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Kodak Sponsorships: What’s The Real Story?

By Jim Andrews Mar 5, 2012

After getting judicial permission to drop its Kodak Theatre partnership a few weeks ago, Eastman Kodak Co. filed court papers last Tuesday to also dump its PGA Tour sponsorship.

Here’s what Kodak’s lawyers said about the PGA Tour agreement and other contracts included in the filing: “Rejection of the contracts would benefit (Kodak) in that (Kodak) would avoid the accrual of any ongoing…obligations for goods and/or services…that are not needed.”

Really? Kodak is not going out of business; it is reorganizing itself under the protection of the bankruptcy process. No doubt, the company needs to shed underperforming assets and unnecessary expenses in order to reach a deal with its creditors and continue operations in a different form.

But do Kodak’s sponsorships, particularly its PGA Tour deal, qualify as obligations that are not needed? The court filing flies in the face of what the company has previously said about the value of its involvement in golf.

IEG Sponsorship Report published an article just over a year ago entitled “Kodak Reports Above Par Results from PGA Tour Partnerships.” In that piece, the company’s director of sports marketing explained how after three years, the deal was paying off in what Kodak termed hard, medium and soft dollars.

Among the hard dollar ROI was incremental business and direct revenue from selling product to PGA Tour events and cosponsors, including Callaway Golf and MasterCard. Kodak defined medium dollar return as “significantly strengthened ties to business customers.” In tracking the number of B2B customers participating in its golf sponsorship program, the company identified hundreds of millions of dollars in potential business tied to golf assets.

Even if we write off Kodak’s soft dollars (exposure and impressions); and even if we assume that the products sold to events and other sponsors are no longer going to be part of Kodak, meaning the hard dollar results would disappear—the medium dollar return would seemingly be enough to warrant maintaining the partnership. The Kodak that emerges from bankruptcy will still need to market its products and services to business customers and the PGA Tour sponsorship has been an effective B2B marketing tool.

Kodak appeared to agree that the partnership was valuable when, just weeks before the January bankruptcy filing, it renewed the original six-year deal for an additional couple of years, through 2016.

So is the PGA Tour sponsorship “a great opportunity to build relations with commercial accounts,” as the sports marketing director reiterated to IEG SR last October, or is it an unnecessary obligation?

More:

sponsorship ROI sports pro sports

 

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Jim Andrews

About the Author

A 30-year sponsorship industry veteran, Jim is responsible for developing and sharing thought-leadership content based on ESP Properties’ groundbreaking work in the areas of sponsorship strategy, valuation, measurement, digital content, data-driven marketing and fan engagement.

In addition to identifying key trends and delivering his unique insights into the critical issues facing rightsholders and their commercial partners, Jim is the chairman of the Annual Sponsorship Conference, responsible for the program and speakers, as well as hosting and delivering the event’s opening address. He also is responsible for the company’s annual report and forecast of overall sponsorship spending, as well as its compilation of biggest spending companies and annual industry surveys.

A frequent media commentator and guest, Jim has been a featured speaker at hundreds of sports, entertainment and marketing conferences around the world.

 

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