Reference no: EM131072687

Case: Communication Competency

Carolyn Bivens: Change Agent at the Ladies Professional Golf Association⁴⁴

In 2005 when Carolyn Bivens became commissioner of the Ladies Professional Golf Association (LPGA), she was surprised to learn that 70 percent of tournaments were losing money. Many of these events hardly compensated the tour for its support. She also inherited unsigned contracts and different financial practices for different tournaments. She was also shocked to see the differences between the PGA and LPGA. At many events, women forego the smaller women's locker rooms to use the more spacious men's locker rooms, where pots of geraniums sometimes disguise urinals. The difference between winning a PGA event and an LPGA event often approaches 1 million dollars

Having a deficit was not an option that Bivens could live with. She moved quickly and unilaterally, bluntly telling tournament owners that they needed to pay for services rendered. In some cases, fees were raised from $15,000 to $100,000. Tournament sponsors balked at the increase and some left, including Corning Glass, who had been a sponsor of the Corning Glass tournament for more than 31 years, and McDonald's. Corning Classic's sponsorship dollars had declined more than 20 percent and Corning's board chairman, Jack Benjamin, said, "We want to be part of the LPGA, but I want to make sure that everybody understands this-if the revenue side of the ledger does not match with the expense side-we cannot support the LPGA." Even long-time partner Anheuser-Busch, sponsor of the Michelob Ultra Classic, is rethinking its sponsorship.

Bivens has been described as the proverbial bull in a china shop, causing controversy since she replaced Charlie Mechem, whom players called affectively "Uncle Charlie." To keep the LPGA on solid financial footing, after looking at each event's profits and losses and severing ties with long-time sponsors, she found new sponsors who were willing to pay bigger purses. For example, she secured Ginn as a sponsor for two new LPGA events and touted the real estate developer as a new partner who could offer the bigger purses that her players deserved. She moved some long-standing tournament dates around to satisfy Ginn, causing some long-time sponsors to question her judgment. Unfortunately, when the real estate market crashed in 2008 and 2009, Ginn foreclosed on its tournament commitments. Bivens has battled the media over control of image rights, and imposed an English-proficiency policy for the tour's international players. She took the latter action to make the tour and its players more marketable. This action caused such an uproar that she had to rescind the policy.

Bivens maintains a vision that she can make the LPGA a model for 21st-century sports organizations. She landed a 10-year deal with the Golf Channel that is worth between $3 and $4 million a year depending on the tour's ability to get TV sponsors. Historically, the LPGA has jumped among channels, on network and cable, making it difficult to develop a fan following. She is also working on improving the meager LPGA pension plan. Currently, the LPGA has no medical benefits for its members. She is planning to leverage the LPGA brand by going international. She signed a five-year broadcasting-rights tour exclusive contract with J. Golf, a South Korean TV company, for more than $4 million dollars a year. This was a major feat during the recession of 2009 when most companies dramatically cut sports marketing programs. In 2009, she traveled to India, Abu Dhabi, and Dubai to determine interest in those countries. She says that players will have to adjust to a globetrotting schedule if that's what it takes to make the tour financially viable.

For the most part, the LPGA doesn't own its events; it extends contracts to third parties to host them. But in 2010, the LPGA will own its major championship, the LPGA Championship. Unfortunately, McDonald's has ended its sponsorship of that event and many now question Bivens' ability to raise more than $3 million to stage it. The loss of sponsors and rising operating costs is taking its toll on other LPGA tour events as well. The title sponsorship of a regular PGA tour event, such as the HP Byron Nelson or Shell Houston Open, costs $6 to $8 million annually (including a TV commitment of $3 million). Sixty-eight percent of the LPGA tour's future events do not have sponsors. That means that the tour's schedule is cloaked with uncertainty. In fact, Bivens says that "it's high risk and high reward" time for the LPGA. Adding to the LPGA's challenge is the recent backlash against golf sponsorships in general. Bivens knows that companies still want the business opportunities that tournaments create, but with less fanfare and spectacle to avoid public backlash. At the 2009 Michelob Ultra Open at Kingsmill, Virginia, for example, Anheuser-Busch cancelled its annual champions' dinner, which mingles past champions with Anheuser-Busch executives, because InBev, the Belgian brewer than now owns Anheuser-Busch, thought that such expense was not needed. Even so, Bivens believes that the LPGA's hospitality benefits will save the LPGA. It is the networking that occurs in the Wednesday pro-amateur rounds that cannot be duplicated anywhere else. "The fact that a sponsor can spend five hours with its biggest three or four customers away from the office is something that money can't buy," she says. The LPGA pro-ams are played in a scramble format, ensuring participants the opportunity to share their experience with their LPGA hosts. Because of all these issues, in July 2009 Bivens resigned her position as commissioner of the LPGA.

Questions

1. Which forces facing Bivens supported change and which resisted change?

2. Did she use an economic or an organizational development approach to create change? Was it effective?

3. Using the diagnostic model for change in Figure 17.4, analyze the factors affecting the LPGA.

Figure 17.4