February 6, 2009
Citigroup Stadium Naming: Savvy or Strikeout?
The controversy over the Citigroup naming of the Mets' new stadium has brought to light how important advertising is to the success of a company.
The question everyone is so anxious about is how can Citigroup have the nerve to dump $400 million into the naming rights of a stadium when it's asking for $45 billion in bailout money?
Well, the simple answer is that a company that does not advertise is a dead company, and stadium naming, according to some experts, offers incredible value in terms of getting your name out there in the public consciousness. $400 million bucks is ultimately not that much given the scale of Citigroup.
The problem is that such a move creates the wrong perception among people who are hyper-sensitive to the excesses of the banking industry.
Fact is, the Mets have a legally binding agreement with Citigroup on this, and are expecting the returns off the naming to cover a great part of the stadium's running costs. Backing out of the deal would not only show bad faith on Citigroup's part, it would underline to everyone the sad state of the US financial world.
Maybe the cost is a little excessive, but it didn't seem that way in 2006 when the deal was done. The US Treasury is looking into this agreement and even they understand that marketing expenses are off limits - they are a necessary part of the bank's survival.
But the public sees this as an expenditure akin to the (admittedly ridiculous) $50 billion jet that Citigroup had to nix. This whole deal is wrongly making Citigroup look greedy and frivolous. It is creating what one bystander calls "bad will" instead of "good will."
The only upside? Citigroup may escape what the New York Times calls "the stadium naming jinx" - eg many big banks that have put their names on stadiums have gone bust. "Should Citigroup back out of its naming pact, perhaps it can remain merely beleaguered, rather than, say, liquidated."
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