Citigroup Inc., targeted by lawmakers for paying $400 million to put its name on the New York Mets’ new ballpark, and eight other banks that received government funds may face questioning by Congress for spending $872 million on stadium sponsorships.
Bank of America Corp., which like Citigroup received $45 billion in government funds, is paying $140 million to have its name on football’s Carolina Panthers stadium. JPMorgan Chase & Co., which received $25 billion from the Troubled Asset Relief Program, is spending $66 million for branding Chase Field in Phoenix, home to baseball’s Arizona Diamondbacks.
Ohio Democratic Representative Dennis Kucinich, who last week urged the Treasury department to cancel Citibank’s deal, called spending by banks for naming rights “frivolous” and said Feb. 3 that he plans to hold hearings. Companies that received TARP funds are under scrutiny as President Barack Obama and lawmakers respond to public outcry over executive bonuses and questionable expenditures.
“I am not aware of any precedent for Congress pressing to void contracts that are not illegal,” said Ettie Ward, a law professor at St John’s University in Queens, New York, who edited “Courting the Yankees,” a book on legal issues in sports.
In 2006 when Citigroup signed the 20-year agreement with the Mets, the richest in U.S. sports, the lender said the partnership would raise its profile among customers. Now the company may lose potential clients because of backlash against the deal, says David Carter, executive director of the Sports Business Institute at the University of Southern California in Los Angeles.
‘Poster Child’
“It’s quickly becoming the sports-marketing poster child for the entire financial meltdown,” Carter said of Citigroup in an interview. “You may be harming the relationships you are trying to build.”
The nine banks received a total of $154 billion from the $700 billion U.S. bailout and are spending a combined $872 million for naming rights. U.S. banks have had $745 billion in losses and writedowns since the subprime mortgage crisis began in 2007.
Kucinich, chairman of the Domestic Policy Subcommittee of the Oversight and Government Reform Committee, said in an interview on Feb. 3 that banks in trouble shouldn’t be paying for naming rights.
“If you are in trouble financially, you don’t worry about putting your name on a baseball stadium,” said Kucinich. “It’s that simple.”
Spokesmen for Bank of America, JPMorgan and PNC Financial Services Group Inc. defended spending for naming rights. Representatives for Wells Fargo & Co., M&T Bank Corp., Comerica Inc. and BankAtlantic Bancorp Inc. didn’t return calls seeking comment.
‘We Understand’
“We understand the TARP funding is an obligation to taxpayers that we intend to pay back with premium,” said Joe Goode, spokesman for Charlotte, North Carolina-based Bank of America. “The only way we can do that is to pursue revenue- generating activities like these business relationships with sports organizations.”
Companies need to be careful how they handle their partnerships during the economic turmoil, Carter said.
“This will pass and sponsors and sports teams and leagues will once again have to do business with each other,” he said. “How they handle these current deals and work their way through them, and out of them, is going to have long-term ramifications if it’s perceived they’ll do whatever they can to get out.”
Citigroup was seeking ways to pull out of the Mets’ sponsorship, the Wall Street Journal reported Feb 3. The team said the agreement is still binding.
“No TARP capital will be used for Citi Field or for marketing purposes,” Citigroup said in a statement on Feb 3.
‘Challenging Time’
“We continue to review all our expenses from travel to real estate costs to staffing during this challenging time in the economy,” JPMorgan spokesman Tom Kelly said.
PNC Financial Services, which received $7.6 billion in TARP funds, is paying $40 million to get its name on the Pittsburgh Pirates’ ballpark.
“PNC’s naming rights at PNC Park is part of our overall marketing and advertising effort,” said spokesman Fred Solomon “It has been a successful partnership.”
Bank of New York Mellon Corp., whose name is on the Pittsburgh Penguins’ hockey arena, received $3 billion. The bank’s 10-year, $18 million deal with the Penguins expires at the end of this hockey season. Consol Energy Inc. agreed in December to become the naming-rights partner for Pittsburgh’s new arena that is scheduled to open in 2010.
Wells Fargo, which received $25 billion, has its newly acquired Wachovia brand on the Philadelphia arena where basketball’s 76ers and hockey’s Flyers play. The cost: $40 million.
Comerica, which received $2.25 billion, is paying $66 million for the rights to the Detroit Tigers’ baseball park.
The Baltimore Ravens football stadium is named after M&T Bank, which received $600 million in TARP money and is spending $75 million for naming rights. BankAtlantic, which obtained $124 million from the bailout package, is spending $27 million to have its name on the arena where the Florida Panthers play hockey.