Last September the Vampire Squid of Wall Street started running ads about how the company's financing was helping local companies give money to people who don't work for Goldman Sachs. The most recent iteration in this campaign is about how a new sports stadium in Louisville, Ky., is "helping revitalize downtown business."
This last claim is so patently false it shows how desperate GS is for anything to prove it provides some value to society beyond creating a market for servants.
To be clear, the $349 million KFC Yum! Center isn't just another case of publicly financed stadiums never making economic sense. From the proudly conservative and reliably pro-business Cato Institute:
Our own research suggests that professional sports may be a drain on local economies rather than an engine of economic growth.The Yum! stands out among these gilded money pits because of the additional ways it is harming the city's economy.
What Goldman's ad isn't telling you
Goldman's financing had a long-term built-in drawback once the arena failed to create more business. Here is Goldman's own description:
The financing also relied on future funding provided by projected arena revenues and increased tax revenues resulting from the revitalization of the downtown area.And, back to Cato:
The sports environment has no measurable effect on the level of real income in metropolitan areas.Add to this that Goldman was having such a hard time selling bonds for the project that a local company had to bail it out. As Terry Boyd of InsiderLouisville reported, local banker Hilliard Lyons was responsible for selling the worst of the debt -- $9 million in unrated, callable bonds -- through its retail network. Maybe Goldman should have cut it up into tranches and rebundled them until the ratings agencies were willing to mark them AAA. Nah, who would fall for that?
And why Goldman is doing this now
So why did Goldman go out of its way to shine a spotlight on this mess via ads?
This is, after all, a company that didn't even have a sign outside its Wall Street office until it went public in 1999. It's not like lack of advertising hurt it after that, either -- to wildly understate the case. Its revenues rose from $16 billion in 2003 to $38 billion in 2006 and that was before the billions it got doing paperwork on the economic mess it created. (For far more information read All The Devils Are Here by Bethany McClean and Joe Nocera -- but only if you have a strong stomach.)
So why? First, the official explanation:
Fiona Laffan, Goldman Sach's head of media relations in Europe, Middle East and Africa, told a communications industry event here that mistrust and hatred of bankers, not just those at Goldman Sachs, remained near an all-time high and that the bank, as an industry leader, needed to do a better job of explaining what it did and how.Because that answer makes no sense whatsoever, the real reason must be, as usual, executive ego issues.
It isn't enough to be obscenely wealthy; CEOs also want to be loved. This marketing effort is as idiotic as one attempted by the oil companies a couple of years ago and just as irrelevant to the bottom line. (To quote myself: "The biggest challenge oil companies face is choosing between 'obscene' and 'pornographic' when describing their profits.")
Goldman doesn't need to worry about public goodwill. It owns far too many legislators and regulators for that ever to be an issue. Even if that wasn't the case, the public isn't its customer. Goldman's business is B2B, not B2C.
If Goldman really wants to improve its image, its best move would be to shut up until we forget about the whole thing. The U.S. public has the attention span of a mayfly on crystal meth. Let Rupert Murdoch, News Of The World and whatever fiasco comes next do your dirty work for you, guys.