Congress Wants to End Citigroup's Deal with the Mets - destined to fail

[shoeshineboy]

This is destined to fail, but it was good to see it actually get some mention. It stinks that we are not only underwriting failed CEOs and businesses but underwriting the Mets' ability to overpay for more players. Too bad this is more emblematic of Congress's failure than anything.

http://www.nbcnewyork.com/news/local/Congress-Wants-to-End-Citigroups-Deal-With-Mets.html

Late last year, two councilmen from Staten Island earned some publicity for themselves for proposing that the Mets change their stadium's name from Citi Field to Taxpayer Field after Citigroup took public funds to help survive the economic downturn. Now two members of the House of Representatives are jumping in and demanding that Treasury Secretary Timothy Geithner "dissolve" the contract between the Mets and Citigroup.

"Absent this outcome, we feel strongly that you should compel Citigroup to return immediately all federal money received to date, as well as cancel all loan guarantees," the letter, from Congressmen Dennis Kucinich and Ted Poe, stated.

Kucinich and Poe are sure to score points with those who are dismayed that their taxes were used to help a company that's paying $400 million to put their name on a baseball stadium. Who wouldn't get upset about something like that? Thing is, that boneheaded use of corporate money is exactly the kind of bad decision that the government absolved Citigroup and other companies of when they put the bailout into action.

Citigroup and the Mets entered into their agreement in 2006, well before any public money was being used. Citigroup was buying mortgage backed securities and credit default swaps at the same time, at least they got their names on a stadium as a result of the Mets deal. How do you decide which bad deals are covered by your bailout and which aren't?

That's why Kucinich and Poe's action is sure to fail, because Congress never fails to miss an opportunity to prove they don't know how to handle the financial storm. They should be focused on improving business practices, oversight and regulation to make sure that nothing like this ever happens again. Kicking an easy target, albeit one which deserves to be kicked, isn't going to make any measurable change for the economy or the citizens they're supposed to represent.

[Nat of the Living Dead]

Dennis Kucinich is truly a Martian and/or a whack job. But wouldn't it just be sweet if this did manage to find any water?

[shoeshineboy]

Dennis Kucinich is truly a Martian and/or a whack job. But wouldn't it just be sweet if this did manage to find any water?

Agreed on both.

[tomterp]

I have mixed feelings.  I agree with much of what you guys are saying, but on the other hand, businesses need to advertise and market themselves to continue to attract customers.  Many businesses find putting their name on a stadium is a very cost effective way of keeping their corporate brand name in the public eye.

I am personally acquainted with a guy who was one of M&T's biggest proponents of putting their name on the Ravens' stadium, and he's quite up on how much traffic passes by the stadium each day, and the mentions the stadium gets in the media, and they consider it a very economical way of marketing.

Are we now saying that the government is going to approve corporate decision making, even so far as to micro manage their advertising budgets?

[HalfSmokes]

I think people are a little quick to say this is sure to fail. Citi execs and mets execs may not want hearings and the attendant subpeonas - Kucinich may be a wack job, but his is chariman of a subcommittee that has jurisdiction

Are we now saying that the government is going to approve corporate decision making, even so far as to micro manage their advertising budgets?

until they have paid back the bailout loans - yes

[tomterp]

"Are we now saying that the government is going to approve corporate decision making, even so far as to micro manage their advertising budgets?"

until they have paid back the bailout loans - yes

And how are they to earn the cash to pay the loans back, absent marketing campaigns?  You want to tie their hands behind their back and then put them in the ring with the competition?

[Nat of the Living Dead]

I have mixed feelings.  I agree with much of what you guys are saying, but on the other hand, businesses need to advertise and market themselves to continue to attract customers.  Many businesses find putting their name on a stadium is a very cost effective way of keeping their corporate brand name in the public eye.

I am personally acquainted with a guy who was one of M&T's biggest proponents of putting their name on the Ravens' stadium, and he's quite up on how much traffic passes by the stadium each day, and the mentions the stadium gets in the media, and they consider it a very economical way of marketing.

I think this is highly overrated. I know of few people who actually went and signed up for Verizon just because they passed by or went to the Verizon Center. I don't think sports fans really care about that sort of thing and if they do, it's to voice their general distaste at having a brand name slapped all over everything they covet. There are always exceptions, but I doubt that much bread and butter for these companies comes from that.

Are we now saying that the government is going to approve corporate decision making, even so far as to micro manage their advertising budgets?

We are in/reaching desperate times. The companies certainly haven't learned anything.

[Nat of the Living Dead]

I think people are a little quick to say this is sure to fail. Citi execs and mets execs may not want hearings and the attendant subpeonas - Kucinich may be a wack job, but his is chariman of a subcommittee that has jurisdiction

The article said this deal was made back in 2006. Shouldn't there be some sort of grandfather clause or something in this case?

[blue911]

And how are they to earn the cash to pay the loans back, absent marketing campaigns?  You want to tie their hands behind their back and then put them in the ring with the competition?

I dunno Tom. Ford Field hasn't worked too well for either the sponsor or the tenant.

[tomterp]

I think this is highly overrated. I know of few people who actually went and signed up for Verizon just because they passed by or went to the Verizon Center. I don't think sports fans really care about that sort of thing and if they do, it's to voice their general distaste at having a brand name slapped all over everything they covet. There are always exceptions, but I doubt that much bread and butter for these companies comes from that.

We are in/reaching desperate times. The companies certainly haven't learned anything.

