Jocks and Rock Stars

Friday, February 27th, 2009

Northern Trust got a cool $1.6 billion in bailout money. But that didn’t stop the bank from paying millions to sponsor a PGA golf tournament. Not only that, but TMZ reports the bank also few hundreds of clients and employees to L.A., put them up in ritzy hotels, then threw bitchin’ parties with performances by Sheryl Crow, Chicago, and Earth, Wind & Fire. Women got trinkets from Tiffany’s. They rented out the House of Blues. Your tax dollars at work!

Meanwhile, at least one bailed-out bank is loosening up the credit a bit. Bank of America, which got $45 billion from the feds, just announced a $200 million loan to . . . the National Basketball Association.

Apparently, those poor billionaire franchise owners and their millionaire athletes haven’t yet figured out how to turn sweetheart deals at taxpayer-bought stadiums into a profit.

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15 Responses to “Jocks and Rock Stars”

  1. #1 |  John Jenkins | 

    Bank of America did not make the loan to the NBA. Bank of America helped arrange a private placement loan from private lenders to the NBA. See here.

    Bank of America would have made money by providing the service. Even if BoA had made the loan, that’s what banks do. If the NBA is a creditworthy borrower and the loan makes sense, why not do it?

  2. #2 |  JA3 | 

    Northern Trust has a page on their site explaining their side of the story on this — and it’s convincing to me. Summary: They’re not a troubled bank, they didn’t want or need the bailout money, they’re treating it as an investment, paying quarterly dividends back to the government and as intended, they’ve used the money to increase their loan activity.

    Some of this could be BS and going ahead with the lavish parties was a bonehead PR mistake, but why should they be punished for succeeding in hard times?

  3. #3 |  BakedPenguin | 

    TMZ reported? I mean, it may well be true, but after seeing the ads for TMZ, it strikes me as a celeb show for those who find Entertainment Tonight a little too intellectually challenging.

  4. #4 |  paranoiastrksdp | 

    But…But..that money was part of a different revenue stream! None of it came from the bailout money, it came from the company’s internal finances!

    Fuck..now I feel like I need a shower..

  5. #5 |  jhawk | 

    “The bank also flew a few hundred clients and employees to L.A., put them up in ritzy hotels, then threw bitchin’ parties with performances by Sheryl Crow, Chicago, and Earth, Wind & Fire. Women got trinkets from Tiffany’s. They rented out the House of Blues. Your tax dollars at work!”

    Don’t people work for the airlines, the ritzy hotels, The House of Blues and so on? Isn’t stopping these corporate parties ultimately hurting the economy?

    My wife works for a large financial firm that isn’t associated with any of this mess, and they canceled all of their employee recognition activities and parties for the sake of PR. That’s 100’s of thousands of dollars at the least not going into the economy. And that’s just one company.

  6. #6 |  jwh | 

    When will the Wizards of Smart conclude that companies won’t be allowed to advertise anymore? Sheesh!!!!

    ….and when can we expect all political parties, except for the DemocRATs, of course, to be declared illegal?

    Inquiring minds want to know?

  7. #7 |  Jon H | 

    The thing is, Northern Trust is a bank specifically for rich people. That’s all they do. I’d be surprised if they were interested in customers with less than $5 million to be managed.

    Presumably their target market has high expectations of sales efforts. (Just look at the expense laid out on fashion shows targeting similarly wealthy customers.)

    If they’re trying to win customers away from the other, troubled, institutions, offering a free mousepad isn’t going to do the trick. The question is, how many new customers do they need to win in order to make the events profitable?

    As noted above, they didn’t really need the money from the government. I can’t imagine they’d have done anything different if they hadn’t received the money. The PGA thing was probably set up long before they got the money.

  8. #8 |  Michael | 

    I just want to find out how to get one of those government jobs ! I would work for food! But,I need to pay the IRS!

  9. #9 |  Ohio Dale Boley | 

    It’s time to stop blaming those who capitalize while claiming to be a capitalist. Lay the blame where it belongs: years of Government attempting to control market behavior. It’s populist notions that enable much of this.

  10. #10 |  Cynical In CA | 

    What John Jenkins wrote.

    Plus, Northern Trust most likely had a contract with the PGA Tour that extended back to 2008, the first year they sponsored the erstwhile Nissan Open. It’s not easy getting out of multi-million dollar contracts, or so I’ve heard.

  11. #11 |  Nick T | 

    Come on Radley. I hate the bailout and I effing HATE publicly financed stadiums but BOA loaning money to the NBA is probably a pretty sound investment no? I mean if thats a good business decision then should we really criticize them for that?

    I guess your critique is the overall system that is screwing taxpayers here, but BOA made kind of an isolated decision from all of that.

  12. #12 |  Banker in Real Life | 

    Radley – love your writing, but you’re in left field on this one. Do you realize how many of these banks were contacted by the Treasury and “asked” to take this money? If your primary regulator calls you and tells you that relatively cheap capital is coming your way, do you think you’ll say no? Of course, the strings become apparent later. And the biggest string is the PR nightmare that makes it impossible to do the business you normally do. The reality is that the media stories vilifying even successful commercial banks are part of the class warfare gathering steam right now.

  13. #13 |  ParatrooperJJ | 

    NT signed the contract over a year ago. If they had backed out they would have had to pay the PGA the money anyway.

  14. #14 |  Jack | 

    But that didn’t stop the bank from paying millions to sponsor a PGA golf tournament. Not only that, but TMZ reports the bank also few hundreds of clients and employees to L.A., put them up in ritzy hotels, then threw bitchin’ parties with performances by Sheryl Crow, Chicago, and Earth, Wind & Fire. Women got trinkets from Tiffany’s. They rented out the House of Blues.

    In other words, they stimulated the economy.

  15. #15 |  James J. B. | 

    #14

    Wrong. They used OUR money to make their investment.

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