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Monday, February 09, 2009
Citi and the MetsNo, I won't let this die. Here's the latest piece -- this time with numbers and smart people analyzing it and everything -- explaining why the Citigroup-Mets deal is actually a good thing:
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.
I continue to maintain that, were I the CEO of Citigroup, I would not have pursued this deal in the first place, because I tend to be dubious of the value of advertising which isn't associated with an offer or a call-to-action to begin with. But I also will admit that I really know jack squat about advertising. This article makes an argument that the deal is a good one as far as these things go. No one yet has pointed me to anything suggesting that, perceptions and politics aside, Citigroup's deal with the Mets is an objectively bad one. Until they do, I'm going to continue to have a hard time getting worked up over this.
Posted by Craig Calcaterra at 12:00pm
“perception and politics aside”?
You really are missing the point, aren’t you?
Posted 02/09 at 01:20 PM
Chris H. said...
The problem I have is that companies like FRA toss out figures like “$15m annual value” without actually substantiating it. No doubt they would insist that their valuation methods are proprietary, etc., but until someone can actually demonstrate real value behind stadium naming deals, I will continue to insist that they’re negligible and more the result of executive ego than anything else.
Posted 02/09 at 01:59 PM
Chris H. said...
Ugh. “Them.” Substantiating *them*.
We need an edit button, Craig!
Posted 02/09 at 02:00 PM
Let’s not forget that the only source in this entire article is Front Row Analytics, who probably had a hand in selling the deal to Citigroup. From their website:
“Front Row Marketing has performed extensive comparative analyses to facilitate mutually beneficial Naming Rights partnerships for venues across the country. Through a well thought-out sales process including price, terms, and benefits, Front Row Marketing solicits major regional and national corporations until an ideal candidate is found.”
God I hate marketing.
Posted 02/09 at 02:23 PM
Craig Calcaterra said...
Total—perception and politics should be a function of the underlying sense of the deal. There are a lot of things that are unpopular and appear to be politically tone deaf, but not all of them should be criticized because they are unpopular and tone deaf. Citi is a business with its ultimate reponsibility to its shareholders. Maybe you don’t like that, but that’s the law, and TARP’s no-strings-attached money didn’t change that.
That said, I’ll accept outrage and political point-scoring if it can truly be demonstrated in some tangible way that this deal is an absurd waste of money. As it is now, there are people who at least claim to know a few things about this issue saying that it’s not a silly waste of money by Citi. Maybe they’re right and maybe they’re wrong, but it strikes me that before everyone rushes to judgment on it, the pros and cons of it—and the exit strategy if the cons outweigh the pros—be rationally hashed out.
Maybe the people quotes in the linked article are full of it. But I don’t think we can say Dennis Kucinich is operating on anything approaching a reasonable plain himself in the comments he’s made about this deal.
Posted 02/09 at 02:24 PM
I went to see the Alvin Ailey performance at the Kennedy Center Saturday night, and noted that the program said something along the lines of (and I don’t have it in front of me), “Presented with the generous help of our friends at Citi.” My guess is that plenty of people in DC who work on Capitol Hill attended these performances and saw the same line, but never thought of turning it into a political football. But Citi’s sponsorship of the Mets’ new stadium is apparently fair game? Granted, we don’t know how much they spent, but to garner a mention there would probably require a few bucks, right?
I agree with Craig that I wouldn’t have bought the naming rights. But I also wouldn’t have given money over to Alvin Ailey in exchange for being thanked in their program materials. I don’t know if the marketing investment will pay off, but the continuing outrage over this deal from the political class is tiresome and disingenuous.
Posted 02/09 at 02:58 PM
Chris H. said...
Don’t misunderstand me: I think the hand-wringing about TARP funds is ridiculous, and the Democratic House Elf should go find something important to do.
I simply dispute the claims made by FRA, etc., as to the value of naming rights.
Posted 02/09 at 03:10 PM
Pete Toms said...
Last week deMause quoted somebody as saying (I’m paraphrasing) that Citi ain’t actually forkin over $20 million a year to the Mets but instead are “movin some decimals around” or somethin like that. Since Citi had a hand in the stadium financing they are shaving some points off in return for the rights deal. I don’t know if any of that is true or significant but it seems plausible to me and more importantly deMause.
Posted 02/09 at 08:53 PM
“Total—perception and politics should be a function of the underlying sense of the deal etc.”
Oy. The point you’re missing is that the stadium deal is standing in for all sorts of larger issues. Political debate tends to have larger debates by focusing on specific issues as placemarkers. The other classic is the use of corporate jets. An economic case could be made for those, but it’s not about that, its about the symbolism of CEOs being above everyone else. In the stadium case, it’s about pouring money into things not connected to a bank’s actual business.
Posted 02/10 at 09:50 AM