When the economy was healthy, no one batted an eye at Citigroup Inc.'s agreement to spend millions of dollars to put its name on the New York Mets' new stadium.
But in a recession that has seen the bank accept $45 billion in government bailout money, the move is viewed by some lawmakers as an example of lavish spending — akin to millions of dollars spent on corporate jets.
Business experts say advertising and other marketing efforts are not luxuries at all. To the contrary, they say, strong marketing strategies are even more important in tough economic times.
According to Mark Peroff, an intellectual property attorney at Hiscock & Barclay in New York, a stadium deal is "probably the most economical way to advertise because of the number of people that you capture."
The question, though, is how appropriate the deal is now that the landscape has drastically changed.
"You have to have the right tone. People in these times have very sensitive ears," said Don Sexton, a professor of marketing at Columbia Business School and a principal at the The Arrow Group Ltd., a marketing consulting firm. "Perceptions rule."
Citigroup's contract with the Mets is the biggest stadium naming rights deal ever. The bank is paying the team $400 million over 20 years to call the ballpark Citi Field. Citigroup is not alone — another bank operating with the help of government capital, Bank of America Corp., is reportedly paying $7 million a year for naming rights to the Carolina Panthers stadium.
Bank of America spokesman Joe Goode said a bank's team sponsorships aren't just marketing tools, but also business relationships. BofA does sports-themed bank and card accounts for consumers, as well as financial services for the teams, he said. He estimated that every dollar spent on the company's sports-related deals generates $10 in revenue and $3 in income.
Sexton said, however, that from a branding perspective, there's no hard data to prove how effective stadium naming rights are for financial services firms.
"I have not seen that putting a name on a field elevates your brand," Sexton said. "The basic idea of a brand is not that they know your name, but what your name stands for."
Citigroup has been a well-known bank for years. Its image, however, along with many companies in the financial services industry, has been sullied as the financial crisis throttled the economy. The company reported five straight quarters of losses, got a rescue package from the government, eliminated 75,000 jobs and got heavy play in the headlines for its plans to buy a $50 million corporate jet — which it soon scrapped after the government cried foul.
William Madway, marketing instructor at Villanova School of Business, agreed there is little data to show the efficacy of stadium deals. But, he says, the Citi Field deal could be very lucrative as long as the bank takes advantage of what the deal represents: supporting the great American pastime, for example, or riffing off the Mets' reputation as an underdog team that has made some great comebacks.
"This is not a silly thing. This is not an indulgence. This is not a corporate jet," Madway said. But, he added, "if they just have the name, and that's all they do, it's not going to work."
Citigroup, which said it has no plans to abandon the contract, noted back in 2006 the deal will not only include naming rights, but also ATMs at the ballpark; promotional programs for fans, Citigroup clients and employees; the creation of a Jackie Robinson Foundation Museum and Education Center in Manhattan; and other ventures.
Part of the reason it's hard to predict the value of a sports team sponsorship for a bank's bottom line is that, simply, sponsorships have tended not to last very long. The financial services industry has seen huge changes even before the financial crisis hit.
Philadelphia's arena for the 76ers and the Flyers is a prime example. It's called the Wachovia Center, but Wells Fargo & Co. acquired Wachovia Corp. on Jan. 1. Five years ago, the arena was named after First Union, which bought Wachovia and took over the Wachovia name. Five years prior to that, it was named after CoreStates Bank, which First Union took over.
But even in good economic times, there can be dissent from fans who don't like their team's venue plastered with corporate branding. When it was time to replace the old Boston Garden, the new arena was called the Shawmut Center, then the FleetCenter, and finally TD Banknorth Garden.
"Purely personally, it annoys me as a Celtics fan," Sexton said.
But to Peroff, Citi Field appears to be a smart investment. He said $20 million a year for 20 years is "a drop in the bucket" when you consider Citigroup's revenues, which last year exceeded $52 billion. He pointed to the millions of people attending Mets games, watching the games on television, and those driving by the stadium every day.
Furthermore, some lawmakers' argument over the appropriateness of the deal does not even touch the issue of encouraging a major company to scrap a contract — a bad precedent to set, Peroff said.
A company's image, however, is driven by many factors. And the people in charge of marketing at big banks using taxpayer money cannot operate as they did a few years ago, said Sexton.
He said it would make more sense if banks spent money on ads and efforts at the branch level to educate consumers about how to handle their finances in a downturn.
"Nowadays, managers need to be especially sensitive to the fact that there's a big chunk of the country that is really badly hurt," Sexton said.