• Sponsor Pays Full Price for Rained-Out Event
  • March 9, 2005
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • Nissan is less than thrilled over having to pay full prize money for a PGA tournament that barely made it to the halfway point, cut short by a month of unusually heavy rains in Southern California.

    The rain-shortened Nissan Open didn't even count as an official victory for winner Adam Scott. It did not get him an invitation to the season-opening event in Hawaii for winners only, with the usual paycheck for last place around $50,000. Nor did it get him the usual two-year exemption on the tour.

    Yet Nissan North America got stuck with the tab for the entire $4.8 million in prize money. "From a sponsor's perspective, it's one thing to pay a full purse after only 36 holes and it's another when you also have to see what didn't happen and who didn't really win," John Gill, director of sports marketing for Nissan North America, told the Los Angeles Times. "I'm sure a lot of people would like to work 50% of the time and get paid, but apparently the only place that happens is on the PGA Tour," he added.

    Gill said he probably would try to negotiate a prorated-compensation clause from the PGA Tour when Nissan opened discussions about extending its sponsorship deal after 2006. Under Nissan's current contract with the PGA Tour, even if bad weather curtails a tournament to only 18 holes, the full prize money will be paid.

    Rain washed out play on Saturday, February 12, and when the tournament was extended into Monday, more rain forced cancellation of the round. Under PGA Tour rules, the scores reverted to the 36-hole totals and that forced a one-hole playoff between Scott and Chad Campbell. It was the first time in the 79-year history of the event that it went less than 54 holes. That's probably why Nissan did not carry any insurance for the Open.

    Scott won with a par on the playoff hole, the 18th, and raked in $864,000. Campbell, who hadn't played since Friday, made a bogey and took home $518,400.

    In the meantime, Gill said that at least the tournament was featured almost hourly on the Weather Channel. "As far as impressions, you just can't buy that space," he said. "Look, this whole situation is nobody's fault. Not the pros, not the PGA Tour, it's just the way it is. You just hang in there and hope that one of these years, it's going to be your year."

    Significance: Nissan's weather woes illustrate the need for contingency planning and insurance when structuring sponsorship agreements, no matter how unlikely it seems that things will go wrong.