AIG, Citibank and a number of other federally bailed-out financial institutions have no plans to cancel hundreds of millions of dollars in sports team sponsorships, even as they take billions in taxpayer support, ABC News has found.
In boom times, the sponsorships were seen as a way to advertise the firms' "brands" and appeal to potential customers. Even today, at least one bank told ABC News that a naming deal was increasing its revenue. But critics, including a member of Congress, say the decision to continue them now is hard to defend.
Struggling Citibank just sealed a multi-billion-dollar emergency "backstop" deal with the U.S. government. The financial behemoth, suffering with billions in bad mortgage-related assets on its books, recently shed 53,000 workers and saw its stock price lose over half its value. Yet it's in a 20-year contract to pay the New York Mets $400 million to name the team's new stadium "Citi Field."
"This type of spending is indefensible and unacceptable to Citigroup's new partner and largest investor: the American taxpayer," said Rep. Elijah Cummings, D-Md., in a statement Monday.
Citi isn't alone: Imploding insurance giant AIG is paying the British soccer team Manchester United $125 million for the privilege of having its logo appear on Man U's uniforms. That, despite the fact the firm is standing largely thanks to a $150 billion lifeline from the U.S. Treasury.
"A friend of mine joked they should put 'US Treasury' on the front of their uniforms," said Steve Ellis of Taxpayers for Common Sense, a Washington, D.C.-based nonpartisan watchdog group which is outraged by the expenditures.
In boom times it was fine for AIG, Citi and others to spend millions on naming rights and other promotional arrangements with professional sports teams, critics say – even if they're a waste of money, as some marketing experts believe. But when the economy teeters on the brink of collapse – and firms are using American taxpayers' money to keep lending or just keep their doors open – those critics are making a stink about the expensive deals.
"Up until now they were businesses who could invest or waste their money as they see fit," said Taxpayers for Common Sense's Ellis. "But now we're the shareholders. And frittering their money away with naming rights and ties to sports teams isn't a really good investment of taxpayers' money -- particularly when credit markets are collapsed."
A spokesman for AIG confirmed that its sponsorship deal with Manchester United remains in place, but that the company is "reviewing all sponsorships to identify any relationship that might be essential, to maintain the value of the business and service customers, so we can repay the [government] loan."
Citicorp is not reviewing its deal with the Mets, chief financial officer Gary Crittenden said in an interview Monday. Crittenden told CNBC the contract was "legal and binding" and "not an issue."
Last week, a bank spokesman defended the arrangement, saying that "there is absolutely no relationship between our sports marketing expenses, including Citi Field," and the government funds it had already received.
That's not enough for Rep. Cummings. "I strongly urge Citigroup to find a way out of this contract and instead spend that $400 million on retaining its employees and restoring confidence in its operations," he said.