HM Yards

Nolandgrab has a post up today noting how badly Barclays shares have been performing of late, and speculates whether this might lead the UK government to become, unbidden, the sponsor of a Brooklyn sports arena (sounds like a sitcom waiting to happen). The performance is truly weird, because Barclays is still putting up reasonably good numbers. I mean, it's still a horrible bank, just not in as awful condition as most of its peers, bar HSBC.

So, what does deep financial distress do to a bank's appetite for sports sponsorship? If you're curious about Barclays' commitment to sponsorship of the Atlantic Yards arena, and read my epic post about how dependent the project's financing structure is on such revenue, there's one good indicator out there. It's called Royal Bank of Scotland.

RBS has fallen much farther and much faster than Barclays because, and it pains me to couch it so, it had less prestigious investment banking operations, among other factors. The UK now owns, by some calculations, 70% of its equity. So, what's RBS doing with its sports sponsorship? Yes to Rugby, no to Formula One, in short.

The first lesson seems to be that under government ownership a bank will need to be more highly attuned to the Great British Class System, only in reverse. Rugby has succeeded it dragging itself out of its upper-class niche to become a reasonably popular sport. So much so that its stars can support expensive drugs habits.

Formula One, on the other hand, caters to a clientele that not only thinks that the kingdom of Monaco should not be pushed into the sea, but that running a race through its streets might be an enjoyable experience. It would simply not be good politics to be spraying marketing pounds at such an audience.

Difficult to work out what Her Majesty thinks of marketing a US business. RBS, which you will now recall is the dim(mer) one, was throwing its money at golfing sponsorship, which made sense if you were chasing after investment and corporate banking business. It's always been rather difficult to tell what business Barclays was looking to develop by sponsoring a basketball arena. Maybe it assumed that net of underwriting fees on the arena's bond financing it would be a fairly trivial commitment.

I don't have much of an insight into the mind of Alistair Darling, the Chancellor of the Exchequer, and now, presumably, the Grand Vizier of All UK Banks. I mean I've tried to stare into his mind and the colour difference between his hair and eyebrows has freaked me out. We'll have to wait for Barclays to fall into the welcoming arms of the government to see how it will play out, but if I were Mister Ratner I'd try and get the funding agreement active before my compatriots start asking awkward questions.