Wednesday, May 20, 2009

Is Frugal the new Frivolity?
Is Frugal the new Frivolity?

By Evan Weiner

May 20. 2009

12:00 PM EDT

(New York, N. Y.) -- I was listening to Bloomberg Radio this morning and one of the guests on the morning Surveillance program piqued my interest. His name was David Rosenberg, the Chief Economist at Gluskin, Sheff and Associates in Toronto, and his topic seemed simple; people are living a more frugal lifestyle instead of being frivolous with their money.

It is pretty straight forward, people are still spending but the spending on high priced products is a thing of the past and being cheap is vogue for the next few years, the next five years or for as many as the next 10 years. Rosenberg in the interview confessed to being a Montreal Canadiens fan but didn't talk about the frugality versus frivolity argument in sports.

But there is no doubt that people and companies have become frugal when it turns to sports. The Steinbrenner family is finding out in New York that there is a limit to how much people are willing to pay for the top priced seats at the new Yankee Stadium, Jerry Jones is calling his new Dallas Cowboys stadium in Arlington, Texas, Cowboys Stadium as he has not been able to strike a deal for naming rights at the facility.

Sports spending for high ticket items such as club seats and luxury boxes is slowing and the days of $20 million a year naming rights for facilities for Citibank’s $400 million, 20-year agreement with Fred Wilpon’s New York Mets new stadium seems so 2006 in a 2009 world.

College football in the United States may find out that there are more frugal people than frivolous consumers in a couple of months. The President and Chief Executive Officer of the National Football Foundation and the College Football Hall of Fame, Steven J. Hatchell, acknowledges that 2009 will be a different world than say 2008 or 2007 was.

Money is tighter.

"Well, I am not sure on a global sense, I am a good one to ask," said Hatchell. "I know on our Board of Directors within the colleges, I think that we hear that things seem to be going very well to be candid with you, the TV contracts are in place, we have Commissioners and AD's (Athletic Directors) on our board and everybody said there is a cautiousness out there and everyone is trying to be very cautious about their spending and probably being a little bit more thoughtful about how they do things than maybe in the past.

"I have to say that we have not heard any alarm go off, we have heard caution but we have not heard any alarm and right now it seems like people feel things are strong. I think as we get closer to football season we will know a lot more. (College) Basketball is just over and now where does it go? The one thing we hear from everybody is that they got to be cautious because they don't know what to expect in the fourth quarter of the year.

"I hate to use that word over and over again but all we hear is people are more cautious. Donors are saying, hey I have been with you for 20 years, just give me a little time to make our contribution or we are going to wait a little bit."

But holding off on money will have an impact on college football costs. College football is fortunate, television contracts and long term marketing deals were signed before the economy imploded and both over-that-air and cable TV networks were willing to pay top dollar for the programming. That money is in the bank, but what happens if boosters cut their funding?

"I think the difference in a lot of the major programs in the country have to do with coaching staffs and what you pay with coaching staffs and I think that is what separates at all of different levels. Again what I would say, we haven't determined or heard anything that there is a difference right now, you see where people (fans) might drive for our contests as opposed to flying or they might try to schedule more than one contest on a trip and maybe some of those are good things to do period that might make a change well in the future.

"I think the fear for a lot of folks is, if it goes too far does it cost sponsorship of programs? Does it mean that some sports would be in jeopardy? But there hasn't been any of that happening. I think AD's right now are smarter than they ever have been and working closely with their universities and I think they are probably on top of it better than anytime in the history of intercollegiate activities."

Massachusetts Institute of Technology recently dropped eight sports. But that was on the Division III level where there are no big TV contracts or athletes receiving performance scholarships.

"There is always different reasons for that (dropping sports) and I don't know the MIT situation. I know people for the most part like to host as many sports as they possibly can do. There is a philosophy there now, let's do a great job with the sports that we have and maybe have the bare number that you have to have to be at a particular level within the NCAA (National Collegiate Athletics Association).

"I don't know I just think that conversations that our athletic directors are having are so mature, so well developed, it is not like the old days where we hope this works out. I think there have taken the guesswork out and I think they know where they stand pretty much and hopefully there won't be any of those cutbacks."

The College Football Hall of Fame is located in South Bend, Indiana, the home of the University of Notre Dame. It is far too early to access the recession’s impact on the Hall.

"We have not (felt the impact) but keep in mind that the College Football Hall of Fame, our test of that has to do more with what happens with Notre Dame home games and what happens in the summer. Right now it has been about the same I would say so the real test will be when we get closer to football," Hatchell said. "Are there meetings there and are there different things that happen during the football season that would be more of a test for us, how that goes and how that pans out. But the schools that are coming to play Notre Dame are planning a lot of things at the Hall of Fame.

“There seems to be also the attitude of people saying we are going to stay closer to home this summer so what are the hours of the Hall of Fame, we are getting those kinds of calls from around the country, we are traveling through the area, we are coming into Chicago, its two hours to drive over, probably a little more at home interest than we have had in the past."

Hatchell sounds a like David Rosenberg in that sense. People may becoming more frugal and visit the College Football Hall of Fame instead of more elaborate outings. In fact, college football itself may become more frugal with frivolity money dries up and people look to shop for bargains instead of going to high end places.

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