Citibank Bailout: “Six-Figure-Taxpayer/Citi Field”

[New York. November 26, 2008.] The New York Mets and Citigroup Inc. [NYSE:C] are still claiming that the $400 million naming rights package will be honored, yet, Citi has watched its stock price drop from its 52-week high of about $35 to almost $3 per share. Of course, this forced the government’s hand to take more taxpayer money to save another private corporation.

Two years ago, when the naming agreement was entered into, Citi was trading at over $50 per share. At that time, I would not have complained about the naming rights agreement — the largest of its kind — which provides that Citi would pay $20 million a year for 20 years (with options for another 40 years) for the right to name the new stadium “Citi Field.” Now, this deal just looks like a joke in light of Citi’s near failure and subsequent bailout. Some suggest that the stadium should be called “Citi/Taxpayer Field.” I disagree. The way I see it, “Six-Figure-Taxpayer/Citi Field” is more like it. The more words to emphasis who is really for this naming right, the more the word “Citi” disappears in just another useless advertisement.

Let’s do some simple math: As of this afternoon, Citi’s stock closed at $7.05 and there are approximately 5.5 billion shares outstanding. Thus, Citi has a market capitalization of less than $40 billion (Finance 101: market cap = stock price x shares outstanding). I will not even go near Citi’s income statement — it just hurts too much. Now, if you compare that market cap with the government’s interest, you see (with some logic bends) who is really paying for the naming rights of the ballpark in Queens. I do not care where you get your bailout information from, no one disputes that it trumps the $40 billion. If you are curious, the government is directly investing $20 billion and backing over $300 billion in loans and securities.

Considering that those taxpayers making in excess of $100,000 annually pay the majority of this government’s taxes (and will be paying more of it based on the result of the 2008 Election), I think they should get some love.

My vote: “Six-Figure-Taxpayer/Citi Field.” With this name, Citi will probably attract a total of 10 new customers — down from the 50 customers they would have added with Citi Field. Wait, did they really agree to pay $20 million per year? Those 50 customers better all print the name Walton on their bank application.

As an aside, I am not sure if any of you New Yorkers noticed but no other major New York sports team has “sold out” their stadium’s yet — the Yankees play at Yankee Stadium, the Rangers and Knicks play at Madison Square Garden, the Giants and Jets play at Giants Stadium and the Islanders play at the Nassau Veterans Memorial Coliseum. Of course, when one finally does sell out, it goes to a failing bank. It was easier when only minor league teams like the Brooklyn Cyclones, the Staten Island Yankees and the Long Island Ducks played in corporate sponsored stadiums — KeySpan Park, Richmond County Bank Ballpark and Citibank Park (sound familiar?).

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November 26th, 2008 at 11:55pm Brian

Entry Filed under: Baseball, Election, Wall Street

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