Citi, AIG Won't Drop Big Sports Sponsorships

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."

AIG Responds to Manchester United Deal

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.

AIG and Citibank are just two examples TCS cites of institutions who are taking federal money with one hand, and paying hefty sums to sports sponsorships and naming deals with the other. Many are banks which are not perceived as financially faltering, who have taken money from the Treasury's Troubled Assets Relief Program (TARP) to boost their anemic lending.

Bank of America (TARP take: $25 billion) is reportedly poised to ink a $20 million-a-year sponsorship with the New York Yankees – a team that is hardly hurting for cash. They are already in a reported 20-year, $140 million deal with the Carolina Panthers football team to call the team's arena "Bank of America Stadium."

Bank of America spokesman Joseph Goode said his bank's deal with the Panthers is making the bank money. "Any investments we make in sponsorship marketing are directly linked to driving revenue growth for the bank," he said, noting the deal also allowed Bank of America to market debit cards with the Panthers logo. He would not comment on the reported pending deal with the Yankees.

Even before the crisis, some marketers believed the naming and sponsor deals were idiotic. "It's pretty clear that it's a complete and utter waste of money, ego-driven," said Seth Godin, a marketing guru and bestselling author.

Other Firms Take Public Support, Keep Sponsorship Deals

It's time for banks to re-evaluate these deals, says Ellis. U.S. taxpayers ponied up billions to these to lend because they wouldn't do it with their own money, said Ellis. But now, "Just as Americans all over the country are having to decide, 'what am I going to do without?' companies are going to have to make those decisions," he said.

"At the end of the day, they've got to look at the taxpayers and say, 'Yeah, we'll take your money and spend some of our assets on [naming] a stadium, or a college bowl,'" said Ellis. "That's a hard sell to the public, obviously."

Who else is taking public support while holding pricey naming deals? It's not a short list. Among the biggest:

PNC Bank ($7.7 billion in TARP funds pledged) is locked in a 20-year, $30 million deal to keep the home of the Pittsburgh Pirates named "PNC Park." A spokesman there said the bank did not use TARP funds to make payments on the deal.

J.P. Morgan Chase ($25 billion from TARP) has a 30-year, $66 million contract for the Arizona Diamondbacks to call their stadium "Chase Field." "That was an agreement that was signed 11 years ago," by a bank that was bought by Chase, said bank spokesman Tom Kelley. "Tell me what 2008 has to do with 1997? That's a contractual obligation."

Comerica ($2.3 billion in TARP funds pledged) has an identical deal with the Detroit Tigers to refer to their home field as "Comerica Park." Both expire in 2028. "From our perspective, they're not connected," said Comerica's Wayne Mielke of the stadium deal and the bank's anticipated receipt of bailout funds. "Why should it be reviewed?" The cost of the naming rights, said Mielke, "does not inhibit our ability to lend."

Capital One – famous for their tagline, "What's in your wallet?" and a recipient of $2.3 billion in TARP money – are the proud and paying sponsor of the Capital One Bowl, formerly known as the Florida Citrus Bowl. The bank did not respond to requests for comment.

Naming deals are "a big gamble," said Steve Hall, a marketing industry veteran who writes a popular advertising blog, AdRants.com. "My whole issue with the naming rights is, in a lot of cases it just sounds stupid. 'Staples Center'. . . It's sort of taken away the good old glory days of sports."

That said, Hall noted that buying a stadium gets a company's name repeated an awful lot. "When a stadium gets named after a company, it gets mentioned millions of times," he said.

Spend Money on Customer Service Not Naming Rights, Says Critic

Instead of spending millions on naming rights, marketing guru Godin says, why not invest in something that will really improve the credibility and public opinion of banks: customer service. "Instead of spending $400 million to put your name on the side of a stadium, how about hiring enough people so that every time someone calls you on the phone it would be answered by someone who knew your name and was delighted to hear from you?"

Despite the criticism from watchdogs like Taxpayers for Common Sense, given the current crisis Godin said banks would be right to follow through with these costly sponsorships. The economic collapse is being fueled by a lack of confidence in what tomorrow will bring, he said, and banks' changing their behavior would signal that fear is justified.

"When banks walk around. . . wasting money on sports sponsorships," said Godin, "it sends a message of profligate spending and confidence."

Click Here for the Investigative Homepage.

-- This embed didnt make it to copy for story id = 6321691. -- This embed didnt make it to copy for story id = 6321691. -- This embed didnt make it to copy for story id = 6321691. -- This embed didnt make it to copy for story id = 6321691. -- This embed didnt make it to copy for story id = 6321691. -- This embed didnt make it to copy for story id = 6321691. -- This embed didnt make it to copy for story id = 6321691. -- This embed didnt make it to copy for story id = 6321691. -- This embed didnt make it to copy for story id = 6321691.
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...