Name of New Mets Ballpark

Bailout Ballpark. Taxpayer Field. Subsidized Park.

All the names are catchy, and perhaps appropriate. Nevertheless, the new ballpark under construction for the New York Mets will continue to be called Citi Field. But that name may be subject to change, based on the shifting tide of the financial landscape and the equally uncertain future of Citigroup.

At a time when Citigroup could still pretend that all was right with its balance sheet, the financial giant entered into the largest sports facility naming rights deal in history, a 20-year, $400 million contract with the Mets.

Now that the toxicity of Citigroup’s assets has been confirmed, and the government has agreed to a $345 billion bailout - $45 billion in direct investments and another $300 billion in guarantees – critics of the naming rights deal are having a field day, no pun intended. But their criticism is misplaced. Neither the naming rights deal nor its amount should be the issue.

When times are tough, marketing budgets should be among the last areas businesses seek to cut. Companies need to market their products, and to do that they need name recognition and exposure. The question that should be asked is whether a company receives value for its investment in marketing.

The visibility of the naming rights deal with the Mets makes it an easy target for those who are rightfully upset with the callous and reckless way Citigroup operated, which resulted in the need for a government handout. But that visibility merely suggests that the naming rights deal may in fact be an appropriate and effective use of marketing dollars.

If critics of Citigroup’s government subsidy want to get worked up over the company’s actions, a more appropriate target would be the compensation package afforded the bank’s executives. Those responsible for leading the financial giant down the road to ruin earned as much as $30 million per year. When he was finally asked to leave last year, Citigroup’s chief executive, Charles O. Prince III, was “rewarded” with an additional cash bonus of $12.5 million and stock valued at $68 million according to The New York Times.

Citigroup isn’t the only recipient of taxpayer funds to have naming rights sponsorships with sports entities. The list is long and includes a number of other financial institutions. Among the largest: PNC Bank ($7.7 billion) holds naming rights to the Pittsburgh Pirates’ ballpark, “PNC Park;” J.P. Morgan Chase ($25 billion) calls the Arizona Diamondbacks stadium “Chase Field;” Comerica ($2.3 billion) has its name on the Detroit Tigers’ stadium, “Comerica Park;” and Capital One ($2.3 billion) is the title sponsor of the “Capital One Bowl”.

AIG, the insurance giant that is being propped up by a $150 billion subsidy from Uncle Sam, has a $125 million sponsorship agreement with Manchester United, the British soccer club. At least with the Citi Field sponsorship, the argument can be made that bailout funds are being spent on American soil.

Not every company seeking a handout from the American taxpayers is continuing or expanding its sports sponsorships. General Motors, which along with the other Detroit automakers is on life support and seeking $25 billion in aid from Congress, has announced cutbacks on advertising in NASCAR and will eliminate all Super Bowl ads next year. The company has also cancelled a sponsorship agreement with Tiger Woods to endorse its Buick line. The original 10-year deal would have expired next year, but the parties mutually agreed to an early termination, saving the beleaguered company $7 million.

The sponsorship deal between GM and Woods was a one-way street - beneficial to Woods, but unproductive to the company and its shareholders. GM hoped to reduce the age of Buick buyers by aligning the brand with the youthful golfer. But the average age of Buick purchasers in 2008 was 68, the same as in 1997, according to a study by the auto research division of Strategic Vision, Inc. Sales of Buicks plunged 58% from 1999 to 2007, and fell an additional 24% this year.

Which brings us back to Citi Field. The issue shouldn’t be the amount of the sponsorship, but whether the deal will benefit Citigroup and its stockholders, a group which now includes the U.S. taxpayers. Based on early returns, the answer to that question is still unknown.

Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management at Eastern New Mexico University, teaches the Business of Sports at the University of Wyoming, and is a contributing author to the Business of Sports Network. Jordan can be reached at jkobritz@mindspring.com.

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MLB Free Agency

As the Major League Baseball free agent signing period begins in earnest – the first day teams can talk money with other teams’ free agents is November 14 – the question on everyone’s mind is, given the current state of the economy, will the big money be out there? The prediction here is...yes.

The economy may be in the doldrums, but most professional sports - although not recession proof - are recession “delayed.” Thanks to long-term contracts with TV networks, naming rights holders, sponsors, suite and season ticket holders, most professional leagues and teams can count on at least the same - if not increased - levels of revenue for the foreseeable future.

There are exceptions, for sure. As previously mentioned in this space, NASCAR has seen race attendance plunge and some teams are closing up shop in the absence of sponsorships. With the season ending this week, rumors are running rampant in the garage that hundreds of employees will be dismissed.

Major League Baseball, on the other hand, is swimming in an estimated $6.5 billion in revenue this year, a figure that will almost certainly be eclipsed next year regardless of the state of the economy. The sport is set to launch the MLB Network in January to the largest audience in the history of sports networks.

Not all MLB teams are flush with cash. The Arizona Diamondbacks recently announced the layoff of 31 front office employees. But the Red Sox aren’t likely to see a diminution of passion for their team. And the Yankees and Mets are moving into new stadiums that will generate obscene amounts of revenue. In the case of the Yankees, the 300 seats in the new Yankee Stadium priced at $2,500 per game – already sold out – will generate $60 million next year. That figure exceeds the ticket revenue generated by over half of MLB clubs in the 2008 season.

The uncertain economic climate led Commissioner Bud Selig to urge all clubs to exercise caution in their financial dealings, which is code for avoiding exorbitant free agent contracts. Super-agent Scott Boras pooh-poohed Selig’s cautionary tone, opining that baseball won’t be affected by the economy. “Baseball didn’t invest in derivatives and sub-primes,” he told NBCSports.com. “Baseball has long-term contracts with national and local TV networks…As I’ve said all along, the hay is in the barn.”

As someone who is given to hyperbole, it’s usually best to take anything Boras says with a barrel of salt. But in this instance, the hyperbolic agent is right on. His clients, including the top two position players on the market, Manny Ramirez and Mark Teixeira, are guaranteed to be well compensated. The only thing the economy may do is reduce the length of their free agent contracts. But teams will be willing to pay more up front to obtain increased flexibility down the road, which means the overall dollars are likely to be the same.

Case in point: When the Dodgers opened the bidding on Manny last week, speculation put the offer at $45 million for two years, with an option for a third year. While not publicly announcing the terms of the offer, Dodger GM Ned Coletti did say the offer would give the enigmatic slugger the second-highest average salary in the sport, behind only Yankee third baseman Alex Rodriguez. Whether the Dodgers are intent on signing Ramirez or merely trying to appease their fans, is another story.

According to the Los Angeles Times, Boras quickly rejected the offer as too short, having previously hinted that his client was seeking a six-year deal at $25 million per year. But that’s where the uncertainty of the economy may come into play.

Once the big names are off the board, there will likely be a feeding frenzy for the second tier of free agents. Clubs who never got in on the Manny or Teixeira sweepstakes will feel compelled to do something – anything – to convince their fan base that they want to win. To avoid the wrath of the press, and to prevent erosion in their ticket base, those clubs will likely overpay for mediocrity.

Welcome to MLB’s 2008 off-season. Less money for free agents as a result of the

economy? Don’t count on it.


Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management at Eastern New Mexico University, teaches the Business of Sports at the University of Wyoming, and is a contributing author to the Business of Sports Network. Jordan can be reached at jkobritz@mindspring.com.

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