Kemper ends sponsorship of PGA Tour event

The Kemper Insurance Cos. yesterday canceled its sponsorship of the Kemper Insurance Open, ending a 35-year relationship with the Potomac tournament that was the longest on the PGA Tour.

Kemper cited financial problems as the reason for its abrupt decision to cease its sponsorship of the professional golf event held each year at TPC at Avenel. Indeed, the once-prominent company has fallen on hard times.

The Illinois-based company last month reported a $312 million loss for 2002, down from a $131 million profit in 2001. It has seen nearly a third of its net worth vanish and is shedding lines of its business. A failed attempt at expansion and overzealous price-cutting of its policies caused much of the losses.

The tournament will be known this year as the Capital Open at Avenel. All other major elements of the event its scheduled dates of June 2 to 8, its purse of $4.5 million and its television coverage on USA and ABC remain intact.

“This is a sad day for us,” Kemper spokeswoman Linda Kingman said. “We’ve had a great partnership with the tournament for many years.”

Said Ben Brundred, chairman of the tournament’s board of governors: “It’s been coming for a while now. For the last couple of years, business has been deteriorating for Kemper Insurance, and they weren’t a particularly large company to begin with.”

Kemper began its sponsorship of the event in 1968, and until yesterday, it was the longest-active title sponsor on the PGA Tour. The company sponsored the tournament when it was held in Massachusetts and continued to do so when the event moved to North Carolina in 1969, Congressional Country Club in Bethesda in 1979 and Avenel, where it has been since 1987.

Kemper’s withdrawal marks a continuation of significant turnover in PGA Tour sponsorships, which are one of the key sources of revenue that fund player purses. Ten companies declined to renew title sponsorships this year, each one in some way citing economic conditions that made a big-ticket sports sponsorship an unjustifiable expense.

Many of those sponsors were replaced by large corporations, such as Ford Motor Co. and Bank of America. But four tournaments, including the Phoenix Open and Greater Hartford Open, are operating on bridge sponsorships that pool several companies on a short-term basis until a long-term sponsor can be found.

Officials with the Capital Open and Kemper, which in May had agreed to extend its contract through 2006, declined to specify the value of Kemper’s sponsorship.

Kemper’s replacement is likely to need to pay between $5.7 million and $6 million per year, with the money roughly split between the tournament operators and television networks. Title sponsors of PGA Tour events are required to buy TV ads during those tournaments.

The $4.5 million purse for this year’s event will remain intact through funds from the PGA Tour’s television revenues, a partial payment from Kemper Insurance and money supplied from Kemper Sports Management. That company, not affiliated with Kemper Insurance, has operated the tournament since 1979 and will continue to do so without a contract with the insurance company.

PGA Tour spokesman Bob Combs said yesterday that several companies already have expressed interest in replacing Kemper as a title sponsor.

Some of those companies are expected to attend the Capital Open to survey the event firsthand. But Mr. Brundred held out the possibility of announcing a new sponsor before this year’s tournament.

“Washington is a very appealing market, and we have a great tradition there, factors that have already produced some excellent prospects,” Mr. Combs said, declining to elaborate.

Aligning with a new sponsor could help the tournament land superstar Tiger Woods, who has never played the event.

Woods declined to play the Avenel tournament in part because of its placement on the tour schedule just before the U.S. Open Championship.

However, if the Capital Open aligns with a company Woods endorses or, at least one that doesn’t compete with a Woods-endorsed corporation the chances of him competing at Avenel would improve.

The Kemper Open in recent years had become known for its relatively weak fields and its reputation for producing first-time tour winners.

Six players since 1991 earned their first PGA Tour victories at the Kemper.

The event, regardless of name or sponsor, will remain at Avenel through 2006. During that time, Mr. Brundred said, changes to the 7,005-yard layout are being considered.

“I think when the economic environment stabilizes a bit, you’ll see some changes to the course,” Mr. Brundred said. “If that happens, you could see the tournament move to Congressional for a year while the work is being done. The prospect of some layout changes at Avenel could also make this a more attractive sponsorship opportunity by improving the product.”