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Not Quite the Ticket to Success It Used to Be

"In addition to supporting the hometown baseball and football teams, Raytheon proudly contributes to other area activities," Shea wrote in an e-mail. "For example, we are an underwriter of the Ford's Theatre's annual spring musical; we are a Filene Circle member at Wolf Trap; and we are a Kennedy Center corporate member." Tickets to those venues also are shared with clients, Shea said.

Only a few years ago, Fairchild was spending about $100,000 annually to rent a 16-seat skybox at the Redskins' FedEx Field.


Season tickets to Washington Nationals games are a client-relations expenditure that some companies are unwilling to make. (Eliana Aponte -- Reuters)

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Stadium Land Rush (The Washington Post, Apr 11, 2005)
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Friday's Question:
It was not until the early 20th century that the Senate enacted rules allowing members to end filibusters and unlimited debate. How many votes were required to invoke cloture when the Senate first adopted the rule in 1917?
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Those days are over for good, said McDonald, the company's controller.

"With stricter rules and stricter corporation governance regulations, such as Sarbanes-Oxley, companies really have to be careful what they do with this issue," he said.

Fairchild may be more cautious than most. It recently settled a lawsuit with shareholders who alleged that the company unjustly enriched its top executives with perks such as interest-free loans, an apartment in Paris, and business and entertainment expenses totaling hundreds of thousands of dollars. Fairchild denied any wrongdoing in the settlement, under which chairman and chief executive Jeffrey J. Steiner agreed to repay $1.5 million to the company and take a 20 percent pay cut.

McDonald said the shareholder dispute has nothing to do with the company's decision not to buy Nationals season tickets or a Redskins skybox.

"Basically, we made a decision that the company shouldn't be incurring that type of an expense to retain and keep clients," he said. "It's really becoming harder for companies to justify these types of expenses. Any public company is going to receive some scrutiny when it comes to expenses of this nature. It's just the way things are changing."

Some shareholders might not like such expenditures, but it's doubtful that ticket purchases would create much of a stir among auditors, said Christi Harlan, spokeswoman for the Public Company Accounting Oversight Board, an oversight group created by Congress in the Sarbanes-Oxley Act of 2002.

Companies generally can take a 50 percent tax deduction on entertainment expenses that are not reimbursed.

For corporate giants such as Raytheon, the cost of buying a wad of season tickets or even a luxury suite is "just a drop in the bucket, unless they bought like five suites at one place," Harlan said. "But if you're a teeny-teeny, tiny-tiny company? Well, then, your shareholders should be up in arms."


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