SBD/August 7, 2012/Marketing and Sponsorship

Bankrupt Spongetech Racked Up $9.5M In Unpaid Sports Sponsorship, Advertising Bills

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SpongeTech has unpaid sponsor and ad bills for nearly three dozen sports entities

Now-bankrupt company Spongetech racked up more than $9.5M in unpaid sponsor and advertising bills to nearly three dozen sports entities during the mid- to late-2000's, according to a SportsBusiness Journal/Daily analysis of court documents in the pending Madison Square Garden LP v. Spongetech Delivery Systems case in N.Y. Civil Supreme Court. In May ‘10, the federal government alleged that 99% of Spongetech’s reported sales were fake. Spongetech filed for bankruptcy soon after. The company's next scheduled sports-related court date is Oct. 24, when its biggest sports creditor, the Mets (Queens Ballpark Co.), will continue its suit in Queens Civil Supreme Court (David Broughton, SportsBusiness Journal).

CREDITOR
AMOUNT
OWED
CREDITOR
AMOUNT
OWED
Citi Field (Mets)
$2,616,500
Red Sox
$78,125
Buccaneers
$2,537,600
Bassmaster
$75,000
D'Backs
$552,557
Blackhawks
$73,251
Madison Square Garden
$511,700
Sun Life Stadium
$60,000
ANC Sports Enterprises
$327,972
Dolphins
$60,000
Giants (NFL)
$360,000
Levy Restaurants /
Billy Jean Tennis Center
$50,000
WFAN-AM
$322,748
AT&T Park (MLB Giants)
$47,500
Bears
$260,000
Rockies
$43,750
Bobcats
$195,000
WCBS Radio
$43,484
SportsNet N.Y.
$175,000
Entercom Boston
$38,802
Cavaliers
$170,000
Long Island Ducks
(independent baseball)
$25,500
Redskins
$170,000
Yankees
$20,478
Islanders
$150,000
ESPN Radio
$19,250
Rogers Media
$134,520
Van Wagner Dorna
$13,338
Browns
$131,807
Angels
$9,125
Texans
$117,633
Phillies
$948
Bengals
$114,285
 
     

HOW IT WENT DOWN: CRAIN'S N.Y.’s Aaron Elstein wrote MSG execs “didn’t know it at the time, but theirs was the latest sports operation about to get soaked by a sponge company.” The Mets were also “stiffed out of nearly" $3M by Spongetech. The Yankees, NFL Giants, Red Sox, Bears and Blackhawks also were “left in the lurch after carrying ads in their stadiums.” Spongetech's ads with sports teams and venues were a “key part of the 2009 hype campaign for the stock.” The Mets were the “first team to carry Spongetech ads, and the company signed a three-year advertising deal shortly before the team moved" into Citi Field in '09. Spongetech also “rented a luxury suite behind third base for five seasons, starting at $250,000 per year.” The ads with the Mets “caught the attention of MSG officials, who were impressed that the little-known company had secured a licensing agreement” for Nickelodeon's SpongeBob SquarePants character. Spongetech COO Steven Moskowitz “signed a three-year contract with MSG on June 15, 2009," agreeing that the company would pay $3.2M a year to advertise during Knicks, Rangers and WNBA Liberty games, "including a prime spot on the Rangers’ Zamboni machine.” Included in the fee was a "suite for six Knicks and Rangers games two concerts and two other events.” The company “got its ad space at a 67% discount because other sponsors, such as Lehman Brothers or Citigroup, were going bust or scaling back dramatically” (CRAIN'S N.Y. BUSINESS, 8/6 issue).

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