http://www.examiner.com/x-3926-Business-of-Sports-Examiner~y2009m3d12-Sports-economy-is-it-tanking
Evan WeinerBusiness of Sports Examiner
Sports economy, is it tanking?
March 12, 9:42 PM
Has the sports economic bubble burst? The answer would seem to be yes, although Major League Baseball's Spring Training ticket sales are up and both Major League Baseball and the Major League Baseball Players Association seem to be making money on the World Baseball Classic as World Baseball Classic, Inc. will be distributing more than $15 million in proceeds from the 2009 World Baseball Classic to the participating federations and the International Baseball Federation according to a March 4 news release. The participating teams will split $14 million, which is nearly double the $7.8 million that was awarded after the inaugural event in 2006. In addition, the IBAF, the worldwide governing body for the sport of baseball, will receive over $1 million to invest in game development globally.
The 15 million dollar haul is pretty sizeable considering that the global economy is tanking despite a Wall Street rally over the past few days.
Last Monday, Major League Baseball announced that Spring Training attendance was up by two percent over last year's pace for overall Spring Training attendance through Sunday's exhibition games. "A total of 871,502 fans have gone through Cactus and Grapefruit League turnstiles in 154 games, an average of 5,659 per exhibition. That compares with an average of 5,548 through the same number of games in 2008," according to the news release.
So far, Major League Baseball based on the WBC and Spring Training attendance looks to be recession proof. But looks might be deceiving. It is far too early to tell if regular season attendance will drop, if luxury boxes will be sold or be empty over the course of an 81 game home schedule and if teams like the Yankees or Pirates can replace a sponsor like General Motors and get comparable dollars when someone jumps in, if someone jumps in, to take General Motors place. The real test comes once the regular season starts. April will not only be a litmus test for Major League Baseball, but Minor League Baseball, the National Basketball Association and the National Hockey League as well. NBA and NHL playoff bound teams are looking for their patrons to buy playoff tickets at a higher price than the regular season.
The NBA and NHL sold all of its sponsorship and inked all of its marketing partners for the 2008-09 before the crisis hit last September. NBA revenues in 2008-09 are up two percent from 2007-08 levels but there is trouble ahead. Major League Baseball is either selling new sponsorship or renewing expiring marketing agreements during the economic meltdown, the NBA and NHL are just selling playoff tickets now, the National Football League is beginning to sell tickets for 2009. The economic conditions are not favorable. Bill Davidson, the owner of the Detroit Pistons, will be lowering season ticket prices in 2009-10. Detroit may be the hardest hit sports market in either the US or Canada. The continuing troubles of the Big 3 automakers combined with a falling Canadian dollar will have an affect on The Pistons along with the Detroit Red Wings, Detroit Tigers and the Detroit Lions.
In Charlotte, a city dominated by the banking industry, Bobcats owner Bob Johnson will slash season ticket prices by an average of 17 percent in 2009-10.
Also this week, the NBA was hit with major economic jolt. The Simon Brothers told the Indianapolis Capital Improvement Board that they no longer could afford to assume the losses of their Pacers franchise and operate the team's home arena. The Simons are seeking relief and could sell or move the franchise with some city layer of government doesn't step in. The problem with that threat is simple. There are very few places that can take on a team. Kansas City is one place but that was a risky market even before the economic downturn. Kansas City's market is too small for the NFL's Chiefs, MLB's Royals and NASCAR, adding another team would just drain the other sports entities in the Kansas City market. Las Vegas is a dead market right now.
In good economic times, the Simons claimed they lost money on the team and they were one of eight ownership groups who asked for additional revenue sharing two years ago.
The NBA has offered 15 teams "bailout" money to help them get through tough economic teams. The NBA and the National Basketball Players Association still have two years left on their Collective Bargaining Agreement and a lot can happen between now and 2011. The economy could pick up or conditions could deteriorate.
All seems to be quiet in the NHL compared to the NBA. New York Islanders owner Charles Wang wants to see his "Lighthouse Project" given the go ahead by various Long Island governments. The Phoenix Coyotes franchise has major financial problems and the falling Canadian dollar is not helping the six Canadian teams. The NHL is in better shape than the Russian Kontinental Hockey League which was fueled by oil money. The KHL season is drawing to an end and it will be interesting to see how many of the 24 teams that started last September will be back in 2009-10 and if the KHL can hold onto big name players, particularly Jaromir Jagr.
