http://www.mcnsports.com/en/node/7194
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.
eweiner@mcn.tv
Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts
Wednesday, May 20, 2009
Friday, March 20, 2009
"Hooverville" meets 21st century sports economics in Sacramento
http://www.examiner.com/x-3926-Business-of-Sports-Examiner~y2009m3d20-Hooverville-meets-21st-century-sports-economics-in-Sacramento
Evan WeinerBusiness of Sports Examiner
"Hooverville" meets 21st century sports economics in Sacramento
March 20, 11:18 AM ·
There is probably nobody who is connected to the National Basketball Association that has a harder job that John Moag. For lack of a better description, Moag is the NBA’s point guard in the league’s attempt to get public dollars from Sacramento elected officials to help build a new area for the owners of the local NBA franchise, the Maloof brothers.
It is in Sacramento that 2009 economic reality is intersecting with the needs of a major league sports business. A “Hooverville” tent city housing the homeless has sprung up not far from the Cal Expo grounds, the place where the NBA and Sacramento officials want to build a new arena to house the Sacramento Kings.
"Hooverville” was the given to shantytowns built by the homeless on open spaces during the Depression. It was named after President Herbert Hoover who led the nation during between 1929 and 1933. Nobody has recorded any songs like “Brother Can You Spare a Dime?’ as the jobless rate hasn’t reached 25 percent but clearly wealth has been lost in the economic downturn.
Both the residents of the Sacramento “Hooverville” and the Maloof brothers’ basketball team have one thing in common, financial problems. A little background is needed to fully explain the connection between the 300 or so residents who are living near the American River and the Maloofs’ basketball team. Both need public handouts to survive. The economy is taking a toll on people who have lost jobs and have had their homes foreclosed and some of those people have ended up in tent towns.
The Maloofs are not hurting for money, their portfolios could be down because of being shareholders in the Wells Fargo bank, but they still have the Palms hotel and casino in Las Vegas along with a beer distributorship. But their basketball team suffers in comparison to other NBA franchises because the team plays in an outdated arena that lacks the big revenue producing luxury boxes and club seats that are so important to team owners. The franchise needs more money to run as a viable business.
Sacramento is small market and a government town that lacks both a rich, local cable TV contract and a multitude of big money, big spending businesses that buy the luxury boxes, the club seats and advertising inside the arena but small markets can survive in new arena with all the money making gadgets. But there is just enough money to support one big time pro sports team and in this case, it is an NBA team. Sacramento is also important because it is the capital of the country’s biggest state, California, and the NBA does a lot of business in California with two franchises in Los Angeles and one in Oakland. It always helps to have a team in the state capital for lobbying purposes in the event the NBA needs government help to solve a problem that could crop up.
Sacramento has been a problem franchise for the NBA for years. The "Hooverville" tent city has been a Sacramento problem since the economic downturn. Both are related.
Sacramento Mayor and former NBA player Kevin Johnson wants to see a new arena built and there are plans to construct an arena as the centerpiece of an arena-village at the Cal Expo although no one is sure how it would be funded. Johnson governs an area that has been hard hit by the recession hurt by job losses and home foreclosures. It is those people who have lost their jobs and homes who could be Kings ticket buyers.
Mayor Johnson wants to close the Sacramento “Hooverille” as quickly as possible and move the residents to homeless shelters and other more secure shelters including some places at Cal Expo.
That is why John Moag’s job has become even more difficult than it was after NBA Commissioner David Stern appointed him to help get the new Sacramento arena built following two crushing referendum defeats in November 2006. How do you get public money to build an arena for expensive entertainment in an area that clearly has many other public needs? An NBA team is not a quality of life issue. “Hooverville” clearly is a quality of life issue.
The question is pretty simple. How do you justify building an arena with some public funding when Sacramento’s jobless rate is more than 10 percent? One answer is that building an arena will create construction jobs. But those construction jobs will not materialize for another two years or so because no developer has stepped forward to help pay off some of the costs of building an arena and surrounding village. The money is not available for the project at the moment. Credit markets remain frozen.
The Kings franchise was born in Rochester, New York in 1945 as the Royals and played in the National Basketball League. The franchise moved to the Basketball Association of America in 1948. The BAA became the National Basketball Association in 1949. Rochester had become too a small and financially challenged NBA city in the 1950s and the franchise moved to Cincinnati in 1957. Cincinnati could not financially support an NBA team either and the franchise shifted to Kansas City where it was renamed the Kings in 1972. Kansas City was also a money loser.
