April 4 (Bloomberg) -- Twenty-two years ago, International Business Machines Corp. used its clout to protest racial discrimination. The company joined other corporate sponsors in pulling television advertising from the PGA Championship which was being played at a whites-only Alabama golf club.
The Shoal Creek club caved. Augusta National Golf Club followed, also inviting its first black member to join in 1990.
Now IBM faces pressure closer to home over Augusta National’s policy against admitting female members, including its new Chief Executive Officer Virginia “Ginni” Rometty. IBM is one of three corporate sponsors of the Masters Tournament, scheduled to begin tomorrow at the club.
The company’s CEO traditionally dons the club’s signature green member blazer at the tournament, as do the CEOs of co-sponsors Exxon Mobil Corp. and AT&T Inc. IBM will have to decide whether to keep spending the money if its CEO lacks equal status with other sponsors.
“The corporate dollars and the corporate decisions to be associated with something that’s known as discriminatory” opens sponsors to scrutiny, said Mike Paul, president of MGP & Associates, a New York-based reputation management firm.
Augusta National’s Chairman Billy Payne, who’s in charge of the club and tournament, faced the media today for his annual Masters-eve address and reiterated the club’s policy.
“All issues of membership remain the private deliberations of the membership. That statement remains accurate,” Payne said in response to questions about reconsidering female membership. “We don’t talk about our private deliberations. We especially don’t talk about them when a named candidate is part of the question.”
That leaves IBM, which promoted Rometty to CEO in January, with a dilemma: Should it pressure the near 80-year-old club to change its gender policies or, if it can’t do that, should it withdraw its tournament sponsorship?
This needs to be resolved in a way that satisfies stakeholders including customers, employees, shareholders and board members, said David Carter, executive director of the Sports Business Institute of the University of Southern California.
“Each of these sponsors that’s come on board did so knowing the policies and protocols of that tournament and of that club,” said Carter. “They’ve seen Augusta protect its brand, its reputation, its policies and standards without wavering for a very long time.”
Corporate sponsors must weigh whether potentially alienating customers and others outweighs the advantages of being part of such a prominent sports event, said Jim Andrews, senior vice president of IEG LLC, a Chicago firm that does consulting and research on corporate sponsorships.
“The Masters is a great place for IBM to do corporate hospitality and it’s a great showcase for its technology, but are you running a risk of offending a number of your customers, especially now that more women are in CIO and CTO roles? It’s a tough equation,” said Andrews.
Edward Barbini, a spokesman for Armonk, New York-based IBM, declined to comment. Alan Jeffers, a spokesman for Exxon, didn’t respond. Brad Burns, an AT&T spokesman declined to comment on the company’s sponsorship.
IBM and other companies in the past pressured private golf clubs to end racial discrimination. In 1990, IBM joined other corporate sponsors including Toyota Motor Corp. and Honda Motor Co. in pulling TV ads from the PGA Championship when that year’s tournament was played at the then whites-only Shoal Creek, outside of Birmingham, Alabama.
Augusta National subsequently ended its racial barrier. The club in 1990 extended an invitation to its first black member, Gannett Co. television President Ron Townsend.
IBM’s Rometty, who plays golf, though not frequently, inherited the Masters Tournament sponsorship from her predecessor Sam Palmisano.
The company is featured in the tournament’s television commercials and runs its website, mobile-phone applications and media-center technology. Palmisano serves on Augusta’s technology tournament committee. He remains IBM’s chairman -- a role Rometty is likely also to assume upon his retirement.
‘Free Speech Zone’
Augusta National doesn’t publicize its membership. A 2010 partial list obtained by Bloomberg News and 2004 documents published by the Augusta Chronicle and USA Today suggest the club doesn’t always extend invitations just as new CEOs take over, raising the possibility that Rometty would be admitted later.
Non-members of Augusta National must be accompanied by a member to visit the course or play a round.
Augusta has faced pressure to change its policy on women before. Martha Burk, then the president of the National Council of Women’s Organizations, led a protest outside the golf course’s gates during the 2003 Masters. The controversy prompted Augusta to forgo sponsorship that year and the next -- opting to broadcast without lucrative commercials.
The 2003 protesters were almost outnumbered by golf reporters and corralled in a “free speech zone,” a place “which was basically a ditch where no one could see you,” said Terry O’Neill, who is today president of the National Organization for Women and participated alongside Burk.
“IBM obviously is spending enormous amounts of money promoting itself by promoting the Masters Tournament at the Augusta golf club and their own CEO is being thoroughly disrespected by the very people that they’re promoting,” said O’Neill. “It’s ridiculously embarrassing to IBM.”
The company and Augusta National have an opportunity at the start of this Masters Tournament to “gracefully” end a male-only tradition, said Hayes Roth, chief marketing officer for Landor Associates, a global branding and design firm.
“It’s a fascinating collision of IBM, one of the most sophisticated and advanced organizations in the world, and Augusta, one of the most anachronistic,” said Roth. “It’s a huge opportunity for both organizations if they seize the high ground on it. But telling Augusta people what to do is tough.”
Any resolution will likely be dealt with privately, consultants including Roth said. IBM probably has sponsorship commitments that cannot be withdrawn in a hurry.
“Rometty has a business to run. She is not going to go out and make this a personal cause,” said Roth. Still, her leadership “may influence how they participate next year.”