In all of this economic chaos, there is some glimmer of hope for the sports economy and growth. The fledgling United Football League on Wednesday held a news conference to discuss plans for the 2009 season, the first one for the league. Paul Pelosi, who along with other investors, has sunk $30 million said the establishment of the UFL was "a tremendous opportunity, recession is time of opportunity."
Pelosi, the husband of United States House of Representatives Majority Leader Nancy Pelosi, thinks his league will thrive in time. Pelosi will know by December 1, long after the NBA, NHL and Major League Baseball have found out just how much the economy has dragged them down.
evanjweiner@yahoo.com
Showing posts with label sports business. Show all posts
Showing posts with label sports business. Show all posts
Thursday, March 12, 2009
Monday, December 29, 2008
Is December the Crulest Month?
Is December the Cruelest Month?
By Evan Weiner
December 29, 2008
1:30 PM EDST
(New York, NY) --- A few weeks ago I asked T. Boone Pickens about his thoughts on the economy. Pickens was not particularly optimistic that things would turn around soon, but he was hopeful that the economy would begin to recover in the third quarter (July, August and September) of 2009. The third quarter cannot come soon enough for most people including sports owners. While Steinbrenner family conducted a spending orgy for players including C. C. Sabathia, Mark Texeria and A. J. Burnett, Yankees officials, presumably led by former New York City Deputy Mayor Randy Levine, requested some $259 million for addition tax-free bonds so the team can finish off paying for the new Yankee Stadium which opens in April. The Steinbrenners spent an estimated $161 million for Sabathia, another $82 million for Burnett and $180 million for Texeria or an estimated $420 million on three players yet need tax-free bonds from financially strapped New York City for the new stadium.
During Hank and Hal Steinbrenner’s wild spending spree, other franchises and sports related entities began looking for line lines. There will be no Tour de Georgia bike race in 2009 nor will there be an Arena Football League season. Both plan to operate in 2010 if they can find sponsors and backers. Hockey’s Double A ECHL has lost two teams as owners threw in the towel in Augusta, Ga. And Fresno, Ca. The LPGA is reducing the number of tournaments it will hold in 2009. While there will be a bailout or loans to the Big 3 automakers from both the United States and Canadian governments, it is very likely that GM, Chrysler and Ford will be pulling money out of sports. GM ended its estimated annual seven million dollar Buick marketing agreement with golfer Tiger Woods and dropped partnerships with the New York Yankees and Pittsburgh Pirates. NASCAR was very interested in the bailouts because they rely on the Big 3. Chrysler sponsors three teams, Gillett Evernham, Penske Racing and Petty Enterprises. In the past, the Big 3 have poured more than $300 million into NASCAR, that is going to change drastically though going ahead. NASCAR put out a statement on December 10 suggesting that attendance will drop in 2009. NASCAR officials expect a drop in sports sponsorship revenues. The International Olympic Committee has decided to wait a year and will put the 2014 Sochi Winter Games and the 2016 Summer Games up for bid for American TV rights after the groups awards the 2016 Games in October. The American TV networks provide the IOC with its biggest revenue source.
A drop in attendance and sponsorship put the Fresno Falcons out of business.
Although the NFL is still swimming in money and has been recession proof, the league is laying off people, following the NBA’s cut of nine percent of staff. But the one of the NFL’s television partners, NBCUniversal is having problems selling commercials for February’s Super Bowl. NBC has rejected Cesario Migliozzi plan for eight companies to come together and pay for a $3 million spot. The recession has even hit the Super Bowl.
