The name for the new arena in downtown Sacramento came with only a few rules: No companies known primarily for tobacco or guns, and nothing embarrassing to the city.
I’m thinking that many bankers would have liked another restriction – no credit unions.
Instead under a deal announced last week, the arena will henceforth be known as Golden 1 Center. While a shining sign of the success of credit unions, it’s a kick in the teeth for bankers who complain that credit unions get to play by different rules.
It’s clear what the Sacramento Kings get out of the deal – a reported $120 million over 20 years. Coincidentally (or maybe not), that average of $6 million a year is nearly enough to cover the $6.5 million a year (rising with inflation after year five) that the team will pay the city to lease the arena.
That makes it easier for the team to turn a profit at the arena from events, advertising, concessions, merchandise sales and all other revenue sources, once it covers the costs of operations and of financing its $250 million-plus share of construction.
On the other hand, the deal isn’t automatically a slam dunk for Golden 1.
The homegrown 82-year-old credit union hopes to add to its 330,000 customers in the Sacramento region by raising its visibility, generating goodwill and offering special members-only benefits at the arena, including faster lines at concession stands, advance ticket purchases and discounts on merchandise and games.
Golden 1 is already the biggest credit union in California in membership with 720,000 and sixth largest in the nation in assets with $9 billion. Becoming the first credit union with its name on a major pro sports venue is a crowning achievement. With national TV broadcasts – maybe an NBA All-Star game soon – Golden 1 might even become a household name from coast to coast.
But there’s a potential downside: If the Kings don’t win, Golden 1 would be linked with a loser. And if someone comes up with a catchy nickname that fans use instead of Golden 1 Center, then the naming rights money would go at least partly to waste.
Now, about that name.
Erica Taylor, Golden 1’s vice president for communications and community relations, says it evokes our Gold Rush history and desire for a bright economic future.
I’m sorry, but Golden 1 Center sounds more like an office building. There needs to be “arena” or “coliseum” in the name.
Or how about Golden 1 Garden? That references one of the country’s most famous arenas – Madison Square Garden in New York – as well as Sacramento’s farming roots. And it rolls better off the tongue.
Golden 1 sees the naming rights fee as a community investment, no different than the more than $1 million it spent last year on college scholarships, food bank donations and grants to foster youth and literacy programs, or the $18 million in dividends and loan interest rebates that it distributed to members last year.
That’s what grates on bankers, who say the reason credit unions have more earnings at their disposal is because they don’t have to pay state or federal corporate income taxes. Golden 1 was mentioned by name when I talked a few weeks back to a delegation of community bankers from institutions based in Chico, Folsom, Lodi and Placerville.
While it made sense during the Great Depression for Congress to give special dispensation to credit unions to aid employees, credit unions “have ventured very far from their mission,” said Richard P. Smith, president and CEO of Tri Counties Bank, a 40-year old institution based in Chico with $4 billion in assets. Now, credit unions act just like banks and should be taxed and regulated the same as banks, the bankers say.
The response from Golden 1 and other credit unions is that unlike banks driven to make profits for stockholders, they are owned by their members and are run for their benefit. “We will never apologize for investing locally for our members across California,” Taylor told me in an email.
I’m not going to pick sides in this fight, though I have far more sympathy for small community banks than the Wall Street behemoths. The more choices for consumers, the better. To thrive, a region needs all kinds of financial institutions – well, except for loan sharks and really unsavory payday lenders.
I take the community bankers at their word when they say they’re invested in their communities and want to invest more. But unlike Golden 1, they’re not doing well enough to afford putting their name on an arena.