GM dumps sponsorships

Tuesday, July 14, 2009

GM dumps sponsorships

Judge lets automaker drop 54 contracts in move to slash costs in advertising

Robert Snell / The Detroit News

For General Motors, it’s lights out in the Big Apple and game over in Lansing.

A federal judge Monday let General Motors Co. shed dozens of sponsorship deals and pricey perks that included VIP suites at international speedways, naming rights for a Lansing baseball stadium and Times Square billboards.

The move frees GM from spending millions on marketing, sponsorship and promotion-related agreements that did not directly relate to the automaker’s core operations. In all, GM shed 54 contracts, but it was unclear how much money the automaker — once the nation’s largest advertiser — will save.

Separately, U.S. Bankruptcy Judge Robert Gerber on Monday approved a deal to allow GM to join forces with Parnassus Holdings LLC — a unit of Platinum Equity LLC — to purchase Delphi Corp., which has been mired in bankruptcy since October 2005.

The sponsorship contracts, listed in a court filing Monday, offer a peek at perks enjoyed by GM executives and clients at some of the nation’s signature sporting events, such as the Daytona 500. The list included high-profile sponsorship deals with the Oakland Raiders, the University of Southern California, the Arnold Palmer Invitational golf tournament and deals for lesser-known events such as the San Antonio Livestock Expo.

GM had partnered with the Livestock Expo for more than 15 years and the deal was due to be renegotiated this summer, said Pamela Rew, the expo’s assistant executive director. The group had been paid more than 80 percent of the contract, which Rew said was not in the millions yet was "substantial."

"The current situation is unfortunate; our hearts go out to the employees and families that are affected by this situation — we wish them only the best," Rew said.

GM has already ended high-profile sponsorship deals with PGA golfer Tiger Woods, documentary superstar Ken Burns and a host of events such as the Super Bowl and Academy Awards. The deals siphoned away millions in cash for a company that has lost $82 billion in recent years.

"The executory contracts are no longer necessary for the debtors’ ongoing business and create unnecessary and burdensome expenses for the debtors’ estates," a GM lawyer wrote in a court filing.

Among the contracts that will be terminated effective June 22 are the naming rights of Oldsmobile Park. GM agreed to pay the city of Lansing $1.5 million when it signed a 15-year contract in 1995. The stadium is home to the Lansing Lugnuts, a Class A affiliate of the Toronto Blue Jays. A spokesman for Mayor Virg Bernero did not return a call seeking comment Monday.

GM also is ending a contract for the Chevrolet clock in Times Square — where it has advertised since the 1930s.

Despite the cuts, GM is still one of the biggest corporate advertisers. The automaker spent more than $424 million during the first quarter of 2009, down 19 percent. Its spending is in fourth place among the 10 largest advertisers, according to TNS Media Intelligence. GM trailed Procter & Gamble Co., Verizon Communications Inc. and AT&T Inc.

The automaker’s marketing approach got an overhaul last week after GM emerged from bankruptcy to focus on four core brands: Chevrolet, Cadillac, Buick and GMC.

"You’ll see that many of those we ‘rejected’ or chose not to carry forward involve retired brands or soon to expire GM brands or simply reflect the reality that the new, smaller, GM only has four brands to support," GM spokeswoman Kelly Cusinato said. "As for future spending and approach to sponsorships, it is too soon to predict."

The marketing department is now headed by Vice Chairman Bob Lutz, who will be responsible for all creative elements of products and customer relationships.

"My top priority now is to enhance the ability of GM to let the public know about what great cars and trucks we build," Lutz wrote in a live Web chat Monday. "For all the money spent in the past, this seemingly simple task has eluded us."

Lutz signaled a pending change in GM’s advertising message now that the new GM has emerged from bankruptcy.

"You will very quickly see a drastic change in the tone and content of our advertising," he said.

"And if you don’t, it will mean that I have failed. Our current product lineup is arguably the best of any mass producer in the world, and our task is to use enhanced advertising and communications methods to convince more Americans to give us a try again."

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