- The Washington Times - Tuesday, May 20, 2003

Capital Open organizers in Potomac yesterday said they believe the PGA Tour event is in its best shape ever after signing a four-year title sponsorship with Arlington-based Friedman, Billings, Ramsey Group Inc.

FBR, a prominent investment banking and brokerage firm, signed the new sponsorship pact less than five weeks after Kemper Insurance Cos. exited from its deal amid massive fiscal problems. The tournament, to begin June 2 this year, now will be known as the FBR Capital Open.

FBR’s deal is technically for one year, with three subsequent option years that allow the company to depart with a year’s notice. But neither Kemper Sports Management, organizers of the Capital Open, nor FBR officials expect the company to exit early.

As a result, better purses and fields are expected to mark the once-lackluster event.

“This deal demonstrates this town and this event are quite unique and that we are secure for the foreseeable future,” said Steve Lesnik, chairman of Kemper Sports Management, which is not affiliated with the insurance company. “We wanted a local company and to maintain the significant charitable contributions of this event [more than $600,000 a year]. We’ve now found a partner to do that.

“When Kemper pulled out, there was a wave of concern. Now we are in a great position to move forward.”

With estimated payments by FBR of between $3million and $4million this year and between $5.7million and $6million in each of the subsequent years, the pact could be worth more than $20million if FBR takes it to conclusion. The money is roughly split between the tournament purse, worth a record $4.5million this year, and TV advertisements mandated for each title sponsor of a PGA event.

Lowering FBR’s payment this year is a settlement from Kemper Insurance to exit its deal. Kemper Insurance sponsored the tournament for 35 years, predating its move to the Washington area in 1980 and making it the longest continuous title sponsor on the PGA Tour. Kemper Insurance signed a four-year contract extension last year.

“This switch happened so fast. But I do think this will work out to be a blessing in disguise,” said Ben Brundred, chairman of the tournament’s board of directors. “This is a very solid company, looking to make a big step. The demographics of our fans match the demographics of the customers they’re seeking. We’re definitely breathing a lot easier now.”

FBR, founded in 1989, had become one of the local economy’s star companies, helping to take many high-flying technology companies public and then doing so itself in 1997. Unlike some of its clients, however, FBR remains on steady financial footing, recording a $53.3million profit in its most recent fiscal year. FBR also has a market capitalization of $1.8billion, making it one of the country’s 10 largest investment banking companies.

The company recently merged with FBR Asset Management Corp. Executives of the new entity, with broad footholds in real estate, investment banking, brokerage and market research, saw a need to market its new state to a much wider audience. Its national commercials, to be aired on ABC during the tournament, will be the first in company history.

“This is an important opportunity for us to take an important step forward,” said Eric Billings, FBR co-chairman. “Inside of our industry we are well known, but outside we are not well known. We had other opportunities [for national advertising], but this venue and this time felt like the best way for us to go.”

The ABC telecasts also will be a switch. CBS had televised the tournament since it started in 1968.

With a new title sponsor in place, a temporary move of the tournament to Congressional Country Club in Bethesda, where the event was played from 1980 to 1986, remains possible, and early discussions between Lesnik and Congressional directors have occurred. Also possible is playing at other local courses. A switch would allow for renovations to TPC at Avenel.

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