Goldman Sachs Group Inc. and American International Group Inc. will skip this month’s Hong Kong Sevens, while other firms that took government money including Citigroup Inc. and Royal Bank of Scotland Group Plc plan to scale back hospitality at the three-day rugby festival.
Goldman, the recipient of $10 billion from the U.S. government, has sublet its corporate box and won’t be using it for the first time in more than a decade, said spokesman Edward Naylor. So has AIG, the U.S. insurer that’s gotten multiple bailouts, said a spokeswoman who declined to be identified.
Financial companies that received multibillion dollar government funds are under increasing scrutiny from lawmakers over how they spend their money, prompting some to drop sponsorships and slash entertainment budgets. The Hong Kong Sevens, known for hard running on the field and hard partying off it, will see less excess this year, said Warrick Dent, commercial head of the Hong Kong Rugby Football Union.
“This isn’t a time for many companies to be spending money, being extravagant,” said Dent, also head of communications and events for the tournament organizer. “There might be a slightly different feel to the event this year.”
The Sevens attracts more than 100,000 spectators and has become a magnet for bankers in the Asia-Pacific region and beyond during its 33-year history. The 49 hospitality suites at Hong Kong Stadium cost HK$450,000 to HK$650,000 ($58,000 to $84,000) annually over two or three years, said Leisure Department spokesman Chris Choy.
Free-Flow
“It’s free-flow food and booze in the boxes,” said Jacqueline Yu, a retired fund manager who attended the past 10 years. “Each would have a specific theme, like Arabian Nights, decorated according to the theme, and lavish gifts, too.”
That’s set to change when the rugby starts March 27 in a city where the government forecasts the economy will shrink as much as 3 percent this year amid the global financial crisis.
Citigroup, which has taken three U.S. government bailouts, will “significantly” reduce spending on its two boxes, said spokesman James Griffiths, without giving details.
“As in previous years, we will be inviting key clients to thank them for their continued support,” Griffiths said in an e- mail. “In light of the current economic environment, the format and costs associated with our involvement will be significantly reduced from past years.”
RBS, which got 20 billion pounds ($28 billion) from the U.K. in October and is cutting sports sponsorship in half next year, will offer “very modest hospitality” in its three boxes and invite less than half as many people as in 2008, said spokeswoman Hui Yukmin.
“RBS’s activity will be a fraction of what it was last year in recognition of the very different market environment we now operate in,” Hui said in an e-mail.
Merrill Lynch
Merrill Lynch, the securities firm that sold itself to Bank of America Corp. to avert a collapse, will keep its box though “won’t be doing any corporate hospitality,” spokesman Rob Stewart said, without elaborating. Bank of America has received $45 billion from the Treasury’s bank recapitalization program.
UBS has cut its budget for decoration and entertainment at its box by 25 percent, said Caroline Darcy, the firm’s head of sponsorship in Asia-Pacific, without giving specifics. The Swiss government agreed to a $59.2 billion bailout of UBS in October.
Some firms are sticking to their plans.
JPMorgan Chase & Co. has a box and is in the process of inviting guests, said spokesman Ray Bashford. JPMorgan, which received $25 billion from the Troubled Asset Relief Program, was the top fee earner among the world’s investment banks in 2008, according to Bloomberg data.
Title Sponsor
Credit Suisse Group AG, a title sponsor of the tournament for 11 years, plans to continue supporting the Sevens, said spokesman Sheel Kohli. The Zurich-based firm, which hasn’t taken state money, gets two boxes as part of its agreement.
Deutsche Bank AG and HSBC Holdings Plc, which also haven’t received state funds, are keeping their one box each. Deutsche Bank will sponsor a charity lunch, too, said a person familiar with the matter who declined to be identified.
HSBC, Europe’s largest bank, will “still be providing pleasant entertainment but I can assure you it will be nothing extravagant,” spokesman David Hall said in an e-mail.
There’ll be nothing at all for AIG, which has sublet its box and already canceled 160 events costing a total $80 million since Congressional hearings last year criticized the company’s spending. New York Attorney General Andrew Cuomo is investigating the insurer that received a $150 billion U.S. rescue for “unwarranted and outrageous expenditures.”
Wells Fargo & Co. last month removed Wachovia Corp.’s name from a professional golf event in the U.S. and said it won’t host clients there after Senator John Kerry criticized Northern Trust Corp. for sponsoring another tournament.
TARP
Other TARP recipients including Goldman Sachs and Bank of America have moved corporate events away from resort locations. At last year’s Sevens, Goldman Sachs flew in England’s World Cup- winning coach Clive Woodward from the U.K. to give speeches to managers and clients.
This year, the box will be occupied by another company.
“People can’t be seen to be extravagant,” Dent said. “We’ll still have a really good crowd, but maybe some of the extra bits companies might have gone to in the past will be toned down.”
(Source: Bloomberg)