Companies wouldn't do the naming thing if they didn't think it helped their businesses.  Why do you think all the Bowl games are now sponsored?  Same deal.  Marketing budgets is NOT an area I would want bureaucrats mucking around in, what the heck do they know?

Mind you there's been plenty of mismanagement, and I'd love to see the Mets lose a big $ sponsor purely for competitive reasons, but bailout or no bailout, I don't see marketing budgets as the government's business.

[tomterp]

I dunno Tom. Ford Field hasn't worked too well for either the sponsor or the tenant.

I'm not arguing that field naming rights is a panacea for all that ails a company.  Obviously, it's a small component of the marketing budget, which is in turn only one part of a company's whole existence, quality products being the most important. 

[HalfSmokes]

Companies wouldn't do the naming thing if they didn't think it helped their businesses.  Why do you think all the Bowl games are now sponsored?  Same deal.  Marketing budgets is NOT an area I would want bureaucrats mucking around in, what the heck do they know?

Mind you there's been plenty of mismanagement, and I'd love to see the Mets lose a big $ sponsor purely for competitive reasons, but bailout or no bailout, I don't see marketing budgets as the government's business.

I think naming rights has more to do with ego than anything else, same with bowl games. As far as them paying off the loans- selling off the component parts of Citi would be a nice start.

[Minty Fresh]

I dunno Tom. Ford Field hasn't worked too well for either the sponsor or the tenant.

[blue911]

I'm not arguing that field naming rights is a panacea for all that ails a company.  Obviously, it's a small component of the marketing budget, which is in turn only one part of a company's whole existence, quality products being the most important. 

Although I'd love to see the Mets have to find another sucker, a deal's a deal.

[Nat of the Living Dead]

Although I'd love to see the Mets have to find another sucker, a deal's a deal.

Except when the Lerner's don't pay the rent for unfinished work. Then it's just considered cheap.

[shoeshineboy]

I have mixed feelings.  I agree with much of what you guys are saying, but on the other hand, businesses need to advertise and market themselves to continue to attract customers.  Many businesses find putting their name on a stadium is a very cost effective way of keeping their corporate brand name in the public eye.

I am personally acquainted with a guy who was one of M&T's biggest proponents of putting their name on the Ravens' stadium, and he's quite up on how much traffic passes by the stadium each day, and the mentions the stadium gets in the media, and they consider it a very economical way of marketing.

Are we now saying that the government is going to approve corporate decision making, even so far as to micro manage their advertising budgets?

I have no issue with companies spending the money on a stadium naming. I just have an issue with the fact that the Mets got the biggest deal available for naming rights and one of the reasons that money is still going into their hands, while the market for that sponsorship has dried up for folks like the Nats, is because the taxpayers are bailing out Citigroup.

[blue911]

Except when the Lerner's don't pay the rent for unfinished work. Then it's just considered cheap.

I trust the Lerner's to make sure that Nationals Park is properly maintained a billion times more than I'd trust the City.

[Nat of the Living Dead]

Not that this has much to do with anything with this thread, it does give you the impression that this crap is about to totally go over the brink:

http://www.cnn.com/2009/POLITICS/01/30/executive.pay/index.html

[tomterp]

Bonuses should be variable compensation, only paid out when
1- the employee, or unit the employee is in, meets its performance goals, AND
2- the company is profitable overall.

At some point, however, bonuses on Wall St. have become the norm, as opposed to an "at-risk" component.

[HalfSmokes]

Bonuses should be variable compensation, only paid out when
1- the employee, or unit the employee is in, meets its performance goals, AND
2- the company is profitable overall.

At some point, however, bonuses on Wall St. have become the norm, as opposed to an "at-risk" component.

The problem is certain groups met number 1. Lets say you have a wealth management group at an insolvent bank that managed to be highly profitable. If the company said sorry no bonuses, they could easily say ok, and take signing bonuses at competitor and take a chuck of their clients with them. If the base salaries are low and compensation is bonus driven, earners will expect bonuses or go elsewhere. You could say something about loyalty, but given the amount of layoffs on wall street that would be a joke.

[The Chief]

I didn't even get a cost of living increase this year, much less a bonus

[tomterp]

The problem is certain groups met number 1. Lets say you have a wealth management group at an insolvent bank that managed to be highly profitable. If the company said sorry no bonuses, they could easily say ok, and take signing bonuses at competitor and take a chuck of their clients with them. If the base salaries are low and compensation is bonus driven, earners will expect bonuses or go elsewhere. You could say something about loyalty, but given the amount of layoffs on wall street that would be a joke.

That's pretty much the argument the Wall Street firms are making, but if they are all losing money, and they are all precluded from paying the bonuses, maybe the effect is mitigated.

[HalfSmokes]

That's pretty much the argument the Wall Street firms are making, but if they are all losing money, and they are all precluded from paying the bonuses, maybe the effect is mitigated.

not really, there are smaller and private firms poaching like crazy now. Merrill brokers have been jumping ship to firms that are trying to expand; it seems like almost every issue of WSJ has another story about it.

[tomterp]

not really, there are smaller and private firms poaching like crazy now. Merrill brokers have been jumping ship to firms that are trying to expand; it seems like almost every issue of WSJ has another story about it.

I have no problem with that. Merrill screwed up big time.

[HalfSmokes]

I have no problem with that. Merrill screwed up big time.

BoA is loosing alot of the value of that purchase. Then again as a former Fleet customer who enjoyed the transition to BoA, I hope they go away

Congress is now looking at capping pay for employees at firms that recieved bailouts at 400k per year. Hope it passes, it will definately be an attorney employment act for employees with contracts - has congress ever heard of the takings clause?