First let me state a few qualifiers when it comes to the Mets’ now infamous Citi Field. Citi Field is gorgeous. The team that will inhabit it is not as gorgeous. It is outrageous that the taxpayers are backstopping the bank which made the naming deal with the team. It is embarrassing to an organization that has already suffered epic collapses the last two seasons to be going into a new stadium dealing with this kind of headache. With this in mind, let me proceed to the broader controversy regarding the naming deal.
Today in the New York Times, representative Dennis Kucinich argues regarding naming deals that “Treasury has the power under TARP to make broad changes, They have to. It’s not whether they can or should; they have to. The legal issues are very easy to maneuver.” According to Kucinich, Citi Field represents “an egregious example. But we have a list of other banks we’re working our way through. We’ll hold hearings.” I do agree with Kucinich that naming deals such as Citi’s with the Mets represent extravagent, and probably poor expenditures. I don’t know how Citi projected that it would recoup their $400 million investment in the naming rights to the stadium, but investment banks made all sorts of investments far more ridiculous over the last decade to be sure.
Further, given that taxpayers are the ones who are responsible for propping up the company responsible for this deal, it should anger all of us. But what Congress (Mr. Kucinich excluded given his populist rhetoric against the bank bailouts) fails to realize is that were it not for the government’s decision to bail out these institutions, these types of issues would not exist. As Citi unwound its assets during its bankruptcy, the naming rights deal could be nixed and purchased by another company. Where were Kucinich’s angry colleagues when it came to bailing out Citi in the first place?
The outrage amongst politicians when it comes to naming deals not only masks their lack of appreciation that this would not be an issue were it not for propping up failing ventures, but also masks the greater implications of their intervention. Since we all are now shareholders in these institutions, the government will tinker with their management. This begins with caps on executive pay, but who is to say that it will end there?
As poorly as some of these institutions were managed, and granting that a lot of their poor management was due to incentives created by government intervention, I would guarantee that government control of the banks will be even worse. Do you think that Nancy Pelosi knows how to create a DCF model in Excel? Does Barney Frank know how the market for CDO^2’s works, let alone what a CDO^2 is?
Much as I think that President Obama could give a hell of a pitch to investors on the virtues of a closed-end real estate fund, there is no way that the government can ever run these businesses properly. Command economies have always failed. The government lacks the profit motive and the knowledge to successfully manage these companies. Putting the firms under the purview of government represents the greatest moral hazard of them all.
Remember, these are only the direct effects of strict government regulation of the banking sector. There would also be a great effect on the markets. If the government is to have say over the operating activities of the major banks, what kind of implications will this have for retail and institutional investors? Will money flood out to less-regulated private equity and hedge funds? Will those shops then become as regulated as the (remaining) big banks? What kind of confidence will exist in the markets when the biggest broker-dealers are being managed by politicians? Will people not recall what happened to all of the other GSE’s?
There are a plethora of problems with these institutions being managed by the government. The Citi Field naming rights deal is very small relative to the big picture, but it exemplifies the direction the government is going. I am just as angry as everyone else that we are responsible for keeping the Citi naming deal alive, but we must remember that it was because of government intervention that we got ourselves into this mess in the first place. As if it wasn’t bad enough that the Mets aren’t going to pursue Manny Ramirez, now us tortured fans have to deal with this pathetic situation.
Given that the world is collapsing politically, socially and economically before my very eyes (and outside of the Bank of America debacle and the Gaza war which I am temporarily holding off on writing about, there isn’t all that much other exciting stuff going on), yesterday I turned my thoughts to the back fields of Port St. Lucie, Florida, where pitchers and catchers are due to report for the New York Metropolitans in less than 30 days. While I assumed this might be a bright spot in an otherwise dark world, upon further review I realized that the Mets’ recent history (and actually their entire history) has been just as depressing as that of modern-day America. Thus, in my venting, without further ado I present to you the twenty greatest follies (from present to past) of the New York Mets; follies that put even the US government to shame:
2.The fact that Citi Field is already rusting (thank you unions)
3. The fact that the Mets chose Citi as their sponsor in the first place
4. The fact that of all teams, only the Mets lost money to Madoff
5. The handling of the firing of Willie Randolph (they actually made us feel bad for him…sort of)
7. Blowing leads of 7 and 3.5 games with 17 games to play during the last two Septembers, while being officially eliminated (at home) with losses to the Marlins on the last day of the season both times
8. Our entire bullpen last year (throw in Guillermo Mota there too even though that was 2007)
And this is just IN THE LAST TWO YEARS mind you. Lest we forget about:
12. The whole Mike Piazza gay thing
14. Generation K
15. Jeromy Burnitz circa 1993
16. The “Worst Team Money Could Buy” of 1992…oh and Bobby Bonilla circa this same year
19. Every single overhyped prospect, including, but not limited to: Billy Beane (he should have been our GM, not our player), Gregg Jefferies, Alex Ochoa, Alex Escobar, Fernando Martinez (rushing to judgment here, but do you really have faith that he is going to be a star) and the aforementioned Generation K (outside of Izzy to an extent), not to mention all of the guys they missed out on
20. Last but not least, trading away: Nolan Ryan, Tom Seaver, David Cone, Scott Kazmir (for Victor Zambrano…wrong Zambrano guys), Mike Scott (who then almost singlehandedly cost the Mets the ’86 pennant), Lenny Dykstra, Jeff Kent and somewhat less painfully, Melvin Mora
I leave out the 1960s because that wouldn’t be fair, though the ’62 Mets (aka the worst team ever) further add to the franchise’s lore. I also exclude Shea Stadium (may it rest in peace) because I grew up there. Oh yea, and as for Armando Benitez (I’ll give Mel Rojas a break), much as I hate him, he got on my good side last time I saw him pitch.
Now with all that being said, imagine being a die hard Mets fan and a liberty-loving, staunch free-marketeer these days…welcome to my world. Still, I am reminded of the late great Met, Tug McGraw, who said, “I never smoked AstroTurf,” er…rather, “Ya gotta believe.” Hope always springs eternal in the lush, rolling meadows, of a little place I like to call Flushing.