Bank, Bank, Bank For The Home Team
It's midsummer, you're on the field in your local ballpark, and you're up to bat. You've been invited there by your banker. As you step to the plate, your name appears on the scoreboard and booms through the loudspeaker. The star first baseman, whose rookie card is worth more than your car, flashes a little wave.
Fantasy? No, you're on the receiving end of the red-carpet treatment given to corporate clients of the banks that back the teams. The banking of baseball is dominated by Bank of America, Chase Manhattan, and FleetBoston, which together make the lion's share of loans to finance parks--like the San Francisco Giants' new $320 million home--and provide the day-to-day banking for most of the 30 Major League Baseball teams.
FANTASY BASEBALL. Winning teams and star players are hot commodities for banks' marketing units. They're a good way for banks to win over corporate and retail clients. Chase Manhattan Corp., for example, hosts eight days of "fantasy baseball" this year that allow buttoned-down executives to play ball with former and current New York Mets and New York Yankees. American National Bank, a Bank One Corp. subsidiary that banks for the Chicago White Sox, hosts charity golf outings for customers and White Sox greats.
In 1999, FleetBoston Financial Corp. became the first official sponsor of MLB for an estimated $2 million a year, after earlier arranging a $425 million credit facility for the league.
Banks won't say how big a business baseball is for them, though it's clearly a tiny fraction of their commercial lending. But the promotional value of a link with the game can be enormous. "Baseball is still the American pastime," says Greg Clark, Fleet's sports lending group executive.
Even the most successful corporate executive can't help but be wowed by his favorite baseball player. When Chase holds lunches or dinners featuring former Yankees and Mets, "you see a lot of adults acting like kids," says Frank Lourenso, head of middle-market lending at the bank. "Executives show up with their suits stuffed with baseballs to get signed." There's no way to quantify how many corporate clients are lured in by the chance to rub elbows with baseball greats, says Lourenso, "but I know it helps."
However modest the banks' earnings from baseball are, there's no doubt that the sport's popularity and earnings potential are growing again. The division-leading White Sox are expecting one of the top attendance years in their 100-year history, says Bill Waters, the team's controller. After thin seasons following the 1994 players' strike, attendance has rebounded nicely, says Craig S. DeSousa, senior vice-president at Chase, and is on track for a record year.
SPECIAL NEEDS. Think of baseball teams as midsize companies. They generate, depending on the team, $50 million to $100 million in revenue annually, and have a host of special needs that their bankers often step in to fulfill--for a fee. White Sox fans, for example, can get refunds for unplayed post-season games at eight different bank locations.
Surprisingly, most banks haven't pushed to snare players as private clients. Multimillion-dollar salaries are common, and the average ballplayer's salary of $1.7 million puts him well into the range of high-net-worth individuals whom bankers love to recruit. Trouble is, their free-spending habits make some players poor candidates.
Instead, the banks woo the owners. American National won the White Sox as a client 20 years ago, when the bank arranged a limited partnership for real estate mogul Jerry Reinsdorf to buy the team. Chase Manhattan's relationship with Yankees owner George Steinbrenner goes back decades, to his days in the shipping business.
Just because a bank has signed a spokesman or sponsored a team, it does not follow that the team is a corporate customer. Yankees shortstop Derek Jeter, for example, promotes FleetBoston--but Chase is still the Yankees' banker.
That's why Chase execs and their guests sit right next to the home team's dugout in Yankee Stadium. "The bankers always get the best seats at anything," says Lourenso.