, but it appears that a bigger bank will end up taking it over. Will the new owner still sponsor the Wachovia Championship? While the new owners of Wachovia will probably honor the agreement with the PGA, which lasts through 2014, no one knows whether it will still be called the Wachovia Championship or something else.
All of the PGA’s sponsorships are taken through 2010, so they should be all right, unless a company just defaults on its obligations to the PGA. During the Great Depression, the firms that survived were the ones that hired new salesmen. If sponsoring a PGA tournament was beneficial to a company in the past, it would probably be wise to maintain its investment in marketing that works.
While everyone hopes for the least amount of pain, it’s hard to tell what the future holds.
