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February 6, 2007
Barclays: Quietly Conquering America
The NY Sun
By Phil Wahba
Barclays' Brooklyn conquest might be the first step into expansion of US operations, but what is the bank really up to?
Given the Barclays motto, “Quietly conquering the world of finance,” no one can know for sure what the bank has up its sleeve. But there is nothing quiet about spending $300 million for the rights to name a planned 18,000 seat basketball arena in Brooklyn after itself.
For Barclays, this salvo signals how important America is to the company’s growth strategy, and how much it wants to raise public awareness of the bank, according to the co-president of Barclays Capital, the bank’s New Yorkbased investment banking arm, Grant Kvalheim.
“Growing in the United States is key to our overall success,” Mr. Kvalheim told The New York Sun. He said the 20-year agreement with the developer of the arena, Forest City Ratner, was a symbol of the bank’s long-term commitment to the American market.
Some commentators are wondering why a United Kingdom-based bank with significant investment banking operations in New York — but no retail operations — would choose a mass-market tool like a sports sponsorship to brand itself.
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This deal brings us into closer association with Forest City Ratner, which has been so successful in commercial real estate, an area of growth and focus for us,” Mr. Kvalheim said of one of his most important clients.
Some industry experts think that the naming-rights deal was a smart move, but the NY Sun found one critic:
A professor of sports marketing at the University of Oregon’s Warsaw Sports Marketing Center, Dennis Howard, believes banks, with their deep pockets, have jumped on the naming rights bandwagon without empirical evidence that it pays off. “There is a herd mentality to this,” he said.
And since 70% of major sports venues in North America have corporate names, up from 37% just 10 years ago, Mr. Howard says their effectiveness has been diluted. What’s more, Barclays will be vying for attention in a marketplace along with Citi, Prudential, and whoever sponsors a future new Giants and Jets stadium.
Still, for financial companies like Barclays, $300 million is chump change, explaining why they are leading the naming charge. But in the absence of any Barclays plan to go retail, “it makes me scratch my head,” Mr. Howard said.
Posted by lumi at February 6, 2007 8:30 AM