There's a Reason Enron Field is Gone

Given my post yesterday, I was very excited to pick up the Wall Street Journal this morning and read the front page headline, "Citigroup Explores Breaking Mets Deal." [WSJ Online is by subscription, but you can check out a summary here.]

The deal would give Citigroup, Inc. naming rights to the new Mets stadium in a 20 year, $400 million marketing deal.

This comes on the heels of a letter by U.S. Representatives Dennis Kicinich (D., Ohio) and Ted Poe (R., Texas) advising Treasury Secretary Timothy Geithner:

"Citigroup is not dependent on the support of the federal government for its survivall as an institution...As such, we do not believe Citigroup ought to spend $400 million to name a stadium at the same time that they accept over $350 billion in taxpayer support and guarantees."

But Citigroup says it is locked into a deal. A CNN report detailing how Citigroup does intend to spend its $45 billion in bailout funds read:

Citigroup told CNN in a statement though that it has a "legally binding agreement" with the Mets, and that it is "using no TARP capital for Citi Field, or for marketing purposes."

One must, of course, consider the fee that Citigroup would have to pay to back out. Plus that might set a "bad precedent." According to an executive quoted in the Journal:

"If we cave for political reasons, it will have enormous implications for our ability to contract with third parties."

Oh, really? I thought it was problems in "contracting" with "third parties" that caused this whole mess. Shouldn't your new financial backers (read: taxpayers) have some say in the way you operate? If you don't want to be influenced by politics, don't beg the government for taxpayer money.

There is hope in sight, however. The Journal goes on to make a very astute observation,

If Citigroup parts ways with the Mets, other financial institutions may find themselves under pressure to reconsider sports-marketing deals.

Right now, it's a spin on the prisoner's dilemma for the banking giants. If one defects, they will all be pushed to follow suit in an attempt to seem benevolent. If none defect, they will be able to remain as they are, mistrusted by the public but still operating on their own terms. The greatest hope is that one will crack under public pressure and set the precedent for the rest. Citigroup may be the first, given its report on spending and its consideration of backing out of the deal.


A note:
The article doesn't go here, but I would like to know exactly how banks benefit from these deals. Does the stadium just act as a giant billboard and place for people to sign up for bank accounts? I'm operating on the assumption that this is just $400 million worth of advertisements that will not be recouped, and I would like to see how else Citigroup intends to capitalize (as in, you know, make money) on the deal.