You’d be hard-pressed to read an economic outlook for 2009 and not come away thinking this is going to be a very difficult year. Most economists point out a number of relevant facts that suggest the 12-month period will actually get worse before it gets better.
NBA Commissioner David Stern
Even more troubling, the projected improvement will be minimal, with some predicting very weak growth of only 1% in 2010 and potentially carrying over to 2011. The fourth quarter numbers from 2008 seem to support the arguments and already this year, America’s Fortune 500 companies have laid off over 71,000 employees.
The nation’s financial and economic woes have hit the sports industry as well. Sponsorships are down, attendance is slipping at NBA arenas and employees of sports franchises are discovering what it’s like to stand in an unemployment line.
The San Diego Padres owner wants out of baseball, while his counterpart at the New York Mets reportedly lost a fortune with Bernie Madoff. Neither the Dallas Cowboys nor the New York Giants can find a company willing to put its name on the door of their new stadiums. NBA season-ticket renewal rates are down.
The Arena Football League is closing its doors – at least for now – and the Houston Comets, the original powerhouse of the WNBA, has officially ceased operations.
Fox Sports and ESPNs Internet sites are having trouble renewing advertising deals and have had difficulty in acquiring new ad sales. Revenues from existing ad deals for many sports website owners has dropped dramatically over the past six months.
While some point to poor attendance at recent college football bowl games, most of that can be attributed to fan indifference rather than economic factors playing a role. Aside from the FedEx Orange Bowl, all of the BCS games saw strong attendance.
NFL Attendance Fell 1% This Past Season
Attendance at NFL games was down 1% this season, although most of those tickets were purchased well in advance of the financial crisis.
Despite the small decline in attendance, the NFL – and football in general – remains in strong financial condition.
The NFL is less susceptible to a slump at the gate than most other American sports. However, the inability of the Giants and Cowboys to reach naming rights agreements for their new stadiums has many in the league concerned.
As a result, The NFL lowered prices 10% across the board for playoff games and scaled back some Super Bowl tickets to $500 from $800.
For leagues like the NBA and NHL, whose television contracts aren’t as lucrative as the NFL or Major League Baseball, they’re feeling an economic pinch along with the rest of the world.
NBA Commissioner David Stern says he’s concerned about the economy’s effect on the league, but he doesn’t plan to scale back aggressive plans to grow the business in China and other overseas locations. “We’re moving along prudently,” he says, “We fully expect to have to work doubly hard when the economy is difficult.”
Attendance at College Football Games Remained Strong
The only MLB club that never seems to be adversely effected by the nation’s economy is the New York Yankees. This offseason, the club doled out over $420 million to sign C.C. Sabathia, A.J. Burnett and Mark Teixeira to lucrative contracts.
For small market teams already having difficulty competing for free agents because they lack the financial resources to offer big deals, teams like the Yankees, Mets, Cubs, Dodgers and Red Sox can take greater advantage of their respective economic strength.
It won’t come as a surprise to see attendance decline at MLB ball parks this season, especially among the small market teams. Even a mid-sized franchise like St. Louis, which typically draws well over 3 million fans each season, has seen a sharp decline in advance ticket sales.
Some within the Cardinals organization believe attendance might not reach 3 million for the first time since 2003 when the club drew 2.91 million fans.
But generally, college and professional sports should weather the economic storm better than most industries. People are passionate about sports, especially football. Consumers are more willing to make financial cuts in other areas in order to continue purchasing tickets for sporting events.
Leagues like the NFL and college BCS conferences will continue to show strong attendance figures as the year progresses. The men’s NCAA basketball tournament has become, arguably, the greatest spectacle in American sports and continues to enjoy strong attendance.
Didn’t the NFL slash playoff ticket prices by 10% to help ease the pain?
Moon Dog
One can either view this as the perfect storm or the blissful ignorance of the owners. They’re now going to either step up to the plate and place their houses in order or fall by the wayside. Nowhere will this be more indicative than within MLB. The NFL has already laid off 10 % of its staff in its New York office. And around the league the same is happening within a number of franchises. And to the that they’ve yet to come to an agreement as to the CBA and the Players’ Union. And you’ve got a lot riding on the whole situation .
That being said the NFLPA have some real issues that’s in need of being addressed concerning their members.
As for slashing of ticket prices that won’t be happening. It’s not within many of these organizations to be that amenable to the needs of their patrons. The owners aren’t always that amenable or benevolent.
And tell me why it is that an idiot like Michael Bloomberg can deride the Federal government for bailing out financial sector and the Big Three domestic auto manufacturers ? But then use $2.3bn of taxpayers’ monies in New York to build two new stadiums for the respective baseball franchises . The guy is no end of an ass to begin with.
He may well be a self made billionaire but that so called business insight has become skewered as his political ambitions.
…………………
cont’d ……
As for the NBA they’ll definitely have some ensuing problems. But I think that of all the people known for their astuteness. Stern may well be the one who knows how best ride this storm overall. When he took over the reins he patiently turned the whole thing around and made it the financial behemoth that it now is.
tophatal ……………….
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