Connecticut’s premier tennis event is suffering from sponsorship issues plaguing the entire advertising industry as the recession forced companies to reprioritize their spending.
The annual ATP tournament at Yale will lose its Pilot Pen title sponsorship at a time when sponsorship spending is at a new low. When the New Haven tennis tournament ends Saturday, the event will no longer be known as Pilot Pen Tennis at Yale.
Pilot Pen informed tournament officials in 2009 that this year would mark the last year of its 15-year title sponsorship, one of the longest running in professional tennis. The Japanese producer of writing implements saw its net income drop from $46.1 million in 2007 to $3.8 million last year, a 92-percent drop in just two years.
The company just couldn’t afford the seven-figure investment, said Dennis Burleigh, CEO of Pilot Pen America, which up until this year had its U.S. headquarters in New Haven.
“If your company is having financial trouble, when you make cuts you have to look at the numbers to see what is vital to your operations,” Burleigh said. “Sponsorships are one of the first places people look because they are so expensive.”
After spending six months searching for a new title sponsor, the ATP tournament has six companies seriously reviewing the sponsorship packet, which calls for a six-figure per year investment over five years totaling more than $1 million, said tournament director Anne Worcester.
The companies include two unidentified Connecticut firms. Worcester said the ideal title sponsor is based in Connecticut with a national and international presence, much like Pilot Pen.
The search includes financial services, consumer goods and insurance firms, but it is a tough slog because so few companies are adding to their sponsorship portfolio, Worcester said. Most companies struggle to keep the sponsorships they have.
Last year was the first time in the history of sports sponsorships that spending decreased, dropping 1 percent after gains of 11.2 percent in 2007 and 14.7 percent in 2008, according to the sponsorship tracker IEG, LLC.
Tennis sponsorships fared slightly better in 2009 than other sports, climbing 1.3 percent to $581 million, although that came after increases of 8 and 10 percent in 2007 and 2008.
“The last year was pretty brutal with companies dropping sponsorships,” said William Chipps, senior editor at IEG Sponsorship Report. “We saw a lot of events — being it tennis tournaments, golf tournaments or charity events — lower their sponsorship prices.”
This year appears to be a better time for the New Haven tournament to find a new sponsor. IEG projects sponsorship spending to rise 3.4 percent to $17.1 billion by the end of 2010. Tennis sponsorships will grow as well, as IEG is predicting spending north of $600 million, a 3.2-percent increase.
As spending increases for tennis, sponsors have less room for negotiating the price, Chipps said.
When the annual PGA tournament in Cromwell lost Buick as its title sponsor in 2006, golf officials turned to long-time primary sponsor Travelers Insurance to step up to the title sponsorship level.
The one-year effort took patience, persistence and commitment to a product that helps a potential sponsor reach its core audience and gain national TV exposure, said Nathan Grube, the tournament director for the PGA tournament. The work paid off because Travelers just extended its contract through 2014.
From Travelers’ perspective, the title sponsorship helps the company reach its key audiences, said Andy Bessette, Travelers executive vice president. Although the past two years brought economic challenges, the company performed well financially and was well positioned to strengthen its sponsorship foothold. “Being affiliated with a top-tier PGA Tour event is also a great way to build awareness of Travelers across the U.S. and internationally,” he said.
In trying to attract a title sponsor, Worcester said the ATP tennis tournament, much like the PGA, plays up its commitment to community outreach, hoping to entice a company prioritizing corporate responsibility. More than 4,000 children participated in the tournament’s affordable tennis lessons conducted through New Haven Department of Parks, Recreation and Trees.
But with the financial crisis, Chipps said would-be sponsors are focused less on the soft metrics of sponsorships such as community involvement and brand recognition and more concentrated on hard numbers such as return on investment.
The eight-day tennis tournament brings 90,000 spectators to the Yale facilities, and the final three days of the tournament are aired on ESPN2 and CBS.
The economic impact is $26 million, according to a 2008 study by George Washington University.
With these factors and sponsorships making a comeback in 2010, Worcester believes the 2011 tournament will have a title sponsor sooner rather than later.
“It just takes one,” she said.
