The economy sucks. We get it. So we turn to sports to take our minds off "things." Well, wouldn't it be fun to look at how the national economy can ruin our national pastimes?
The sporting industry is built on customers' disposable income. But times are tough for the average American worker, and they're getting much tougher for corporate America.
Recently, baseball commissioner Bud Selig advised team owners to be cautious with ticket pricing plans in the future. After baseball enjoyed four consecutive years of record attendance, this year total ticket sales have slid from 79 to 78 million seats filled. Ticket prices have outpaced inflation in recent years, but don't be surprised if there's a freeze in ticket prices sometime soon.
Furthermore, the fan's inability or reluctance to buy tickets will coincide with a drop in both gambling interest and merchandise sales. This, in turn, could result in a decrease in investor interest. Golf tournaments and NASCAR races need sponsors to run. Of course, it will be worse for leagues if companies don't have enough money for advertising or sponsorship.
In 1999, former American energy mogul Enron bought naming rights to the Houston Astros' stadium for $100 million. Manchester United, perhaps the most famous franchise in sports, signed a four-year, $100 million contract with AIG to have AIG printed on its jerseys. The logos of bankrupt companies are worth little, and one wonders if struggling corporations will be as eager to continue with such extravagant marketing. The soon-to-be-opened Citi Field, the Mets' new stadium, could be a candidate to follow in the footsteps of the Enron snare in Houston.
Four new sporting venues will soon open in New York, where Wall Street's collapse will likely hinder their success. Publicly funded stadiums seem to be corrupt more often than not, and the outcry from taxpayers could reach new heights. If fans no longer attend games, they certainly won't agree to help pay for the Brooklyn Nets to build a new arena.
New stadiums draw a significant amount of revenue from their luxury suites and personal seat licenses, which only rich corporations and investment bankers can afford. Luxury suites may be a dying breed, as some stadiums have begun converting them into more reasonably priced seating.
Owners could soon find themselves with their own financial trouble. The front-runners to buy the Chicago Cubs, the Rickets family, took a hit in value because of Wall Street's meltdown. Ownership groups, like the rest of the United States, will become increasingly reluctant to borrow money from banks and go into debt while building new stadiums or buying professional franchises. If teams begin to lose value, players may even be in line to take pay cuts.
NFL commissioner Roger Goodell has advised owners to control costs and search for new sources of revenue. The NFL already decided that it will opt out of its labor deal two years prior to schedule. Meanwhile, the NBA laid off 50 of its 800 league office employees, and the Charlotte Bobcats cut 35 non-basketball operations workers.
The NBA and NHL have set salary caps based on league revenues, which will likely decrease this year. Mid-level players who rely on their salaries and not endorsements might go abroad to play where there are no such limits on spending. One example is NBA fringe player Josh Childress, who fled to Greece. In hockey, Russia's KHL is already viably competing with the NHL as the most competitive league with the best players in the world.
Honestly, I don't think the landscape of sports will really change. Sports are ingrained in American culture, and people would sacrifice a whole lot to keep their season tickets. For many leagues, television contracts are the main source of revenue, and there's no reason to expect a change in that, especially with baseball and the NFL already set in long-term deals.
Sports will always thrive as long as they're perceived to be an escape from the business world and work-day life. People need an outlet to get away from this economic crisis and sports will hopefully remain that diversion.
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