The recession has not really hit the NFL, the NBA or the NHL yet, although the NFL kept its playoff ticket package prices at 2007-08 levels. The leagues will feel the pinch beginning in 2009. The first North American “Major” league that will feel the full fury of the economic slowdown will be Major League Baseball. The Yankees and to some extent, the Wilpon family New York Mets have spent some money but there have been very few players who have benefited from free agency this winter. Wilpon has had an interesting off-season. His team has been defending itself for taking money from the cash strapped Citibank, an institution that has been given money by the American government to continue operations after it cut an estimated 50,000 employees and Wilpon apparently was involved in the Bernard Madoff ‘s $50 billion ponzi scheme. The Citibank agreement that provides Wilpon with about $400 million for 20 years for naming rights at the Mets new Queens stadium is a public relations nightmare. There will be jokes about the Mets late season collapses in 2007 and 2008 and Wilpon’s business partners, the collapsed Citibank and Madoff, Citibank is the major problem for the Wilpon’s most public business, the Mets. Wilpon’s request for additional tax-free bonds has been flying under the radar because of the Yankees spending, the Citibank bailout and Madoff. But to be far to Wilpon, he signed the Citibank agreement long before the bank’s failure and a deal is a deal, no matter how unpalatable it might be to US Congressman or to the man/woman in the street.
The other baseball franchises are not sure of their ticket sales yet for 2009 or how many fewer marketing dollars will be coming into their coffers. Advertiser dollars will be scarcer in 2009. Arizona and Toronto have fired staff and MLB has implemented a hiring freeze. MLB has launched a baseball network in the United States in partnership with cable companies. MLB still is moving ahead with this year’s World Baseball Classic, recession or no recession, MLB has to maintain a global presence. So does the NFL and despite the global economic crisis, the league will play another regular season agme in London, UK in 2009.
The NBA and NHL will see just how much the economy has hurt them come playoff time in April when new ticket packages have to be bought. The NFL is preparing for a turndown in 2009. Detroit has to be a significant concern for MLB, the NFL, the NBA and the NHL. Windsor, Ontario is a major part of the Detroit market place, the US dollar costs Canadians about a $1.22 these days, which makes it more expensive to attend Detroit sporting events. Chrysler has shut down production for a month, even with the bailouts, the Big 3 will be leaner and trimmer and monies that might have gone into Tigers, Lions, Pistons and Red Wing games from the automakers and their employees may not be available at former levels. That will hurt the Detroit teams, on top of that, Mike Ilitch has raised 2009 Tigers ticket prices. The other border city that might have some concerns is Buffalo, New York. The Sabres and Bills have Canadian backers and Seattle is close enough to the Canadian border and that could impact some Mariners or Seahawks fans who travel from British Columbia to see a game.
There are additional worries. All the major sports leagues have deals with SiriusXM Radio, the satellite company which has some very major financial problems. The NFL is looking for a new American radio deal and its long time radio partner, Westwood One, has been delisted by the New York Stock Exchange and even though the network is trying to add content, like former US Senator Fred Thompson’s new daily show that will replace Bill O’Reilly, some soon to be laid off Westwood One employees may not be getting severance packages, that is how dire the situation is over at Westwood One. The NFL isn’t looking for billions from radio, maybe $20 million a year will get the contract.
Then there is the most tradition stream of getting the word out for sports teams. Newspapers. It has been a bad year for newspapers, one paper, the New York Sun folded, one chain, the Tribune Company is in bankruptcy, the New York Times is hemorrhaging money and may sell off its stake in the Boston Red Sox/New England Sports Network/Fenway Sports Group. Other newspapers have cut back; Newsday has decided to lop off three sports columnists among the group of employees that will be let go. The Washington Post and the Baltimore Sun have combined some operations and papers are not sending reporters out on the road to cover games as frequently as in the days gone by. Dallas Mavericks owner Mark Cuban thinks leagues should work with newspapers and form a “beatwriter cooperative” which would be funded by the leagues, who would hire reporters who would write exclusively for newspapers in sports markets and their work would be placed in newspapers sports sections.
Cuban admits that this could be construed as conflict of interest but he argues that if it can help newspapers, it should be considered.
The sports landscape is changing rapidly. The heady days of just four months ago when global expansion, which all of the North American leagues were pushing, was in full speed mode, where the rising value of the Euro was being bandied about by European basketball powers as a way to attract Kobe Bryant or Lebron James and the Kontinental Hockey League, backed by oil money and $147 a barrel oil prices was ready to challenge the NHL for players. There seems to be a market contraction going on that was unimagined a year ago. The causalities are beginning to add up. Two ECHL teams are gone, a number of LPGA events have been canceled, the Arena Football League has suspended operations, there are questions about the stability of the Phoenix Coyotes and the Tampa Bay Lightning and the viability of the proposed Brooklyn Arena for the New Jersey Nets and there is still a lack of new NFL facilities in San Diego, Santa Clara and Los Angeles in financially strapped California. T. Boone Pickens better be right that the economy will start showing signs of life in the third quarter, if it doesn’t happen, cities holding notes on publicly built arenas may default, some sports teams will move or fold and an unwelcomed market correction, unwelcomed by players, will impose a Darwinism in sports that has not be seen since the Great Depression in the 1930s.
