Wells Fargo is close to finalizing another five-year deal to keep its name on its eponymous golf tournament coming up in Charlotte.
A sponsorship renewal for the annual event would come at a time of intense scrutiny of Wells Fargo, following a hectic past few years and its recent, sudden departure of CEO Tim Sloan.
The bank's troubles, including a major scandal involving fake accounts that employees opened without customers' permission in 2016 and millions paid in penalties as a result, has marred the bank's reputation. In the past, Wells Fargo has removed its name from the tournament when it was dealing with internal issues, such as its merging with Charlotte-based Wachovia in 2009-2010.
But keeping its name on a popular event in Charlotte, its biggest employment hub, could be a welcomed distraction for San Francisco-based Wells Fargo and a boost for its image, experts say.
"If the bank were to continue to promote the positive aspects of the tournament, that has a way of offsetting the possible negatives associated with the (Wells Fargo) brand right now," said Roger Beahm, a marketing professor at Wake Forest University.
The Wells Fargo Championship, which attracts top golfers such as Tiger Woods and Rory McIlroy, has become a social event for even attendees who aren't necessarily fans of golf. Its popularity can be a boost for the city and the sponsor, Beahm said.
Furthermore, having the tournament here could be seen as a positive for employees in the Charlotte region, where Wells Fargo employs about 26,000 people. Roughly 300 Wells Fargo employees volunteer each year for the tournament, the bank says.
"It does give their employees a bit more confidence and pride," said David Reibstein, professor of marketing at the Wharton School of Business at the University of Pennsylvania. "In this case, many employees might feel a bit better about their employer."
MOVING FORWARD
The tournament, which renewed a five-year sponsorship deal with Wells Fargo in 2014, routinely sells out and has become one of the top events on the PGA Tour that's not a major. The tournament has contributed tens of millions of dollars over the years to charity through its primary beneficiary, Teach For America.
The event has generated $12 million to $15 million in revenue for the past several years, but last year it exceeded $18 million, according to Kendall Alley, the bank's Charlotte regional president.
"All the parties are positively inclined to move forward. We just have to get everything finalized," Alley said of the sponsorship. "There's nothing I see that can blow the deal up."
The major detail to be worked out as part of the sponsorship deal, Alley said, is moving the tournament in 2021, since the Quail Hollow Club hosts the PGA Tour's President's Cup that fall. The tournament moved to Wilmington's Eagle Point Golf Club in 2017, the year the PGA Championship was held at Quail Hollow.
'POINT OF PRIDE'
Known as the Wachovia Championship since it began in 2003, the golf tournament became the Quail Hollow Championship in 2009 and 2010. The change came after Wells Fargo bought Charlotte-based Wachovia, and after the community voiced concern about government bailed-out banks spending money on sports sponsorships and client entertainment, according to an April 2010 Observer story.
Under the five-year agreement that was signed in spring 2008, Wells paid between $6.5 million to $6.8 million annually to be the event's title sponsor, even though it didn't have its name on the tournament for its first few years.
In a February 2009 press release announcing the name change, David Carroll, who at the time was head of Wells Fargo's wealth and investment management group, said that given the merger with Wells Fargo and Wachovia, it no longer made sense "to invest in promoting the Wachovia brand via the tournament."
"In the current environment, we also believe that promoting this event with our brand could send mixed signals about our priorities to many of our stakeholders," Carroll said in 2009.
A similar argument could be made today, Beahm said.
Last month, Wells Fargo said that embattled CEO Tim Sloan would be stepping down immediately, a move that came more than two years after a scandal over the fake accounts rocked the bank. Wells said bankers opened as many as 3.5 million bank and credit card accounts without customer permission as employees faced intense pressure to sell products, the Observer has reported.
Wells Fargo has struggled to mend its reputation as it has disclosed problems in other areas of the company, including foreign exchange, wealth management, auto lending and add-on products such as identity theft protection. Last summer, Wells said that about 545 of its customers lost their homes to foreclosure because of the bank's own calculation errors.
Reibstein, the Wharton professor, said the bank's handling of its problems could be a turnoff for would-be customers, as well as for current customers and employees.
"Spending that kind of money (on a golf tournament sponsorship) under the circumstances they've had could create a negative image," Beahm said.
But, Alley said that it is a "point of pride" to host the tournament in Charlotte. This year, the tournament takes place April 29-May 5 at the Quail Hollow Club.
"Despite all the articles and comments made (about the scandals), we never left our communities," Alley said. "We made (over) $400 million in community donations (last year.) We remain committed to the sponsorships we have, including college football. We continue to support the arts."
(Staff writer Deon Roberts contributed.)
