To be sure, this is the season of knee-jerk reactions. Suddenly, corporate America can do nothing right—in fact, everything from executive compensation to promotional budgets has been denounced as a waste of taxpayer funds. What a shame that so few elected political leaders understand the real world. The irony became stronger in recent days as the government rolled out its plan to deal with toxic assets. Clearly, some government officials have begun to realize that they’ll need the private sector as a partner to help solve the nation’s financial mess.
One of the city’s largest private employers, Citigroup, has come under populist fire for its 20-year, $400 million partnership deal with the New York Mets, a deal that included naming rights to the Mets’ new stadium in Queens. Citi, of course, has fallen on hard times. It received $45 billion in funds from the Trouble Assets Recovery Program and another $300 billion in federal loan guarantees. Even with that help, Citi has had to lay off more than 50,000 workers.
Several members of Congress have demanded that Treasury Secretary Tim Geithner find a way to cancel Citi’s deal with the Mets.
That opposition is part of a broader attempt to force damaged companies to abandon rational, legitimate business practices simply because they received taxpayer support. By making the simple act of advertising a product or holding an off-site business meeting taboo, demagogues are not helping Citi, AIG, Bank of America or the economy in general. Rather, they are prolonging the day when these companies will pay back the taxpayers in full.
Citigroup agreed to pay the Mets $20 million a year for 20 years in 2006, back in the days when a “tarp” was something groundskeepers rolled onto the infield during rainstorms. The Mets named their new stadium Citi Field, but the deal was about more than just naming rights. In fact, it was an investment in a partnership with the Mets that includes significant media currency and many other opportunities to interact with potential clients.
While everyone is focused on the large price tag of $20 million per year, when fully understood, Citi’s partnership with the Mets makes sense on many levels. As an advertising strategy, it’s hard to beat. Up to four million people will visit Citi Field this year. Millions more will pass by the stadium as they battle traffic on Roosevelt Avenue, Northern Boulevard, the Van Wyck Expressway and the Grand Central Parkway. The Citi Field logo is visible from the Long Island Rail Road, the No. 7 subway line—and even from the air, as planes depart and arrive at nearby La Guardia Airport. Citi’s deal will grow public awareness of the bank’s services and will build partnerships with potential customers. How is it wasteful to make a bid to become the dominant bank in the most lucrative banking market in the world?
Citigroup is headquartered in New York and employs nearly 30,000 people here, including nearly 6,000 in Queens, making it the borough’s largest private employer. Citi intends to use its extensive roots in the community to bring underprivileged children to the stadium, and is partnering with individual Mets players to bring financial literacy programs to the city’s public schools.
Critics need to realize that banks, car companies and insurance giants—humbled though they are—still have to advertise their products, still have to reach out to local communities and still have to travel to meet clients and would-be clients.
Citigroup’s deal with the Mets is good for the city. Critics of the deal should spend more time understanding the full package of benefits and less time trying to make it a political piñata. Furthermore, at the rate the Treasury is printing money, $20 million per year might seem like a bargain if we enter a period of hyperinflation. Just like most of the business practices that the government is criticizing, Citigroup’s deal with the Mets is the sort of thing that should be judged by its impact over time and not condemned today.