GMAC Bowl???

[Michael71]

Don't get me wrong...I'm all for sports & helping the US automakers...sorta!  Can someone help me understand this?

Does GMAC make money directly by sponsoring a bowl game...or does the company(taxpayers) foot a huge bill?

If not, how can they justify this sponsorship  after a $5 billion bailout from taxpayers?

[cannon_fodder]

GMAC is no longer a division of GM.  It was sold off several years ago and functions as a private entity.  I am not aware of any bailout money they have received.

And if they DID receive bailout money (Citi) advertising is a proven method of gaining MORE business.  Marquee events are actually a good return on your investment dollars if marketing is your goal.  The $2,000,000 they spent to sponsor this bowl would be a drop in the bucket for a national advertising campaign.

Personally, I'd be pissed if the bailed out companies couldn't advertise.  Would see like dooming them to failure even more so than they already find themselves.

[sgrizzle]

I think the issue is perception, just like taking private planes to fly to DC. I've heard of several projects that have been delayed or otherwise obscured because the company doesn't want to "look like" they're wasting money.

However, in the case of a bowl game, this contract was signed a long time ago.

If you wanna see a waste of money, watch the new PSA from the corn growers trying to convince you "High Fructose Corn Syrup" is good for you.

[bokworker]

quote:Originally posted by cannon_fodder

GMAC is no longer a division of GM.  It was sold off several years ago and functions as a private entity.  I am not aware of any bailout money they have received.

And if they DID receive bailout money (Citi) advertising is a proven method of gaining MORE business.  Marquee events are actually a good return on your investment dollars if marketing is your goal.  The $2,000,000 they spent to sponsor this bowl would be a drop in the bucket for a national advertising campaign.

Personally, I'd be pissed if the bailed out companies couldn't advertise.  Would see like dooming them to failure even more so than they already find themselves.

GMAC did in fact get TARP money... they are now a bank! They got enough of their bond holders to agree to take an equity position (at a big discount to their debt levels) to qualify for the TARP money. Ironically, GMAC did what the government wants all of the banks to do with the new capital...they announced new LENDING programs to get people into GM dealerships to buy cars. In addition to GMAC loaning to individuals they "floor plan" a majority of the GM dealerships inventory. As all of the press focused on GM the real story was getting GMAC in a solvent position as without this ability to lend to dealers then most would not have been able to finance any cars on their lots for people to buy.

In addition to lending to consumers and dealers GMAC is a huge player in the home mortgage market through their DITEC mortgage lending unit (partially owned by Cerberus... yes, the same Cerberus that owns Chrysler).

[cannon_fodder]

Thanks for clarifying BOK, I was myopically thinking auto bailout money.   In that case, my second point stands.  [^]  They got some $5 BILLION from the Feds and GMAC is owned jointly by Cerberus and GM (GM sold a private stake to Cerberus some time ago).

And as SQ pointed out, they are locked in for a multi year deal anyway. In 2000 they paid $500K to buy the naming rights to the bowl.  They have no released more recent info, but odds are it is less than $1mil.  

For $1mil, I'd say it is the best advertising money they can spend.  In the interest of full disclosure, I am a HUGE college football fan (go TULSA!)... so my take could be tainted.

[Michael71]

quote:Originally posted by sgrizzle

I think the issue is perception, just like taking private planes to fly to DC...

Agreed!  It would just be hard for me to justify.  What happens if the marketing doesn't "pay off"?  Are they just gonna get another bailout?  Do taxpayers just lose that money?

[cannon_fodder]

So no marketing for companies that get federal bailout money?

Someone better tell Detroit because I keep seeing SCREAMING car commercials on TV.  Pass the word to Citi, who sponsored the Rose Bowl, the Mascot Challenge, and advertises heavily in all mediums.  And on and on and on.

In most businesses, a failure to advertise is simply a failure.

[tim huntzinger]

NO NO NO NO NO NO more corporate welfare! NO MORE! What is sooooo hard about this?  The darn stadium is probably already subsidized to the Nth degree by the local taxpayers and now the rest of us.  This is outrageous and just another example of how screwed up the whole situation is.

[bokworker]

For those looking for more reasons to get pissed off at the nature of "bail-out Nation"..


http://dealbook.blogs.nytimes.com/2009/01/05/gmacs-sweet-government-ride/

"bail-out creep"... I don't think we have seen anything yet.

[Wilbur]

quote:Originally posted by cannon_fodder

Thanks for clarifying BOK, I was myopically thinking auto bailout money.   In that case, my second point stands.  [^]  They got some $5 BILLION from the Feds and GMAC is owned jointly by Cerberus and GM (GM sold a private stake to Cerberus some time ago).

And as SQ pointed out, they are locked in for a multi year deal anyway. In 2000 they paid $500K to buy the naming rights to the bowl.  They have no released more recent info, but odds are it is less than $1mil.  

