Still Rooting for Polo Grounds, Where's Ralph Lauren At?

From this morning's Wall Street Journal:

"Citigroup Inc., eager to quell the controversy over how lenders are using government bailout money, is exploring the possibility of backing out of a nearly $400 million marketing deal with the New York Mets, say people familiar with the matter.

Officials at Citigroup have made no final decision about whether to try to void the 20-year agreement, which includes naming the Mets' new baseball stadium after the bank, say these people.

In a statement Monday, Citigroup said that "no TARP capital will be used" for the stadium -- referring to government funds from the Troubled Asset Relief Program. But as it revisits the pact, Citigroup is essentially acknowledging that the volatile political climate could make it untenable for the bank to proceed with the deal.

The Mets deal was attacked last week as an example of misplaced spending by financial institutions that needed bailout funds. Reps. Dennis Kucinich (D., Ohio) and Ted Poe (R., Texas) wrote to Treasury Secretary Timothy Geithner on Wednesday, asking him to push Citigroup to dissolve the Mets deal.

"Citigroup is now dependent on the support of the federal government for its survival as an institution," the letter said. "As such, we do not believe Citigroup ought to spend $400 million to name a stadium at the same time that they accept over $350 billion in taxpayer support and guarantees."

A re-examination of the Mets deal comes just days after President Barack Obama called it "shameful" that Wall Street firms doled out billions of dollars in bonuses even as Washington was spending taxpayer dollars to help bail them out. The Treasury Department hasn't been pushing the bank to break the contract, according to people with knowledge of the government's stance.

Anger also is rising over signs that the massive capital infusion to U.S. banks hasn't resulted in a surge in lending. In a survey of banks released Monday, the Federal Reserve said about two-thirds of banks' loan officers reported that they tightened terms for business loans over the past three months.

Under terms of the Mets deal, Citigroup has the right to plaster its name and logo around the arena, dubbed Citi Field, which is largely built and set to open in April in the New York City borough of Queens.

Citigroup's contract with the Mets calls for the bank to pay the team roughly $20 million a year over two decades. The arrangement helped cover the costs of building Citi Field because it served as an asset the Mets could tout as they tried to lure private capital. While the Mets didn't receive direct taxpayer financing for the ballpark, the team did benefit from free land, infrastructure investments and tax-free bonds from the city government. Citigroup underwrote more than $600 million in bonds for the stadium.

If Citigroup backs out of its agreement with the Mets, it likely wouldn't happen immediately and could involve the bank paying a breakup penalty to the Mets, people familiar with the situation said.

"The Mets are fully committed to our contract with Citi," said Mets spokesman Jay Horwitz.

A Citigroup spokesman said the bank "signed a legally binding agreement with the New York Mets in 2006."

Within Citigroup, some officials believe the company should try to void the Mets pact in order to distance itself from unnecessary controversy. But other executives argue that trying to wiggle out of the contract will set a bad precedent. "If we cave for political reasons, it will have enormous implications for our ability to contract with third parties," said an executive who has been briefed on the discussions.

When Citigroup and the Mets unveiled their pact in 2006, it was the richest naming-rights deal in baseball. Top executives including then-Chief Executive Charles Prince and Lewis Kaden, the Citigroup vice chairman who negotiated the deal, attended a groundbreaking ceremony with Mets players and officials.

Citigroup has a number of other sports-marketing arrangements. Last month, it was the main sponsor of college football's Rose Bowl game. The company is sponsoring the 2010 national championship game. Citibank Park, which opened in 2000 in Central Islip, N.Y., is home to the Long Island Ducks minor-league baseball team.

This would suck if the Mets had to change the name of the stadium before they ever played a game there. It would cost millions to reproduce and recreate all the promotional merchandise and memorabilia. But here's the catch: as long as Citigroup is operating normally, I don't think they can legally back out of the deal. Not without at least paying the Mets a substantial breakup fee for their troubles. But if Citigroup declares bankruptcy, that could change this significantly. I think if this Citi deal falls through the Mets should call it Shea Stadium for two years and wait for the economy to turn around before looking for a new sponsor.