The Kings franchise ended up in Sacramento in 1985 not long after the owners of the Kansas City Kings threw in the town and sold the franchise to a Sacramento group who wanted a team in California’s capital. In 1996, the Kings owner at the time, Jim Thomas, proposed building both a Major League Baseball stadium and an NBA arena in the city, but by January 1997, the idea fell apart and Thomas began threatening to sell the team because the franchise was losing money. Sacramento city leaders, fearing that Thomas might move the team to Anaheim or some other city, loaned him $82 million to help ease his financial burden. Thomas then sold the franchise to the Maloof brothers in 1998.
In 2001, Sacramento's mayor, Heather Fargo, put together a task force to study whether Sacramento should green light an arena and entertainment center in the city's downtown area and, by November 2002, there was some sort of commitment to the plan. But the Maloof brothers pulled out of the proposed venture within a year, partly because they didn't want to get stuck with a debt service bill. When the issue was revisited in 2004, the Maloofs were unhappy that a city councilman offered a resolution that would cap spending at $175 million for the city and $175 million for the Maloofs.
Apparently a salary cap on NBA players' payroll was fine for the brothers, but a municipal spending cap for an arena was unacceptable.
In 2006, the Maloofs and the city seemed to have struck a deal for a new arena that would have secured the franchise for decades if voters said yes in a November 2006 referendum The city, through the general tax, would have put up at least $470 million for the arena and parking. The city would own the building, but all of the revenue generated for all events held inside the building would go to the Maloof brothers. Not only that: The siblings would keep all the money earned from selling the naming rights to the city owned arena.
The Maloofs would pay off Thomas' old loan, which they inherited after they purchased the team. Additionally, they would pay $4 million in annual rent, an amount that could easily come from naming rights. They will also have to kick in $20 million for arena repairs. The Maloofs walked away from the deal however.
The Maloofs and the city fought over development surrounding the arena, the city wanted commercial and residential building to ring the new facility to spur downtown development but the Maloofs, who would get just about every nickel of revenue inside the building, wanted the land for an 8,000 space parking lot. The Maloofs wanted the big parking lot because they would keep all of the money generated from the lot. The Maloofs wanted the same parking deal they had and still have at the old arena.
That might not seem like a deal breaker until you do the math. Assuming the Maloofs fill the lot and charge $10 a car, that would mean $80,000 a night multiplied by 41 and you get more than $3 million annually from parking alone just from Kings events. The Maloofs would also get parking money from non-Kings events at the building, so the parking lot issue was a deal breaker.
“Hooverville” has met the Maloofs in Sacramento. The 1930s and 21st century sports business reality will meet at the Cal Expo when some “Hooverville” residents are placed in shelters on the Cal Expo grounds, land that someday might house the Maloof brothers’ Sacramento Kings.
evanjweiner@yahoo.com
Evan WeinerBusiness of Sports Examiner
"Hooverville" meets 21st century sports economics in Sacramento
March 20, 11:18 AM ·
There is probably nobody who is connected to the National Basketball Association that has a harder job that John Moag. For lack of a better description, Moag is the NBA’s point guard in the league’s attempt to get public dollars from Sacramento elected officials to help build a new area for the owners of the local NBA franchise, the Maloof brothers.
It is in Sacramento that 2009 economic reality is intersecting with the needs of a major league sports business. A “Hooverville” tent city housing the homeless has sprung up not far from the Cal Expo grounds, the place where the NBA and Sacramento officials want to build a new arena to house the Sacramento Kings.
"Hooverville” was the given to shantytowns built by the homeless on open spaces during the Depression. It was named after President Herbert Hoover who led the nation during between 1929 and 1933. Nobody has recorded any songs like “Brother Can You Spare a Dime?’ as the jobless rate hasn’t reached 25 percent but clearly wealth has been lost in the economic downturn.
Both the residents of the Sacramento “Hooverville” and the Maloof brothers’ basketball team have one thing in common, financial problems. A little background is needed to fully explain the connection between the 300 or so residents who are living near the American River and the Maloofs’ basketball team. Both need public handouts to survive. The economy is taking a toll on people who have lost jobs and have had their homes foreclosed and some of those people have ended up in tent towns.
The Maloofs are not hurting for money, their portfolios could be down because of being shareholders in the Wells Fargo bank, but they still have the Palms hotel and casino in Las Vegas along with a beer distributorship. But their basketball team suffers in comparison to other NBA franchises because the team plays in an outdated arena that lacks the big revenue producing luxury boxes and club seats that are so important to team owners. The franchise needs more money to run as a viable business.
Sacramento is small market and a government town that lacks both a rich, local cable TV contract and a multitude of big money, big spending businesses that buy the luxury boxes, the club seats and advertising inside the arena but small markets can survive in new arena with all the money making gadgets. But there is just enough money to support one big time pro sports team and in this case, it is an NBA team. Sacramento is also important because it is the capital of the country’s biggest state, California, and the NBA does a lot of business in California with two franchises in Los Angeles and one in Oakland. It always helps to have a team in the state capital for lobbying purposes in the event the NBA needs government help to solve a problem that could crop up.
