BOA bails on the Yankees

Pete has been agitating about this for a while, but now it’s official:

The New York Yankees and Bank of America ended months of negotiations on a long-term, high-profile sponsorship agreement, fallout from the financial industry’s decision to accept aid from the federal government.

While the sides never discussed naming rights to the team’s new $1.5 billion stadium, they had talked about the possibility of a 20-year deal that would have included signage, special events and tickets.

“With the downturn in the economy and the effect on financial institutions including government support of those institutions, we have determined that it is better to enter into a traditional business arrangement with a financial institution,” Yankees spokeswoman Alice McGillion said.

It’s tough out there.

Here’s a partial answer to a question raised by commenters in the Barney Frank thread yesterday:

“We recognize that our decision not to pursue a long-term partnership with the Yankees reflects a lost revenue opportunity for our company, however these are unprecedented times that perhaps call for some very difficult decisions,” Goode said.

He estimated that each dollar spent by BOA with the Yankees and similar sponsorships generates a return of 10 times in revenue and threefold in income. Goode said spending sponsorship money with the Yankees had boosted BOA’s consumer banking, commercial lending and wealth management businesses.

I won’t hold my breath for the worksheet Goode used to come up with those figures, such as they are, but in the meantime I’m not buying it.

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  1. Jason Rosenberg said...

    Maybe I’m being simplistic, but if Goode’s numbers are even CLOSE to being right, isn’t passing on this deal grounds for immediate firing? I mean, a 3:1 Net return?!?

    Call me skeptical…

  2. Millsy said...

    10 to 1 returns.  Wow.  I guess we now have ‘numbers’ for this sponsorship stuff.  If that were truly the case, banks and other companies would be pretty cutthroat at becoming sponsors of these teams…even for 9 times what BOA paid for.  We don’t really see that competitive of a bidding process for this stuff, though…meaning either A) there’s really virtually unlimited supply of advertisting inventory through a team and, therefore, plenty to meet demand or B) Goode is full of crap.  I’m going to guess it’s a little of A and a lot of B.

  3. Pete Toms said...

    Yes I have been prattling on about this in our discussions about Citi Field and TARP $$$ etc.  I got it wrong though.  I thought the deal was done and BofA and the Yanks were laying low due to obvious reasons….I was waiting for the backlash…

    Add this to the Yanks difficulty in selling seats in the “bowl”, hiring outside help to assist in moving unsold luxury suite inventory and Hank, Hal, Lonn and Randy must be sweatin a bit.

  4. kendynamo said...

    oh no way, this guys numbers HAVE to be totally accurate!

    pfft!  no, obviously i am as sceptical about the BS this spin doctor come up with as all of you.  but thats rather far along the tangent from what was brought up yesterday (a mornic congressman who’s made spectacular blunders in financial policy very recently knowing more about bank marketing than actual bank marketers).

    and i agree, if BOA could actually get a 3 to 1 return per dollar spernt on advertising it would be criminal NOT to do the deal.  clearly those numbers are crap.  and the computation is massivly more complicated than that. it’s kind of like the keynesian logic being used to justify the stimulus package, that every dollar spent will return 1.5 to the economy.  well if that was the case why not spend infinity billion dollars and make us all wealthy beyond our wildest dreams?

    whoops, sorry for going there.  back to the point, yes this BOA guy is full of crap.  but there are still people crunching numbers professionally to try and find accurate numbers for return on dollar investments for coporate stadium sponsorships.  these numbers, however, are not divulged by PR men when talking to newspapers.

  5. John Bee said...

    “(Goode) estimated that each dollar spent by BOA with the Yankees and similar sponsorships generates a return of 10 times in revenue and threefold in income.”

    Isn’t revenue income? Isn’t income revenue? What am I missing here? Do these economists think we are all stupid? I’m insulted at this use of lingo designed to confuse and impress.

  6. joepro said...

    I have no love for b of a, I think they have the attitude that the government will never let them fail, and they may be right.  I’m mostly upset that they just built two BRAND NEW branches near my house, and are asking the government for like $40 billion.

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