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Rebuilding A Golf Classic's Swing

By Orange County Business Journal

Categories: Featured News
March 4, 2019

After 40 years spent golfing and running professional tournaments, Jeff Purser can track the trajectory of a title sponsor as well as any golf ball.

Purser could see the mounting problems at Toshiba Corp. signaled trouble for the longtime title sponsor of the Newport Beach tournament.

“It’d been a … roller coaster,” Purser said, noting the expansive corporate changes taking place since 2015 at the Tokyo-based multinational company—one of the largest foreign-owned firms with significant operations in Orange County. “Their business plan was decimated.”

“That happens in the world nowadays. It is what it is.”

Last year, Toshiba ended its 20-year run as title sponsor of Orange County’s only tournament connected to the Professional Golfers of America.

Hoag Memorial Hospital Presbyterian, the ninth-largest OC employer with 6,100 workers, has assumed the title sponsorship role for the tournament being held March 8 to 10 at Newport Beach Country Club.

The event, formerly known as Toshiba Classic, is now the Hoag Classic.

It’s a unique position for the hospital operator and the PGA, given that Hoag is also the primary beneficiary of the tournament.

Typically, a professional golf tournament has a presenting sponsor and a main charitable cause; last month’s Genesis Open in Los Angeles was sponsored by Fountain Valley’s Genesis Motor America, while Tiger Woods’ Anaheim-based TGR Foundation was the event’s main beneficiary, for example.

Execs on Call

Hoag isn’t unaccustomed to doing double duty. It operates two of OC’s largest hospitals, Hoag Hospital Newport Beach and Hoag Hospital Irvine, in addition to numerous health centers and urgent care centers in the area.

It’s also familiar with sports sponsorships. It serves as the official healthcare provider of Irvine’s Orange County Soccer Club and Costa Mesa’s Los Angeles Chargers, among other partnerships.

In the case of the golf tournament, Hoag is bringing something that other title sponsors would have a hard time replicating—its connection to Orange County’s top executives, some of whom are pitching in to make sure it’s a success.

“I went to Hoag for a kidney operation 12 years ago—they discovered cancer,” said Rick Taylor, chief executive of Konica Minolta Business Solutions U.S.A. Inc., a maker of printers and other technology products with its Western U.S. operations in Anaheim, whose company is one of the tournament’s main sponsors.

“The Hoag doctors and nurses probably saved my life,” Taylor said. “I think Hoag is special.”

The PGA Tour Champions event will award $1.8 million in prize money, with about $300,000 of that going to the winner. The golfers, ages 50 and up, are largely well-known players who have more than 400 worldwide professional victories, including 50 major championships.

The Hoag Classic could well pump $30 million into the Newport Beach economy.

It’s also being called the most philanthropic event on the PGA Tour Champions.

“We are proud of how this event brings national exposure to Orange County,” said Robert Braithwaite, Hoag Hospital chief executive. “It creates a focal point for community unity and pride.”

Bing Started It

The history between the golf tournament and Hoag dates back to 1975 when Bing Crosby was looking for a place to hold a satellite event for golf pros who weren’t invited to the famous Pebble Beach Pro-Am Tournament.

Crosby funded the $10,000 prize for the first Bing Crosby Southern Pro-Am, his pal Marshall “Duffy” Duffield, USC quarterback, was tournament director and a Hoag Hospital 552 Club member. From year one, the tourney’s principal charity was Hoag.

The tournament ran into problems in the 1990s and former Chairman Hank Adler recruited Purser, a Bowling Green State University graduate who started running Ladies Professional Golf Association, or LPGA, tournaments—surely you recall the Phar-Mor in Youngstown?

Purser, executive director at Hoag Charity Sports, a supporting unit of the Hoag Hospital Foundation, worked on the Toshiba Classic for 20 years.

For the most part, the Classic was “Steady Eddie,” in fact, a good deal better.

