The So-Called “Stadium Curse” That Bankrupts Companies

Want to crash a stock, maybe plunge the company itself into bankruptcy? As they say, just take it out to the ballgame. Stadium sponsorship carries with it a curse of sorts. The curse is simple: If you have the guts to put your name on a major North American sports venue, you and your stockholders will pay. When financial services firm Conseco, Inc. filed for bankruptcy protection in 2003, it joined WorldCom, United Airlines, Adelphia Communications, and U.S. Airways as the victims of the curse in just one year. Of the 63 stadium sponsors, 9 of them filed for bankruptcy within months of each other. However, it didn’t take a visit to bankruptcy court to trash a stock — just a trip to the nearest stadium or arena. Of the 45 non-bankrupt companies on the index for the entire year, 16 (more than a third) saw their stocks fall 30% or more. It’s not the cost of the stadium deal that causes financial problems — it’s the corporate ego that leads to bad deals. Companies that put their names on skyscrapers and stadiums, or who continually refer to themselves as the “greatest” in describing their accomplishments, are headed for disaster. That’s because when someone tells you they’re the greatest and their competitors stink, smart investors stay away.