When entertainment becomes a yawn

At this time of year Martin Ackroyd, finance director of Wm Morrison, the UK supermarket group, receives more post than usual. It is not about sales projections or from customers commenting on Morrison's recent acquisition of Safeway, its former rival. Instead, many of the letters come from investment banks keen to solicit his attendance at the summer's sporting and cultural events.

Ackroyd is not the only subject of banks' affections. The corporate hospitality season warmed up last month with the Chelsea Flower Show and will go on after the European football championships in Portugal into the late summer. Banks send out thousands of invitations to the corporate great and good in the hope that a day at the races or an evening at the opera will translate into business. Employees of companies planning a large deal or takeover are particularly sought after.

A managing director in the fixed-income division of a European bank said: "Entertaining gives you airtime with clients. That half-hour chat in the plane on the way to see the football is well worth the investment."

However, for prized clients, awash with requests to attend Wimbledon or cup finals, banks' invitations are not always appreciated. Ackroyd said he throws most of his in the bin. "I'm too busy doing my job and have got no time for that sort of thing. The only thing that would interest me would be to go and see Bradford City Football Club but I've got my own season ticket so they can't really help me," he said.

Other recipients are similarly underwhelmed at the prospect of lavish days out in the company of financiers. Acceptance rates for events such as golf days can be as low as 30%. Charles Vanderwelle, treasury director of ITV, formed this year by a merger between Carlton Communications and Granada, said spending days away from the office is difficult to justify. "At this time of the year I could be doing something every week. There just isn't the time," he said.

Function fatigue is forcing banks to seek higher standards. Last year UBS took Sports Mondial, an entertainment organiser, to court for allegedly serving warm beer and cheap wine to guests of its foreign exchange and treasury business at the UEFA Champions League football final in Milan. Sports Mondial said it is not now working with investment banks.

Organisers that are dealing with banks have been forced to become more innovative. Team Tactics, a Kent-based company which has provided services to Dresdner Kleinwort Wasserstein, Bear Stearns and UBS, is offering wine-tasting evenings, pool tournaments and Asian cookery lessons to its banking clients.

A manager at a London-based fund of hedge funds and former corporate financier at SG Warburg said boozy afternoons at Ascot are increasingly rare. "There used to be a lot more of the kind of entertaining where you invited a whole lot of people to the races for no particular purpose. What goes on now is much more focused," he said.

Richard Beggs, managing director of Moving Venue Management, which organises events for Deutsche Bank and JP Morgan Fleming, said the emphasis has shifted to events that take place in London and do not occupy a day.

The Chelsea Flower Show is a case in point. In 1999, Merrill Lynch Investment Management decided to sponsor the show after research showed its corporate clients were more interested in dahlias than the Derby horse race. If attendance figures are anything to go by, the event has been a success. Richard Royds, head of UK retail business at MLIM, said more than 70% of those invited to last month's display accepted. "It's become a kind of annual pilgrimage. People call us up every year and remind us to invite them," he said.

Royds said spouses are crucial to generating enthusiasm: "Once an event is in the partner's diary, the chances of that person calling up and cancelling at the last minute are greatly reduced."

Appealing too strongly to spouses can be counterproductive, however. In April, Ernst Welteke, president of the German Bundesbank, resigned after he and his family had spent four days at a luxury Berlin hotel, courtesy of Dresdner Bank, an organisation that he helped to regulate.

The UK's Financial Services Authority only allows its employees to accept business lunches if they are infrequent and not too lavish and bars them from attending expensive cultural or sporting events without first discussing the invitations with line managers. Wimbledon, the FA Cup Final, Royal Ascot and the Royal Opera House are specifically ruled out.

Scepticism about corporate entertainment is becoming more common: Anthony John, a director at Investment Manager Selection, a fund of funds, said the company keeps careful tabs on who's going where and with whom. "We keep a corporate gifts and entertainment register. That way we can check that the appropriate individual is attending the appropriate event, for the appropriate reason," he said.

Chiswell Associates, a UK-based fund manager, goes a step further. David Kidd, chief investment officer, said the fund bars its managers from accepting offers of hospitality from providers of third-party investment vehicles looking to raise money. "We are known for independence and don't want to be compromised."