Woods, GM end endorsement deal

GOLFWEEK STAFF

When Tiger Woods returns to the PGA Tour next season, he won’t be playing out of a Buick-logoed bag.

Buick-parent General Motors, struggling to stay afloat amid the worst sales environment in a quarter-century, announced Nov. 24 in a message to dealers that Woods no longer will pitch company products, effective at the end of this year.
Woods had one year remaining on a five-year deal worth $40 million, according to Advertising Age magazine.

“It’s with great emotion that I wish to inform you that the time has come forour longterm relationship with Tiger Woods to end,” Susan Docherty, vice president of Buick-Pontiac-GMC, said in the e-mail announcement to employees, dealers, partners and suppliers.

According to the message and a subsequent news release by Buick, the break-up was amicable. A message left by Golfweek with Mark Steinberg, Woods’ agent, was not immediately returned.
“I am very proud of the long-standing partnership I’ve had with GM and have enjoyed being a part of the company’s dramatic product evolution,’’ Woods said in a statement.

Woods, who has won 65 Tour events, earns nearly $100 million annually from endorsements with such brands as Nike, EA Sports, American Express and Tag Heuer, among others, according to Ad Age.

In October, Buick approached Woods about the possibility of renewing the contract beyond 2010. However, in recent weeks, both sides re-evaluated their positions, according to a source close to the negotiations. Woods and wife Elin are expecting their second child early in ’09.
GM’s troubles have deepened in recent weeks, with chief executive Rick Wagoner joining CEOs from Ford and Chrysler in lobbying Capitol Hill for a federal bailout of the ailing automakers.

Earlier this month, GM reported a $2.5 billion quarterly loss and warned that by the end of the year it might reach the minimum level of cash needed to run the company.

Experts say a company that falls below minimum cash levels will have to stop paying some of its bills, a move that could force GM into bankruptcy protection. In that climate, marketing budgets are a prime target for cost savings.

Mark LaNeve, GM’s vice president for North American marketing, said GM and Woods started discussing an end to the deal earlier this year, and it had nothing to do with GM’s quest for $25 billion in federal loans for the auto industry.

But the company’s statement said the decision was made as part of “the search for budget efficiencies during a difficult economy for General Motors.’’

GM is so concerned about costs that it cut advertising during the 2009 Super Bowl, although it still plans to sponsor the National Football League and likely air ads before and after the game. GM also has pulled out of the Oscars and Emmy awards in 2009 – the first time in more than a decade that it is not running ads before, during or after the two events.

U.S. automakers, the largest category of advertisers, cut ad spending 18 percent to $1.37 billion in the second quarter compared with the same period in 2007, according to TNS Media Intelligence in New York.

Foreign automakers also are trimming their spending on advertising in U.S. markets, with a 5.4 percent cut in the second quarter, for an overall 11 percent drop in U.S. auto ad spending to $3.27 billion, the 12th quarterly dip in a row.

“Everything we do right now we are taking a harder look at,” Larry Peck, Buick and Pontiac promotions manager, said of the break-up with Woods.

The decision to jettison Woods, the most-visible face of the Buick brand since January 2000, speaks volumes about the deteriorating economic climate for manufacturing and, perhaps, golf.
As part of his deal, Woods carried a Buick bag, appeared in Buick promotions and made personal appearances for the carmaker. He recently caddied for a contest winner at Torrey Pines, site of the Woods’ dramatic U.S. Open victory in June. Woods has not played since, recovering from knee surgery. His return date has been the subject of much conjecture.

Buick remains the official car of the PGA Tour, but it recently eliminated some regional relationships that will limit some tournaments’ use of Buick “courtesy cars’’ next year.
Buick still will sponsor two events on the PGA Tour, the Buick Invitational in February at Torrey Pines and the Buick Open in Flint, Mich., but those deals expire in 2010. With the mantra of cost savings, it’s unclear what will happen with those Tour stops in the future.

Hank Haney, Woods’ instructor, also had his endorsement deal cut short by a year. Haney had signed a three-year deal, which expires at the end of 2010.

“Our budgets are being reduced,” Peck said. “Most likely the money we are now saving will be put towards budget savings or cost elimination.”