JP Morgan Sprinted Ahead, While Citi Focused On Naming Rights Deals

I just read that the market cap of Jamie Dimon-run JP Morgan (JPM) has surpassed Citigroup's (C) market cap (sweet revenge for Jamie). There are probably several reasons for this.

One of the best indications that Citigroup management had taken their eyes "off the ball" occurred in late 2006 when two Citigroup "naming rights" deals were announced. These occurred about the same time that very costly logo and branding updates were being done at all Citi bank branches changing from an umbrella to a rainbow.

Instead of focusing on this peripheral stuff, management should have spent more time reviewing their mortgage and structured product portfolios!

These are the two Citigroup naming rights deals-

1. Citigroup paid $34 million to re-name the Wang Center in Boston.
2. Citigroup paid $20 million a year for 20 years to name the NY Mets stadium. (the total cost is $400 million!)

Here are some other companies involved in naming rights deals that were very poor investments- Enron, 3-Com, Monster, Adelphia.

More recently Barclays (BCS) has been hit by the naming rights jinx. They bought 20-year naming rights for the Nets Barclay Stadium for $400 million, and for this they got a lot of bad press because their bank had ties to the slave trade. Their stock is down almost as much as Citigroup this year.

In the words of Jim Cramer, the next time you hear about a company acquiring expensive naming rights- SELL, SELL, SELL!