Monday, November 24, 2008

Failed Companies On Your Stadium or Kit

ABC News' Justin Rood is reporting that Citi Group and AIG have no plans in following GM's footsteps and cutting back on their sports marketing plans:

"In boom times it was fine for AIG, Citi and others to spend millions on naming rights and other promotional arrangements with professional sports teams, critics say – even if they're a waste of money, as some marketing experts believe. But when the economy teeters on the brink of collapse – and firms are using American taxpayers' money to keep lending or just keep their doors open – those critics are making a stink about the expensive deals."

Quick point here on whether naming rights are a "waste of money".  They probably are, in the sense of driving traffic to that particular vendor of whatever they offering.  The marketing professionals who think this is a good use of money will argue that it doesn't matter if Manchester United fans go and check out AIG on the web after they watch their side play or not.  They still see the AIG logo emblazoned across the Best Player in the World's chest, and subconsciously, they are making that connection.  

But studies show that consumers are remarkably adept at learning how to filter out advertising messages--in fact, the more egregious the marketing is, the more likely we are to ignore it.  I have no evidence, but I'm guessing that most Manchester United fans know that AIG sponsors their team, but prior to the last few weeks, they couldn't tell you with any confidence what the hell AIG does.

The only in-your-face marketing that works any more is for brands that are already established in your head.  You see a Mello Yello NASCAR, or a McDonald's billboard, it reminds you that enjoy that product, and you start thinking about getting that product.  But if you saw a NASCAR with an unfamiliar company's name painted on the hood, how far out of your way would you go to find out more?  It only works if it reinforces something you already know, not to introduce you to something new.  It's "reminder marketing"--nothing more.

And now, while the corporations don't seem to eager to depart from their deals, it may be time for the sports franchises to reconsider.  Do the Mets, already famous for their build up of consumer confidence, only to fail late in the year in dream-crushing fashion, really want to be tied to their banking equivalent in CitiGroup?    Yes, they are getting $400 million over 20 years from CitiGroup.  They are also getting that money from an organization that needed your tax dollars to stay solvent for another week.  They also laid off 53,000 workers.  53,000!  That's at least 5 times more people than live in all of Wasilla, Alaska.  Could the Mets, even in a down economy, get someone else on board?  A sponsor that doesn't have the stink of failure and government bailout on them?  I don't see this as being much different than Enron Field.  

Let's not forget that the Houston Astros played in Enron Field (or that Enron agreed to play $100 Million Dollars over 30 years for the privilege).   It took the complete, extremely public disintegration of that corporation for that park to become Minute Maid Park.  

The corporations receiving helping hands from their government, and laying off real working men and women argue that there is no issue here--they are in binding contracts (which maybe true) and that, hell, what's $20 million dollars when you are a few Billion Dollars in the hole? (which may also be true, but really bad PR form).

From Justin Rood, again:

 PNC Bank ($7.7 billion in TARP funds pledged) is locked in a 20-year, $30 million deal to keep the home of the Pittsburgh Pirates named "PNC Park." A spokesman there said the bank did not use TARP funds to make payments on the deal.

 J.P. Morgan Chase ($25 billion from TARP) has a 30-year, $66 million contract for the Arizona Diamondbacks to call their stadium "Chase Field." "That was an agreement that was signed 11 years ago," by a bank that was bought by Chase, said bank spokesman Tom Kelley. "Tell me what 2008 has to do with 1997? That's a contractual obligation."

 Comerica ($2.3 billion in TARP funds pledged) has an identical deal with the Detroit Tigers to refer to their home field as "Comerica Park." Both expire in 2028. "From our perspective, they're not connected," said Comerica's Wayne Mielke of the stadium deal and the bank's anticipated receipt of bailout funds. "Why should it be reviewed?" The cost of the naming rights, said Mielke, "does not inhibit our ability to lend."

Capital One – famous for their tagline, "What's in your wallet?" and a recipient of $2.3 billion in TARP money – are the proud and paying sponsor of the Capital One Bowl, formerly known as the Florida Citrus Bowl. The bank did not respond to requests for comment.

So why play ball with these asshole companies?  I know why the corporations are still at it--the last positive thought anyone might have of AIG is going to be Ronaldo slotting some incredible set-piece game winning goal.  What's in it for Manchester United?  The Mets?  The Tigers? Why don't they cancel these deals? 

Look at the Diamondbacks--they are getting $2 million a year--that's enough to sign Chris Snyder, a catcher who hit .237 who was good for almost a strikeout a game.    The Pittsburgh Pirates are getting $1.5 million a year--good enough to sign a solid reliever in John Grabow on a team that had much, much bigger issues.

So why bother?  It is because MLB owners pale at the thought of having their stadiums clearly named by the highest bidder?  Would they rather their corporate relationship appear to continue on, ad infinitum?  This money doesn't seem to do anyone any good.

Again, GM has cancelled their deal with Tiger Woods, even though (or because) they haven't received any money from The American Taxpayer.  Seems to me a lot of companies that should be following their example are not only not following their example, they are aggressively demanding that they should not have to.  I assume as a new partial owner of these companies, I'll get a vote.  But I'm not holding my breath.


The Black Freighter said...

Good write-up and something a lot of people really don't question. I've always thought it was just a brutal marketing tool for companies you've never heard of... like you said, it only works for the established, like McDonald's, Coca-Cola or Target.

Muumuuman said...

Hey BBM, if you ever happen to get wealthy, could you please change one of the college bowl games to "The Big Blue Monkey Bowl!" That'd be AWESOME!