Friedman, Billings Ramsey. They’re the FBR in the FBR Open. Every year about this time the topic comes up — a lot.
Even though the investment bank based in the Washington, D.C., area reportedly spent between $25 million and $30 million for the naming rights to the tournament, many people still call the newspaper to find out what the initials mean.
But Bryon Carney, president of the Thunderbirds, the civic group that puts on the event, says there’s still plenty of time to learn about the company. FBR is in the third year of its five-year sponsorship of the tournament and both sides say they’re happy enough with the deal that it could easily be extended.
“What they’ve told is is they’re very happy and they want continuous relationship for a long time,” Carney said. “We’re moving down the road with that in mind and we believe they will be our partner for a significant amount of time.”
The sponsorship has exceeded the company expectations, said Rick Hendricks, FBR president and chief operating officer. The way the contract was structured, FBR could have opted to terminate the sponsorship, making the tournament only a 3-year hitch. The only stipulation was it would have had to notify the Thunderbirds by July 2005.
“From our standpoint, there was no decision to make,” Hendricks said. “The way we’re looking at the world today we feel like this is something that has really become a part of FBR. We’re thrilled to part of the Phoenix community so we’d like to see it continue.”
To increase its visibility in the Valley, FBR opened a sixperson office in Scottsdale after it committed to the sponsorship. But name recognition remains a challenge, particularly to everyday consumers.
“We want everybody in Phoenix to know who we are,” Hendricks said. “Clearly though what’s most important is the business leaders and those people we would target from a private client standpoint, and I think we’re making pretty good headway there.”
FBR is only 17 years old, and it competes with Goldman Sachs, Morgan Stanley and Lehman Brothers, brands that have been around a century or so.
Hendricks said the television advertising the firm does during the tournament has helped its presence. He says people generally know FBR is a financial company.
“In the Phoenix community, so many people are at the tournament, they don’t see the advertising,” he said. “They see the name but they don’t see us on TV with ads making it clear we’re an investment banking firm.”
Friedman, Billings and Ramsey are the the three principals of the company. The biggest part of its $1.1 billion business is raising equity to take companies public.
The companies look for an investment banker to structure the deal and assume some risk for any portion of the offering that goes unsold. The company is one of leading underwriters for IPOs, or initial public offerings, particularly for energy companies.
FBR’s strength is to link companies looking for large sums of cash with investors. The company also invests in mortgage-backed securities and provides private client services for high-worth individuals.
The sponsorship has allowed the Thunderbirds to dramatically increase the amount of money it gives charities, Carney said. Of the $40 million the group has raised for charity since the tournament’s inception 70 years ago, about $10 million has come since FBR signed on, he said.
The 2004 tournament raised $4.5 million for charity and in 2005 it was upped to $5.8 million. Even more is expected this year, Carney said. The goal is to be the No. 1 charitable giver on the PGA Tour. The FBR Open is second to the EDS Byron Nelson Championship in Dallas.
The deal with FBR allowed the Thunderbirds to improve the quality of a tournament that draws 500,000 people, most of whom purchase advance tickets to the most well-attended tournament on the tour, Carney said.
“When you improve the quality and the value, you can, in some cases, raise the price,” he said. “We’ve been able to raise some prices and still maintain all of our loyal sponsors and that has contributed to greater revenues and greater dollars for charities.”