evanjweiner@yahoo.com
By Evan Weiner
December 29, 2008
1:30 PM EDST
(New York, NY) --- A few weeks ago I asked T. Boone Pickens about his thoughts on the economy. Pickens was not particularly optimistic that things would turn around soon, but he was hopeful that the economy would begin to recover in the third quarter (July, August and September) of 2009. The third quarter cannot come soon enough for most people including sports owners. While Steinbrenner family conducted a spending orgy for players including C. C. Sabathia, Mark Texeria and A. J. Burnett, Yankees officials, presumably led by former New York City Deputy Mayor Randy Levine, requested some $259 million for addition tax-free bonds so the team can finish off paying for the new Yankee Stadium which opens in April. The Steinbrenners spent an estimated $161 million for Sabathia, another $82 million for Burnett and $180 million for Texeria or an estimated $420 million on three players yet need tax-free bonds from financially strapped New York City for the new stadium.
During Hank and Hal Steinbrenner’s wild spending spree, other franchises and sports related entities began looking for line lines. There will be no Tour de Georgia bike race in 2009 nor will there be an Arena Football League season. Both plan to operate in 2010 if they can find sponsors and backers. Hockey’s Double A ECHL has lost two teams as owners threw in the towel in Augusta, Ga. And Fresno, Ca. The LPGA is reducing the number of tournaments it will hold in 2009. While there will be a bailout or loans to the Big 3 automakers from both the United States and Canadian governments, it is very likely that GM, Chrysler and Ford will be pulling money out of sports. GM ended its estimated annual seven million dollar Buick marketing agreement with golfer Tiger Woods and dropped partnerships with the New York Yankees and Pittsburgh Pirates. NASCAR was very interested in the bailouts because they rely on the Big 3. Chrysler sponsors three teams, Gillett Evernham, Penske Racing and Petty Enterprises. In the past, the Big 3 have poured more than $300 million into NASCAR, that is going to change drastically though going ahead. NASCAR put out a statement on December 10 suggesting that attendance will drop in 2009. NASCAR officials expect a drop in sports sponsorship revenues. The International Olympic Committee has decided to wait a year and will put the 2014 Sochi Winter Games and the 2016 Summer Games up for bid for American TV rights after the groups awards the 2016 Games in October. The American TV networks provide the IOC with its biggest revenue source.
A drop in attendance and sponsorship put the Fresno Falcons out of business.
Although the NFL is still swimming in money and has been recession proof, the league is laying off people, following the NBA’s cut of nine percent of staff. But the one of the NFL’s television partners, NBCUniversal is having problems selling commercials for February’s Super Bowl. NBC has rejected Cesario Migliozzi plan for eight companies to come together and pay for a $3 million spot. The recession has even hit the Super Bowl.
The recession has not really hit the NFL, the NBA or the NHL yet, although the NFL kept its playoff ticket package prices at 2007-08 levels. The leagues will feel the pinch beginning in 2009. The first North American “Major” league that will feel the full fury of the economic slowdown will be Major League Baseball. The Yankees and to some extent, the Wilpon family New York Mets have spent some money but there have been very few players who have benefited from free agency this winter. Wilpon has had an interesting off-season. His team has been defending itself for taking money from the cash strapped Citibank, an institution that has been given money by the American government to continue operations after it cut an estimated 50,000 employees and Wilpon apparently was involved in the Bernard Madoff ‘s $50 billion ponzi scheme. The Citibank agreement that provides Wilpon with about $400 million for 20 years for naming rights at the Mets new Queens stadium is a public relations nightmare. There will be jokes about the Mets late season collapses in 2007 and 2008 and Wilpon’s business partners, the collapsed Citibank and Madoff, Citibank is the major problem for the Wilpon’s most public business, the Mets. Wilpon’s request for additional tax-free bonds has been flying under the radar because of the Yankees spending, the Citibank bailout and Madoff. But to be far to Wilpon, he signed the Citibank agreement long before the bank’s failure and a deal is a deal, no matter how unpalatable it might be to US Congressman or to the man/woman in the street.
