Sports sponsor for Tampa Bay Bucs, Tampa Bay Rays in regulatory, financial hot water
Wake up and good morning. SpongeTech Delivery Systems, a New York sponge maker that advertises as a Pewter Partner with the Tampa Bay Buccaneers and whose sign hangs from a wall at Tropicana Field (see photo, courtesy of Rays) where the Tampa Bay Rays play, is under investigation by the Securities and Exchange Commission for possible securities law violations.
Now the SEC has suspended trading of shares in SpongeTech, saying "questions have been raised about the accuracy and adequacy of publicly disseminated information" concerning the penny-stock company's sales, revenues and investment agreements.
If you went to a (victorious) Rays game recently at the Trop against Toronto, you may have received a (Rays pitcher) Matt Garza figure. Look at the box. It was sponsored by SpongeTech.
In fact, the maker of sponges with soap already in them (aka "The Smarter Sponge") has been on a tear in the sports marketing world. By some estimates, SpongeTech signage appears in 28 of 30 Major League Baseball ballparks. It has deals with at least six National Football League teams and two National Hockey League teams, and has various other partnerships including Mike Ashley Racing and the National Hot Rod Association, World Football Challenge, and the Nautica NYC Triathlon. Here's a YouTube short with a SpongeTech plug by the announcers in a game between the New York Mets and San Francisco Giants. (Photo of Raymond James Stadium by AP.)
That's a lot of money committed to marketing. Here's the rub. In addition to the SEC clampdown on its shares and an ongoing investigation, SpongeTech is on the verge of being delisted as an OTC (over the counter) stock. Its shares currently trade at a paltry 6 cents per share. In a recent 8-K filed with the SEC, SpongeTech said it "received a formal order of investigation" regarding possible securities laws violations on Sept. 18. Its officers and directors have also received subpoenas for documents, the filing said.
The New York Post has closely tracked SpongeTech, which operates from an office in Manhattan, with recent stories about its stock suspension and the SEC investigation. In partial response, SpongeTech says it is suing a California company called SpongeTech Inc. for trademark infringement and claims it was defamed by the California business in its remarks to the New York Post.
It's not the kind of publicity pro sports teams like, even if they are hungry to sign up any and all potential corporate sponsors. In early 2008, the Tampa Bay Rays were forced to sue Tampa-based Academic Financial Services Inc. over the sponsor's failure to honor the parties' three-year, $1-million sponsorship contract. The pact with AFS, a Tampa issuer of student loans, was kaput after just one year.
-- Robert Trigaux, Times Business Columnist