BUNNELL, Fla. — The PGA Tour sued Ginn Development on Friday, citing breach of contract after the resort company dropped sponsorship of the Champions Tour Ginn Championship.
Ginn, which has seen its financial well-being take a serious hit in the worldwide economic downturn, announced on Wednesday it was ending all golf sponsorships immediately, including the Champions Tour event and the LPGA’s Ginn Open.
“We regret having to take this legal action, but feel we have no other recourse than to try to recover what had been guaranteed to our members through existing agreements with Ginn Companies,” PGA Tour spokesman Ty Votaw said in a statement.
Ginn still had three years remaining on its title sponsorship contract with the Champions Tour and had planned a $2.5 million purse for 2009, according to the event’s Web site. Ginn also offered a $2.5 million purse for its LPGA event last year, the third-largest on that tour.
The lawsuit was filed in Flagler County, near the PGA’s Florida headquarters, and was first reported by the Florida Times-Union. The tour is seeking unspecified damages, with the lawsuit only saying they would exceed $15,000, which is the standard language used in lawsuits of this type filed in Florida.
“The tour will incur monetary damages, including but not limited to Ginn’s agreed-upon contribution to the tournament purses and other expenses of each tournament, as well as lost television fees and other revenues from the tournaments,” the lawsuit reads.
Ginn said late last year that it was dropping the PGA Tour’s sur Mer Classic because of the ailing real estate market. But the LPGA event in Reunion, Fla., and the Champions Tour stop in Palm Coast, Fla., were both to be played on Ginn courses.
“We also had no forewarning that Ginn was planning to cancel the 2009 Ginn Championship at Hammock Beach, and only learned of the decision when the company issued a release late Wednesday,” Votaw said. “In fact, we had been in discussions with them on possible modifications to the agreement.”
However, the lawsuit suggests that there were signs many months ago of Ginn being in financial distress.
As noted in the suit, Ginn Development president and CEO Robert Gidel wrote to the PGA Tour on Aug. 11, saying “economic and other factors have caused Ginn to re-evaluate its ability to sponsor the remaining tournaments” in the company’s five-year contract for Champions Tour play.
“Ginn will not be in a position to sponsor any remaining tournaments after the March 2009 championship tournament,” Gidel wrote at the time.
Three weeks later, according to the lawsuit, Ginn failed to provide the PGA Tour with a letter of credit that would have secured the prize money for this year’s Champions Tour event at Hammock Beach.
Ryan Julison, spokesman for Ginn in Celebration, Fla., said the company does not comment on pending litigation.
Last week, Ginn ended its real estate sales and marketing operations “due to the loss of revenue” that was the primary source of funding the purses and buying television coverage for the LPGA and Champions Tour events.
“We did the best we could, but the economy got the best of us,” Gidel told The Associated Press on Wednesday.
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