Bank of America sponsorship deal collapses

Open Thread: Supporting A-Rod
Manny rejects Dodgers again for the fourth time

On the day we first reported on the potential Bank of America sponsorship deal the Yanks were set to sign for the new stadium, the Dow closed at 11510.74. Tonight, the market sleeps at 7182.08, and the potential sponsorship deal is dead.

The AP reported on the demise of a deal that could have brought the Yanks upwards of $20 million a year for the next 20 years. Ronald Blum writes:

The New York Yankees and Bank of America ended months of negotiations on a long-term, high-profile sponsorship agreement, fallout from the financial industry’s decision to accept aid from the federal government.

While the sides never discussed naming rights to the team’s new $1.5 billion stadium, they had talked about the possibility of a 20-year deal that would have included signage, special events and tickets.

“With the downturn in the economy and the effect on financial institutions including government support of those institutions, we have determined that it is better to enter into a traditional business arrangement with a financial institution,” Yankees spokeswoman Alice McGillion said.

According to the AP, BoA had been the Yanks’ official bank since 1994. It’s unclear if they will continue to sponsor the team in a more limited capacity.

Meanwhile, it’s a bad sign for everyone that Bank of America backed out of a deal that is both lucrative for them and for the Yanks. According to the AP Joe Goode, a bank spokesperson, noted that a spending of $1 by the bank on the Yanks generated a 1000 percent revenue return and a 300 percent income return.

“We recognize that our decision not to pursue a long-term partnership with the Yankees reflects a lost revenue opportunity for our company, however these are unprecedented times that perhaps call for some very difficult decisions,” Goode said.

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Open Thread: Supporting A-Rod
Manny rejects Dodgers again for the fourth time
  • Mattingly’s Love Child

    Eh, better to not get the sponsorship dough from a bank that may not exist in 6 months, or at least may be a federal bank (then Barney Frank will be pushing for them to break their contract, like Citi with the Mets). Better solution is to find several other smaller sponsors that are a little more financially stable that add up to $20 million.

  • Artist formerly known as ‘The’ Steve

    “Meanwhile, it’s a bad sign for everyone that Bank of America backed out of a deal that is both lucrative for them and for the Yanks. According to the AP Joe Goode, a bank spokesperson, noted that a spending of $1 by the bank on the Yanks generated a 1000 percent revenue return and a 300 percent income return.”

    Bingo, and all the companies taking the government money are facing similarly nonsensical strings attached. B of A is one of the more sympathetic cases, the Feds twisted their arm to buy Merrill Lynch in the first place, now they’re in trouble and forced to take TARP money. Once you do that, the Feds get to tell you how to run your biz.

    Another example of this is Congress is looking at limiting executive bonuses. Sounds great politically, makes zero sense business wise. The execs get those bonuses because they bring in huge amounts of business for the firm. That’s how Wall St works. If companies have to limit those packages, those execs will simply leave the firm for smaller firms that aren’t accepting TARP dollars and take their clients with them. So a company that’s ALREADY in trouble will now get hurt further by losing what business they have left in this down economy. Good luck getting any of these ‘loans’ paid back when you’ve destroyed what’s left of the company. Utterly, colossally stupid. The type of stupidity that could only come out of Washington.

    This is why we shouldn’t be bailing them out. There’s no point in having them go out of business in both scenarios, but choosing the one where they take billion of taxpayer $ down with them.

    • Mattingly’s Love Child

      AIG screwed everything up, in regard to the bonuses. They were giving their people retention bonuses with our tax money. I’m sorry, your resume isn’t worth shit if you’re coming from a company that needed the Federal Government to prop it up. So if those idiots who screwed up want to leave AIG, they should have just let them…..this set the tone for all of the other bailouts.

      • Artist formerly known as ‘The’ Steve

        Again, they shouldn’t try to preserve these firms. Set up an RTC like we did in early 90’s after the SNL’s failed and liquidate their assets. But having Congressmen telling huge banks and Wall St firms how to run their businesses is a recipe for disaster. And since were talking about Congress, a very expensive one. A best case scenario could be a lost decade like Japan experienced in the 90’s, after their real estate bubble collapsed. After years and years of government bailouts, they eventually let the market play itself out because nothing they did ever worked. And now they are saddled with huge debts that will lower their standard of living for decades to come.

        • Mattingly’s Love Child

          I’m glad I’m stockpiling beef jerky and canned goods in my basement/bomb shelter…..

          • Babe’s Ghost

            Ciggies, booze and ammo… that will be the new currency.

        • Chris

          One problem is that there is no cheap way to let these banks fail. Whatever we do will cost billions of dollars in taxpayer money. The question is what costs the least and gives the most benefit. I have no idea what that solution is, but I would guess not a matter of doing what we’ve been doing.

        • Rich

          The RTC involved cleaning out stockholders, which in terms of the current situation with insolvent banks is tantamount to temporary nationalization until they can be restructured and sold to private investors.

          I think that’s the best alternative, but to this point we haven’t seen the political will to take that (necessary) step.

    • Drew

      Last year I wrote a report on the purchase of Merrill. While it may be true that the government twisted their arm; the merge left BOA as the largest financial services firm in existence with consulting and other duties in over one hundred countries. It’s just sad what has transpired since then..

  • http://ibbw.wordpress.com Jamie

    I have a HUGE problem with some of these figures…

    “noted that a spending of $1 by the bank on the Yanks generated a 1000 percent revenue return and a 300 percent income return.”

    I’m sorry, but trusting anything out of the mouth of a BOA spokesperson is just lunacy at this point. There’s no better way to put it.

    What do they think we are, @#! idiots?? Yes, you know what Mr. Goode , I’m going to trust your projected revenue and income returns regarding the stadium deal. I mean why wouldn’t I? You already did such a bang up job thinking being levered 30 to 1 as a firm was a great idea.

    Oh and what’s that you say? Ok I do agree with that Mr. Goode, my framed A-Rod signed jersey is as “hard to value” as the $400 million of Commercial Real Estate MBS’s that you STILL have sitting on your balance sheet, waiting to BLOW UP IN YOUR FACE when the fall rolls around.

    At least I already realized this, cut my losses, and am now just wearing the jersey instead to Fenway as part of a bet.

    In all seriousness, Nationalization is the answer. It’ll happen within the next 6 months. Mark my words.

    • http://ibbw.wordpress.com Jamie

      Oh and another thing, the market right now is yielding figures so much lower than a 300% return that if they really think those numbers are correct and are confident in them, they would have signed the sponsorship deal weeks ago, recession or not. 300% return? If that is “accurate” my friends, its recession proof.

      • GG

        yea, I saw that too and thought noway

    • GG

      only Citi, not BofA

  • http://nyfaninboston.blogspot.com/ Manimal

    I wouldn’t call it “collapsed” quite yet, I think it is delayed. Bank of America is already under scrutiny for what they have been doing with their stimulus money. Once all this shiz clears up things should continue in this deal.

    • Ed

      Opening day is a little over a month away. I’d imagine the Yankees would want to get their major advertising in place by then. If BoA can’t get the deal in place soon, the Yankees are probably better off doing a series of smaller deals that can be ready before the first game in the stadium.

  • al

    that is the perfect borass deal… one year.. and have cashman calling…

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