Will Wall Street's woes hit the Yankees?
The New York Yankees are counting on corporate titans to pony up as much as $850,000 a year for luxury boxes in the team's new stadium.
NEW YORK (Fortune) -- The political uproar over AIG spending $440,000 on a beach retreat for its top agents - right on the heels of the insurance giant getting a taxpayer-funded bailout - may mark the beginning of the end for Wall Street's culture of excess.
And that's not only bad news for bankers and brokers with a taste for high-class perks but also for all the party planners, travel agents, art dealers and other businesses that rely on the financial sector's historically free-spending ways.
Take the New York Yankees, for instance. The Yankees move into their new stadium next year, and over the past year they've been trying to sell New York's corporate titans on the virtues of the new stadium's 47 available luxury suites. Asking price: $600,000 to $850,000 a year - several times what other major league teams charge for their luxury boxes.
A year ago, selling Yankees skyboxes was considered a slam dunk. Today, not so much, not with the stock market tanking and most financial companies gushing red ink. "I would hate to be in their position," a top executive with another Major League team says of the Yankees. "$850,000 for a luxury suite?" says Phil Matalucci, president of sports-suite broker Luxury Suite Alternative. "There could not be a worse time for teams to be selling luxury suites."
A Yankees spokeswoman insists that the economic crisis has not had any impact on the commitments the team has already received from prospective suite-holders. Still, as one Yankees' limited partner tells Fortune, it's a little too soon to judge since the contracts for the suites were only recently sent out.
One bank that has signed on for a suite is Bank of America (BAC, Fortune 500), a major Yankees sponsor that had a prime suite at the old stadium as well. Bank spokesman Joseph Goode says that the value BofA wrings out of its suite - in terms of entertaining clients and rewarding top-performing employees - "is multiples more than the initial investment."
Will there be AIG-like fallout for Bank of America or any other financial company that ponies up for baseball's primest real estate - particularly if they're also participating in the $700 billion financial bailout? Early indications are there will be. Says U.S. Rep. Elijah Cummings (D-MD), a member of the House Committee on Oversight and Government Reform: "It is absolutely unconscionable that a company would ask for billions of dollars from taxpayers who are struggling to keep their homes and pay their bills - and then in the next breath spend $850,000 of that money on a luxury skybox to watch a baseball game."