Toshiba spent close to $60 million to sponsor a golf tournament that raised about $20 million for local charities. It was a “wonderful two-decade run,” said Purser, noting how unusual it is for a title sponsor of a major golf tournament to log such longevity.

Newport Beach private equity firm Eagle Four Partners LLC in 2012 acquired the country club as part of the package of buying the Balboa Bay Club & Resort for more than $200 million, according to prior reports.

Hosting the PGA Tour Champions wasn’t the crown jewel hidden in those properties, but neither was it a lump of coal.

“It’s not something the golf club makes money on, but it’s a huge week for us … we have huge crowds,” said Kevin Martin, a partner of Eagle Four.

“Our members like having the tournament. They love supporting Hoag Hospital, a lot of them volunteer and they’re invited to so many of the events … there’s [a] ton of entertainment going on.

Post Toshiba

After Toshiba began to scale back some of its area operations and pulled back on its sponsorships, largely as a result of its troubled U.S. nuclear energy unit, Purser had a big financial hole to fill.

Purser began signing what he hopes will be a new “Team Forever,” a mix of OC stalwarts, and relative new shooters, with ambitious plans to plant their flags in the region.

An unusual move was to make Hoag both a title partner, as well as a beneficiary. Hoag reported $975 million in sales for the 12 months ended Sept. 30, trailing only the UCI Medical Center and Kaiser Permanente among the largest OC hospitals.

Purser and pals have turned the PGA’s business model on its ear.

“What we’ve done is a departure from the business model the PGA tour put in place 40 years ago. It’s both telling the story about Hoag and the beneficiary is Hoag.”

Konica Minolta is a big sponsor of the PGA so it didn’t take much to convince Taylor to become part of the Hoag Classic.

Besides, Taylor was chief executive of Toshiba America Business Solutions when his company was the title sponsor.

“When this opened up without much prodding, we jumped right in,” Taylor said.

Taylor said Konica’s golf activities in the last four months raised $3.5 million for the National Kidney Foundation and $1.4 million for the Blue Angels for veterans in San Diego from a tourney it co-sponsored in La Jolla.

“This is in our DNA. And Hoag Hospital is just a great cause,” said Taylor.

While the principals declined to reveal the amount of underwriting, it appears they are exponentially spiking the size of their checks from prior years.

“We’re the presenting sponsor, [it’s a] a significant commitment,” Taylor said.

“We’re having a major event around the event; 1,200 customers, a large number playing in the Pro-Am.”

We have commercials in the broadcast—two-and-a-half hours live all three days on NBC-owned Golf Channel—so [it’s] national branding and exposure,” he said.

The upside? “We do a lot of business in here,” Taylor said.

“The investment is big, but the return is also big—we hope [companies will] want to do business with us, our skyboxes are on [holes] 18 and 9.”

$6 Million Nut

Purser is confident he’ll not only cover the $6 million nut for the tournament—which includes the $1.8 million purse, $1 million in TV production costs, and year-round construction needs, among other items—while producing at least $1 million for 50 local charities, the largest share to Hoag Hospital.

His goal is to eventually reach $2 million for charities.

He has reason to be confident.

The event’s tournament director is well-known executive Paul Folino, who is chairman of Hoag Charity Sports.

Folino was chief executive of tech firm Emulex, which was a silver sponsor until 2006.

“He has a passion for golf,” Purser said of Folino. “When he was chairman of Emulex, they’d always been involved in some capacity. I’m grateful he’d take time.”

“We run it like a corporation,” Folino said.

“I help on the fundraising, that kind of thing, [and try to] leverage my corporate interface in the community.

“One reason I took [the tournament director role] when Toshiba had to back away, Jeff had the challenge of doing a turnaround.

“Having it come under the Hoag umbrella [and] putting it under a local company? No brainer,” Folino said.

While Folino is on a number of boards in Orange County, he said the Hoag Classic is his top priority.

Hoag is “my most important” nonprofit because “we’re rebuilding,” he said.

“My focus is probably 80% the Hoag Classic turnaround.”

To view the original Orange County Business Journal article, please click here.