For $1mil, I'd say it is the best advertising money they can spend.  In the interest of full disclosure, I am a HUGE college football fan (go TULSA!)... so my take could be tainted.

$1M is the best advertising money they can spend?  Really?  Did you see all 12 people sitting in the stands?  How many people from Tulsa and Muncie actually watched on TV?  200?  Those 200 were probably looking for banking services and thought "I think I'll go to GMAC."  How convenient GMAC is to Tulsans!  Can't imagine the dozens of branches they probably have in Muncie.

Every citizen should be pissed that GMAC gets $5B in our tax money, then spends it on a bowl game.  Don't give a damn about prior commitments.  But I'll be sure to try that with some of the folks I owe money to.  "But, I have prior commitments!  Really!"

[cannon_fodder]

So you do not believe that GMAC should be allowed to advertise?  Can GM or Crysler advertise?  What about Citi?  The whole long list I posted above...

If you are, you don't think that a prime time sporting event reported in all major news sources around the world is a good way to do so?  For $1mil they couldn't have run an ad on every news network in the nation... but every news network, radio show, and paper mentioned the GMAC bowl.  

And they sold some 28,000 tickets.  Not that it matters in the slightest, they aren't advertising to the people in the stands.  Just like Macy's isn't advertising to the people watching the thanksgiving day parade.  

quote:How many people from Tulsa and Muncie actually watched on TV? 200?

Over the last 4 years it has drawn an average rating of 1.6.  Or 1.6% of the TVs in the nation on during prime time watched it.  Or about 1.8 million people on TV.   The last time it was on during prime time it drew a 1.98 rating, which would be about 2.2 million people watching it.

Given that, and I'm not sure if you know this, the University of Tulsa is location in Tulsa... we probably had a higher market share.  I'm guessing most of the 20,000 or so season ticket holders in the Tulsa area watched it.  Seeing how it was the only football game on I'm guessing most of football loving Oklahoma watched at least part of it.

But, then again... they weren't advertising to Tulsa or Oklahoma.  A sponsorship is a national advertisement as I discussed above.  The 2+ million people who watched the game and the 50,000,000 plus who watch any news broadcast that includes sports heard GMAC's name.

OR.. they could have renigged on the contract, lost naming rights, and been sued for the money in breach.  That probably would have been better for the company.

[Michael71]

quote:Originally posted by cannon_fodder

Over the last 4 years it has drawn an average rating of 1.6.  Or 1.6% of the TVs in the nation on during prime time watched it.  Or about 1.8 million people on TV.   The last time it was on during prime time it drew a 1.98 rating, which would be about 2.2 million people watching it.

Given that, and I'm not sure if you know this, the University of Tulsa is location in Tulsa... we probably had a higher market share.  I'm guessing most of the 20,000 or so season ticket holders in the Tulsa area watched it.  Seeing how it was the only football game on I'm guessing most of football loving Oklahoma watched at least part of it.

But, then again... they weren't advertising to Tulsa or Oklahoma.  A sponsorship is a national advertisement as I discussed above.  The 2+ million people who watched the game and the 50,000,000 plus who watch any news broadcast that includes sports heard GMAC's name.

OR.. they could have renigged on the contract, lost naming rights, and been sued for the money in breach.  That probably would have been better for the company.

It just kinda reminds me of New Orleans after Katrina.  Residents were fired up that Allstate sponsored the Sugar Bowl...but, they couldn't get money for their houses that were destroyed.

...not exactly the same, I know, but the point is the commitment to their customers.  Advertising is important...but to what degree?

[cannon_fodder]

AllState paid out more than $2,500,000,000.00 in damages in Katrina.  They spent nearly $17,000,000 to sponsor the Sugar Bowl, which is estimated to have a $174,000,000 impact on the New Orleans economy.  So they spent one half of one percent of their Katrina losses to have a huge economic impact in the area.  I'd have to say anyone *****ing about that is clearly out of context with the actual situation.

The allegation here is that GMAC spent 2 one hundreds of one percent (.02%, .0002) of their bailout money on advertising.

I'd say advertising is worthy of that kind of expenditure.

[tim huntzinger]

quote:Originally posted by cannon_fodder

AllState paid out more than $2,500,000,000.00 in damages in Katrina.  They spent nearly $17,000,000 to sponsor the Sugar Bowl, which is estimated to have a $174,000,000 impact on the New Orleans economy . . .

If the math were truly that simple why would not any entity pony up the cashola for the LPGA tour after Sem Group tanked? Because these kind of equations are BS and everyone knows it.

What miniscule amount of 'bail-out' money did AIG spend on their little getaway? Does that make it okay? Hardly. Funny thinking for a 'libertarian!'

Just because Congress was stupid enough to sign the TARP bill - which has only increased the toxicity of our economy - does not mean changes cannot or should not be made.