Thursday, May 14, 2009

Golf and Banks

I had a conversation this morning with a gentleman who was involved with an investment bank that used to host an outing at the Masters. Given these days of criticism for banks involved with golf, this obviously occurred in the past.

In any case, the bank invited 40-60 guests for a very expensive outing at the Masters. It was extravagant, but it was worth it to the bank. The bank knew when those guests had to decide on a bank to finance a future transaction that interest points wouldn't be the make-or-break factor.

The bank knew that future deals would be made on likability, trust, relationship, service, and the like. The non-quantifiables that an invite to a memorable Masters outing would bring.

For that bank, it was a fruitful business expense because one deal out of the 40-60 guests would pay 30 to 40-fold the cost of outing. The CEO of Goldman Sachs says it best,"[T]here's a business purpose for the round of golf; it's not as if people within Goldman Sachs are playing with each other when they should be laboring at their desks. We're engaging with our clients in a context in which people can be more friendly, share more information, become closer — all with a commercial purpose, which is in the best interest of our shareholders. There was nothing wrong with it then, but it does have a different feel in the context of so much distress."

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