The New York Times reports that Citigroup (NYSE: C) plans to commit $400 million to its naming rights deal for the stadium of the New York Mets. I say stop this deal!
Why? There are so many examples of companies that got into trouble after they named stadiums after themselves. In Boston, the stadium where the New England Patriots play was named after Gillette -- but Gillette doesn't exist anymore -- Procter & Gamble (NYSE: PG) bought it in 2005. And we had the Fleet Center, where the Boston Celtics play -- but Bank of America (NYSE: BAC) bought Fleet in 2003. And we also had the Tweeter Center, a concert venue -- named after Tweeter Home Enterprises which filed for bankruptcy last June. Fortunately, Boston's other world championship team, the Red Sox, has the good sense to deny naming rights to any company for its Fenway Park.
Now for Citi. According to the Times, it made its 20-year deal for the Mets naming rights back in November 2006 under previous CEO, Chuck Prince, after netting $5.3 billion in 2006's third quarter. But in the past three quarters, it has lost $17 billion - including a $2.5 billion loss reported on Friday.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter
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Reader Comments (Page 1 of 1)
7-20-2008 @ 10:32AM
Jerry Nemiroff said...
On this one I agree with you 110%. This was just another stupid deal by Chuck Prince. A complete waste of money as far as I am concerned. This is what happens when you give a completely unqualified individual too much power without a responsible Board Of Directors to temper poor policy making decisions. It should be cancelled if at all possible. A complete waste of money. Let me again thank Sandy Weill for throwing away Jamie Dimon who should have been running this company today, and instead giving us Chuck Prince who almost put Citi out of business.
7-23-2008 @ 1:42AM
Margy said...
If Citi wants naming rights to a stadium, they should forget the $400 million dollar deal in New York, and purchase the naming rights for the Jacksonville Municipal Stadium which is only $4 million. They would get back the $4 million in brand naming advertising when the Jaguars play their three prime time national games this year.
7-21-2008 @ 7:19AM
Ira Malis said...
Unforturnately, Mr Cohan is falling victim to the behavioral finance pitfall known as vividness. You remember the flameouts, but not the successes.
An equal weighted index (rebalanced annually) of all companies that had their names on the stadia of the four major sports, has soundly trounced the market over the past 13 years, advancing 305%, compared to a 105% increase in the S&P 500. The NRI (naming rights index) has beaten the market in 8 or 13 years.
The only rules I put into place, is that once a company has filed for bankruptcy, it does not have to be put in the following year's index. So when PSINet filed in 2000, the index reflected the 98% decline in PSINEt stock in 2000, but even though its name was on the building, it was not in the 2001 index.