The other baseball franchises are not sure of their ticket sales yet for 2009 or how many fewer marketing dollars will be coming into their coffers. Advertiser dollars will be scarcer in 2009. Arizona and Toronto have fired staff and MLB has implemented a hiring freeze. MLB has launched a baseball network in the United States in partnership with cable companies. MLB still is moving ahead with this year’s World Baseball Classic, recession or no recession, MLB has to maintain a global presence. So does the NFL and despite the global economic crisis, the league will play another regular season agme in London, UK in 2009.
The NBA and NHL will see just how much the economy has hurt them come playoff time in April when new ticket packages have to be bought. The NFL is preparing for a turndown in 2009. Detroit has to be a significant concern for MLB, the NFL, the NBA and the NHL. Windsor, Ontario is a major part of the Detroit market place, the US dollar costs Canadians about a $1.22 these days, which makes it more expensive to attend Detroit sporting events. Chrysler has shut down production for a month, even with the bailouts, the Big 3 will be leaner and trimmer and monies that might have gone into Tigers, Lions, Pistons and Red Wing games from the automakers and their employees may not be available at former levels. That will hurt the Detroit teams, on top of that, Mike Ilitch has raised 2009 Tigers ticket prices. The other border city that might have some concerns is Buffalo, New York. The Sabres and Bills have Canadian backers and Seattle is close enough to the Canadian border and that could impact some Mariners or Seahawks fans who travel from British Columbia to see a game.
There are additional worries. All the major sports leagues have deals with SiriusXM Radio, the satellite company which has some very major financial problems. The NFL is looking for a new American radio deal and its long time radio partner, Westwood One, has been delisted by the New York Stock Exchange and even though the network is trying to add content, like former US Senator Fred Thompson’s new daily show that will replace Bill O’Reilly, some soon to be laid off Westwood One employees may not be getting severance packages, that is how dire the situation is over at Westwood One. The NFL isn’t looking for billions from radio, maybe $20 million a year will get the contract.
Then there is the most tradition stream of getting the word out for sports teams. Newspapers. It has been a bad year for newspapers, one paper, the New York Sun folded, one chain, the Tribune Company is in bankruptcy, the New York Times is hemorrhaging money and may sell off its stake in the Boston Red Sox/New England Sports Network/Fenway Sports Group. Other newspapers have cut back; Newsday has decided to lop off three sports columnists among the group of employees that will be let go. The Washington Post and the Baltimore Sun have combined some operations and papers are not sending reporters out on the road to cover games as frequently as in the days gone by. Dallas Mavericks owner Mark Cuban thinks leagues should work with newspapers and form a “beatwriter cooperative” which would be funded by the leagues, who would hire reporters who would write exclusively for newspapers in sports markets and their work would be placed in newspapers sports sections.
Cuban admits that this could be construed as conflict of interest but he argues that if it can help newspapers, it should be considered.
The sports landscape is changing rapidly. The heady days of just four months ago when global expansion, which all of the North American leagues were pushing, was in full speed mode, where the rising value of the Euro was being bandied about by European basketball powers as a way to attract Kobe Bryant or Lebron James and the Kontinental Hockey League, backed by oil money and $147 a barrel oil prices was ready to challenge the NHL for players. There seems to be a market contraction going on that was unimagined a year ago. The causalities are beginning to add up. Two ECHL teams are gone, a number of LPGA events have been canceled, the Arena Football League has suspended operations, there are questions about the stability of the Phoenix Coyotes and the Tampa Bay Lightning and the viability of the proposed Brooklyn Arena for the New Jersey Nets and there is still a lack of new NFL facilities in San Diego, Santa Clara and Los Angeles in financially strapped California. T. Boone Pickens better be right that the economy will start showing signs of life in the third quarter, if it doesn’t happen, cities holding notes on publicly built arenas may default, some sports teams will move or fold and an unwelcomed market correction, unwelcomed by players, will impose a Darwinism in sports that has not be seen since the Great Depression in the 1930s.
evanjweiner@yahoo.com
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