BNP Leans on Tennis Goodwill as $10 Billion Fine Looms

Jun 06, 2014 11:17 am ET

(Updates with details of women’s final in second paragraph.)

June 6 (Bloomberg) -- BNP Paribas SA is seeking solace on the clay courts of Roland Garros, home to the French Open tennis tournament.

France’s largest bank, which faces a potential $10 billion U.S. fine for business with Iran and other sanctioned nations, has been among the main sponsors of the event for more than four decades. BNP, whose fight against the largest U.S. criminal penalty has been joined by the French government, is banking on its support for the sporting event -- with the women’s and men’s finals this weekend -- to recoup some lost reputational ground. Former winner Maria Sharapova of Russia plays Simona Halep of Romania for the women’s title tomorrow.

“When a brand finds itself in the middle of a controversy, sponsorship can certainly be used to repair a damaged or tarnished image,” said Nigel Currie, a sports marketing executive at BrandRapport in London. “The brand will owe a lot of its recognition outside France to its sponsorship programs.”

U.S. authorities are seeking to impose penalties to settle allegations that BNP transferred dollar funds for clients in violation of sanctions against Sudan, Iran, and Cuba. The fine, which could more than wipe out this year’s profit, estimated by analysts at 5.64 billion euros ($7.7 billion), raises questions about whether BNP will cut back on dispensable expenses such as its sponsorships of sports and cultural events.

Partnering with Roland Garros has been an important part of branding efforts for BNP, which spends about 30 million euros annually on tennis sponsorships. The two-week event is watched by 40 million people in France alone and is broadcast in 184 countries.

Branding Gains

BNP’s logo, and its slogan “bank for a changing world,” adorn large billboards outside the main Court Philippe Chatrier at Roland Garros as well as hoardings on the court itself.

Players including eight-time champion Rafael Nadal of Spain give press conferences with the bank’s name visible behind them. Dozens of guests file in and out of BNP’s corporate hospitality box at Chatrier every day while hundreds of tennis fans use its on-site cash machines.

BNP spokeswoman Isabelle Wolff declined to comment on the consequences of the U.S. probe on its tennis sponsorships.

The scale of the fine has yet to be made final and French President Francois Hollande discussed the matter yesterday with his U.S. counterpart Barack Obama, who’s visiting France to mark the 70th anniversary of D-Day. Hollande said a disproportionate fine could have repercussions for Europe’s financial sector.

Concerns U.S. penalties may hurt operations have hit the shares of Europe’s second-largest lender, which are down 5.2 percent in 2014.

‘Reduce Attention’

On June 4, Standard & Poor’s said it may lower BNP’s long- term credit rating, citing the possible impact on the bank’s capitalization and disruption to some activities. Moody’s ratings service on May 29 warned in a note to clients that BNP faced a risk of “client defections and lost revenue.”

Sponsorships are sometimes scaled down in case of a major crisis “to reduce attention on the company or brand,” said BrandRapport’s Currie.

The movie industry is BNP’s other main area of sponsorship. On top of its film-financing business, the bank supports French movie theaters and each year helps distribute 1 million tickets at reduced prices.

In tennis, in addition to the French Open, BNP has been the official sponsor of the Davis Cup and the Fed Cup -- the biggest team competitions in the sport.

It is the title sponsor for a hard-court event in Indian Wells, the richest tournament on the U.S. west coast, and for the year-end championships of the women’s WTA Tour in Singapore.

Tennis Support

The bank also sponsors junior tennis and wheelchair tennis. BNP’s strapline “We are tennis” is visible on the t-shirts of the ball boys and girls at Roland Garros.

Francesco Ricci Bitti, president of the International Tennis Federation and of the Association of Summer Olympic International Federations (ASOIF), called BNP “the most important sponsor in tennis,” which has helped “grow tennis around the world.”

The ITF’s agreement with the bank -- including its Davis Cup and Fed Cup competitions -- runs out in 2016, he said. The French Open said its deal with BNP also runs until 2016.

The French Open organizers say they need BNP to continue to back them. The French Tennis Federation has embarked on a 340 million-euro expansion of the Roland Garros complex -- including a retractable roof over its main court and two new show courts.

The French Open is the smallest of the four majors. The federation’s president, Jean Gachassin, last year said the upgrade “absolutely” has to proceed, or the event risks falling behind the other three Grand Slam events -- the Australian Open, Wimbledon, and the U.S. Open.

BNP Needed

Building a roof over its main Court Philippe Chatrier, just like in Australia and Wimbledon, will allow Roland Garros to go ahead even when it rains and hold night sessions that will boost ticket sales and television coverage, he said.

In 1973, the French Tennis Federation asked BNP, which was then called Banque Nationale de Paris SA, to fund the construction of the Roland Garros main court’s box seats, according to the bank’s website. BNP Paribas, created by the 2000 merger of Banque Nationale de Paris and Paribas SA, expanded its sponsoring to other tennis events.

The Roland Garros tournament called its partnership with BNP “one of the strongest and most enduring in sports history.”

The bank must not drop its sponsorship because of its troubles with U.S. authorities, Eric Sakoun, a 22-year-old tennis fan and an intern at Paris-based fund manager Sigma Gestion, said in an interview at Roland Garros.

“It is almost unimaginable that they’ll abandon it,” he said.