By ALEX MICELI
LOS ANGELES – On the first day of the Northern Trust Open, more than tournament highlights engaged the attention of players and even PGA Tour commissioner Tim Finchem.
Many Tour members at Riviera Country Club still struggled to absorb and comprehend the ramifications of the crisis engulfing tournament sponsor Stanford Financial and its chief, Robert Allen Stanford. The Securities and Exchange Commission is investigating the company for allegedly defrauding investors of $8 billion, in part, by selling certificates of deposits that promised falsified returns.
The Tour won’t be the only one affected. Stanford’s involvement in professional golf is extensive, including business deals with giant management firm IMG, an LPGA tournament and endorsement deals with several marquee pros such as Camilo Villegas, Morgan Pressel and Vijay Singh.
“I haven’t heard anything from them,” Singh said after his practice session at Riviera. “I’m not in a position to comment. I’m sure they are doing the best they can. I’m not a financial guy.”
Singh, an IMG client, just entered into a major endorsement deal with Stanford that included sponsorship of his bag, visor and left chest on shirts and sweaters. Those insignia were prominently displayed Thursday when he teed off in the first round of the tournament.
Finchem, too, seemed uncertain about how the Stanford situation would unfold. He only has committed to staging the Stanford St. Jude Championship on June 11-14 in Memphis, Tenn. – with or without its title sponsor.
“We don’t know what’s going to happen with Stanford; that’s the first question,” Finchem said. “And the second question will be if they’re not able to sponsor the tournament. If that develops, we will have to deal with that, and that can take lots of different forms.”
The Tour could attempt to find another sponsor or draw upon its sizable financial reserves – about $200 million, sources said – to underwrite the event on its own.
There is a precedent for such intervention: In 2000, the first year of the Tampa Bay Classic, the Tour contributed a part of the $2.4 million purse.
It was unclear whether the Tour or the event has received any monies from Stanford for the 2009 sponsorship. Finchem would not discuss payment details, but sources familiar with sponsorship deals say such agreements typically are handled in one of two ways: a large, usually 50 percent payment up front, and the balance paid before the event week – or nearly a complete payment just weeks before the event.
“Payment schedules are a function of a lot of different things with companies,” Finchem said. “A lot of companies account differently; they want to pay differently. There is no rhyme or reason to it.”
A Stanford collapse may be more problematic for IMG.
The firm manages the Stanford St. Jude Championship; and sponsorship contracts to IMG clients Villegas, Pressel and Singh. Stanford also is affiliated with IMG’s prized client, Tiger Woods, with a three-year founding sponsorship of AT&T National, a Tiger Woods Foundation event.
IMG is so deeply involved with Stanford that it has a one-man office in Memphis to assist with the local Tour stop.
IMG also incurred collateral damage when the New York Post published Thursday a story on its Web site, saying Stanford paid a low- to mid-seven figure consulting fee to IMG in exchange for IMG steering its clients’ investments to Stanford. The story’s allegations were based on unnamed sources.
In an e-mail statement, Mark Steinberg, IMG Golf’s senior corporate vice president and global managing director, rebutted the claims. “The suggestion conveniently made by ‘unnamed sources’ about IMG’s business affairs involving our clients in today’s New York Post is complete fiction, designed to benefit the people making the claims, and is completely irresponsible,’’ Steinberg said.