Struggling FBR sticks as Open sponsor

With America's financial sector struggling mightily, it is significant to note that 15 of 37 PGA Tour regular-season events - major championships and fall season excluded - are sponsored by banks or investment firms.

That's approximately 40 percent of the primary-event sponsors.

One of those is our very own FBR Open.

And in case you haven't been paying attention, the Washington, D.C.-based investment bank known as Friedman, Billings and Ramsey also has fallen on hard times.

In February, FBR laid off 75 of its 775 employees. Last week, another cutback reduced its work force by another 70 employees, which represents about a 20 percent reduction for the year.

Add in three consecutive quarters that have totaled somewhere between $30.2million and $202.6million in losses, depending on whether you're talking about the bank or its capital markets division (FBR owns 52 percent) or both, and you might be a little concerned if you are the Thunderbirds, the civic group that stages the FBR Open.

For the record, FBR re-signed last year to sponsor the tournament held at the TPC Scottsdale for the next four years, or through 2012. That represents roughly a $24 million commitment.

Granted, FBR deals in hundreds of millions of dollars - even billions - but there are some other alarming signs.

FBR's bank stock (NYSE: FBR), which was at an all-time high of $28.70 a share when the firm became the tournament's title sponsor five years ago, has plunged to $1.75 - and that's up from a low earlier this year of $1.29.

Meanwhile the stock connected to its capital markets division (NASDAQ: FBCM) is at $5.80, down from $18.14 a year and a half ago when the fledgling company first came online, but up from a low of $4.74 in May.

Despite this gloomy scenario, we don't detect much sweat from FBR, the Thunderbirds or even the PGA Tour. Perhaps they know something we don't know, but all parties were united when asked if the future of FBR remains at the TPC Scottsdale.

Bill Stephens, FBR's vice president of marketing and communications, said: "We are the title sponsor for the FBR Open for the next four years, and have no plans to change that."

Tim Louis, the Big Chief of the Thunderbirds, added: "I'm not worried at all about (FBR) being the title sponsor in 2009."'

Rick George, the executive vice president and chief of operations for the PGA Tour, responded: "We're planning to have another great FBR Open again next year."

Asked if the PGA Tour was aware of FBR's financial struggles, George, who took over his new duties just a few months ago, said: "No, I'm not in tune with that."

But George did say that "in general" the Tour is well aware of the overall economy as it relates to its sponsoring corporations, "not just banks and financial institutions.

"We're fortunate to be fully sponsored and feel great about our future,'' George said.

The PGA Tour has lost only the AT&T Classic in Atlanta so far this year. But here in the East Valley in 2008, we've already lost one professional tournament in the LPGA Safeway International, so pardon some of us if we're looking over our shoulders.

Could FBR get out of the next four years of its contract with the Thunderbirds if it took another earnings broadside later this year? All parties were vague on this point, chiefly because it's Tour policy that all contracts between tournaments and sponsors remain confidential.

"Generally speaking, there are provisions written in (the contracts) for all types of things," George said, citing the confidential policy for not elaborating.

Louis said that despite FBR's current downward trend, the Thunderbirds aren't looking for greener pastures.

"We know they're struggling like all financial institutions are struggling right now,'' Louis said. "But we have such a great relationship with them, and our confidence remains strong.''

Stephens said FBR plans "a few cutbacks for next year's tournament,'' which is five months away (Jan. 26-Feb. 1).

"We need to be prudent, so we probably won't bring out a lot of employees (as guests) like we have in the past," he said. "And we'll probably cut back on the entertainment side, too. But we're definitely sticking around as the title sponsor of the FBR Open.''

If true, that's a huge relief, because the FBR Open is a crucial part of this community, with an annual economic impact of $180 million.

Through the years, the tournament has pumped $53 million into local charities, with $25.67 million of that raised since FBR became the sponsor in 2003, including a PGA-Tour record $7.8 million last year.

Collectively, those numbers speak volumes.

Then again, so do the dismal financial numbers surrounding the firm.