Why The Mets Deal Is Right For Citi

Citigroup and other financial service companies are sweating out a public relations disaster for spending on sports stadium naming rights while taking TARP money from the government.

As the biggest and most expensive deal, Citigroup's 20-year, $400 million agreement to slap its name on the New York Mets' new ballpark in Queens has become a lighting rod for ire from fans and politicians like Rep. Dennis Kucinich, D-Ohio, who see it as essentially handing taxpayer money to wealthy owners and athletes.

But the backlash stems more from perception than from reality. Stadium naming rights deals make money, at least when they're done right. In addition to the general exposure, a company like Citi gets its foot in the door to handle all of the banking for the team and the venue, access to players and their agents and a place to drum up business with other team sponsors in the corporate suites.

"That's often a way to do deals," says William Chipps, a senior editor with IEG Sponsorship Report, which analyzes corporate sponsorships.

Citigroup is one of six major banks taking TARP money while their names adorn sports stadiums. The others: JPMorgan Chase (Arizona Diamondbacks); Bank of America (Carolina Panthers); PNC Financial (Pittsburgh Pirates); Comerica (Detroit Tigers); M&T Bank (Baltimore Ravens); and Bank of New York Mellon (Pittsburgh Penguins).

Altogether, there are 24 financial services firms with their names on Major League Baseball, National Football League, National Basketball Association and National Hockey League venues, making it the largest sector in the business.

Front Row Analytics, a consultancy that helps sports franchises value sponsorships, says television exposure in New York media market is a $15 million annual value for Citi, 75% of the $20 million the company is paying the Mets. Throw in national television (the Mets are scheduled for at least 10 games on ESPN and Fox, more if they make the postseason), on-site signage exposure, plus the revenue potential from stadium ATMs and suite deals with other sponsors, and Citi is well into the black. The estimated value from hosting an All-Star Game, which is likely in a new park's early years, is $11 million.

"People see the sign on the building, but it's much more than that," says Eric Smallwood, a Front Row Analytics vice president. Officials from Citigroup did not return calls for comment.

Estimating the value of a sports sponsorship certainly involves some guess work, and there's the growing chance Citi could become so vilified that a large public reminder of the bank will hurt, not help, marketing. For the Mets, too, the risk of implosion is real--witness the Houston Astros scrambling for a new partner after Enron blew up in 2002.

Citigroup's total deal with the Mets is equal to less than 1% of the $45 billion in TARP funds the company is due to receive. The current mess exacerbates the bank's need for profit making, and that means marketing. Like it or not, the company stands a better chance of repaying taxpayers with the Mets than without them.