Stadium naming rights aren't just about money
NEW YORK - When the economy was healthy, no one batted an eye at Citigroup Inc.'s agreement to spend millions of dollars to put its name on the New York Mets' new stadium.
But in a recession that has seen the bank accept $45 billion in government bailout money, the move is viewed by some lawmakers as an example of lavish spending - akin to millions of dollars spent on corporate jets.
Business experts say advertising and other marketing efforts are not luxuries at all. To the contrary, they say, strong marketing strategies are even more important in tough economic times.
According to Mark Peroff, an intellectual-property attorney at Hiscock & Barclay in New York, a stadium deal is "probably the most economical way to advertise because of the number of people that you capture."
The question, though, is how appropriate the deal is now that the landscape has drastically changed.
"You have to have the right tone. People in these times have very sensitive ears," said Don Sexton, a professor of marketing at Columbia Business School and a principal at Arrow Group Ltd., a marketing consulting firm. "Perceptions rule."
Citigroup's deal with the Mets is the biggest stadium naming rights deal ever. The bank is paying $400 million over 20 years to call the ballpark Citi Field. Citigroup is not alone - Bank of America, also operating with the help of government capital - is reportedly paying $7 million a year for naming rights to the Carolina Panthers stadium.
Bank of America spokesman Joe Goode said team sponsorships aren't just marketing tools, but also business relationships. Bank of America issues sports-themed cards for consumer accounts, as well as offering financial services to teams, he said. He estimated that every dollar spent on sports-related deals generates $10 of revenue and $3 of income.
Sexton said, however, that from a branding perspective, there's no hard data to prove how effective stadium naming rights are for financial services firms.
"I have not seen that putting a name on a field elevates your brand," Sexton said. "The basic idea of a brand is not that they know your name, but what your name stands for."