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Tech Industry clubs PGA Tour with $45 million lawsuit

The e-tailer files a lawsuit alleging that the professional golf organization broke a sponsorship agreement with the company. filed a $45 million lawsuit against the PGA Tour in federal court Wednesday, alleging that the professional golf organization broke a sponsorship agreement with the struggling e-tailer.

    The Aliso Viejo, Calif.-based e-tailer filed the suit in the wake of a deal the tour signed earlier this month with USA Networks, under which USA will operate an online store for the professional golf league. alleges that its marketing agreement with the PGA Tour obligated the tour to work with in setting up e-commerce stores on the PGA Tour's Web site.

    The "PGA Tour has entered into a relationship with USA Networks...that directly contradicts and contravenes its obligations to," the e-tailer said in its lawsuit. "As a direct and proximate has been damaged in an amount believed to exceed $45 million."

    As part of the suit, asked the U.S. District Court for the Central District of California to cancel its five-year marketing agreement with the PGA Tour.

    In a statement, the PGA Tour denied that it had breached its agreement with, charging that was aware and supportive of the tour's new partnership with USA Networks.

    "While we are sympathetic to's financial situation, we are disappointed that its new management would take this unwarranted action as a means to help rectify its own problems," Ed Moorhouse, chief legal officer of the PGA Tour, said in a statement. "We intend to defend ourselves vigorously against these baseless claims."

    Earlier Wednesday, slashed its staff by more than 50 percent as part of a restructuring plan to cut expenses. The move marked the second round of job cuts for in less than a month. attorney Mike Hornak denied that the timing of the lawsuit was meant to deflect attention from's layoffs. He also denied that the primary purpose of the suit was to cancel the agreement between and the tour.

    "From our standpoint, the PGA Tour went and decided they could find a better deal, and without giving an opportunity, went to USA Networks," Hornak said. "To us, the e-commerce aspect was an important part of the agreement."

    As part of the restructuring, plans to shut down its online golf equipment store that it acquired from bought Buygolf in October 1999 for $23.5 million in stock, according to the lawsuit. The purchase was linked to's agreement with the tour, in the expectation that Buygolf would help offer golf supplies through the tour's Web site, said in its suit.

    The damages sought by include its purchase price for Buygolf.

    "Despite the PGA Tour's pledge to reasonably integrate into its long-term general Internet strategy, the tour has failed to make any good faith efforts" to do so, charged in its suit. paid the tour $8.5 million and 1.8 million shares of stock as part of the sponsorship agreement. Under that agreement, the PGA Tour renamed its minor league tour the " Tour."

    The suit will not affect the Tour schedule, the PGA Tour said in a statement. The money the PGA Tour received from will fund the Tour for the 2001 and 2002 seasons, the organization said.

    Earlier this month,'s chief executive and chief financial offers resigned. The turmoil comes as the company missed Wall Street estimates in its fourth-quarter and cut expectations for the coming year.