Sacramento has been a problem franchise for the NBA for years. The "Hooverville" tent city has been a Sacramento problem since the economic downturn. Both are related.
Sacramento Mayor and former NBA player Kevin Johnson wants to see a new arena built and there are plans to construct an arena as the centerpiece of an arena-village at the Cal Expo although no one is sure how it would be funded. Johnson governs an area that has been hard hit by the recession hurt by job losses and home foreclosures. It is those people who have lost their jobs and homes who could be Kings ticket buyers.
Mayor Johnson wants to close the Sacramento “Hooverille” as quickly as possible and move the residents to homeless shelters and other more secure shelters including some places at Cal Expo.
That is why John Moag’s job has become even more difficult than it was after NBA Commissioner David Stern appointed him to help get the new Sacramento arena built following two crushing referendum defeats in November 2006. How do you get public money to build an arena for expensive entertainment in an area that clearly has many other public needs? An NBA team is not a quality of life issue. “Hooverville” clearly is a quality of life issue.
The question is pretty simple. How do you justify building an arena with some public funding when Sacramento’s jobless rate is more than 10 percent? One answer is that building an arena will create construction jobs. But those construction jobs will not materialize for another two years or so because no developer has stepped forward to help pay off some of the costs of building an arena and surrounding village. The money is not available for the project at the moment. Credit markets remain frozen.
The Kings franchise was born in Rochester, New York in 1945 as the Royals and played in the National Basketball League. The franchise moved to the Basketball Association of America in 1948. The BAA became the National Basketball Association in 1949. Rochester had become too a small and financially challenged NBA city in the 1950s and the franchise moved to Cincinnati in 1957. Cincinnati could not financially support an NBA team either and the franchise shifted to Kansas City where it was renamed the Kings in 1972. Kansas City was also a money loser.
The Kings franchise ended up in Sacramento in 1985 not long after the owners of the Kansas City Kings threw in the town and sold the franchise to a Sacramento group who wanted a team in California’s capital. In 1996, the Kings owner at the time, Jim Thomas, proposed building both a Major League Baseball stadium and an NBA arena in the city, but by January 1997, the idea fell apart and Thomas began threatening to sell the team because the franchise was losing money. Sacramento city leaders, fearing that Thomas might move the team to Anaheim or some other city, loaned him $82 million to help ease his financial burden. Thomas then sold the franchise to the Maloof brothers in 1998.
In 2001, Sacramento's mayor, Heather Fargo, put together a task force to study whether Sacramento should green light an arena and entertainment center in the city's downtown area and, by November 2002, there was some sort of commitment to the plan. But the Maloof brothers pulled out of the proposed venture within a year, partly because they didn't want to get stuck with a debt service bill. When the issue was revisited in 2004, the Maloofs were unhappy that a city councilman offered a resolution that would cap spending at $175 million for the city and $175 million for the Maloofs.
Apparently a salary cap on NBA players' payroll was fine for the brothers, but a municipal spending cap for an arena was unacceptable.
In 2006, the Maloofs and the city seemed to have struck a deal for a new arena that would have secured the franchise for decades if voters said yes in a November 2006 referendum The city, through the general tax, would have put up at least $470 million for the arena and parking. The city would own the building, but all of the revenue generated for all events held inside the building would go to the Maloof brothers. Not only that: The siblings would keep all the money earned from selling the naming rights to the city owned arena.
The Maloofs would pay off Thomas' old loan, which they inherited after they purchased the team. Additionally, they would pay $4 million in annual rent, an amount that could easily come from naming rights. They will also have to kick in $20 million for arena repairs. The Maloofs walked away from the deal however.
The Maloofs and the city fought over development surrounding the arena, the city wanted commercial and residential building to ring the new facility to spur downtown development but the Maloofs, who would get just about every nickel of revenue inside the building, wanted the land for an 8,000 space parking lot. The Maloofs wanted the big parking lot because they would keep all of the money generated from the lot. The Maloofs wanted the same parking deal they had and still have at the old arena.
That might not seem like a deal breaker until you do the math. Assuming the Maloofs fill the lot and charge $10 a car, that would mean $80,000 a night multiplied by 41 and you get more than $3 million annually from parking alone just from Kings events. The Maloofs would also get parking money from non-Kings events at the building, so the parking lot issue was a deal breaker.
“Hooverville” has met the Maloofs in Sacramento. The 1930s and 21st century sports business reality will meet at the Cal Expo when some “Hooverville” residents are placed in shelters on the Cal Expo grounds, land that someday might house the Maloof brothers’ Sacramento Kings.
evanjweiner@yahoo.com
Thursday, March 12, 2009
Sports economy, is it tanking?
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
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
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