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Leagues get ready to bear brunt of US economy's pain
Published in The Saudi Gazette on 21 - 09 - 2008

US sports will feel the economy's pain but should suffer less than other industries because anxious consumers still need distractions amid unsettling times.
In a week marked by failures on Wall Street and moves by the US government to bolster the financial system, sports from football to fishing will begin to see cutbacks in consumer and corporate spending, if they have not already.
“Those (sports) that don't have a plan may be shocked by the ripple effect,” said Robert Boland, a professor of sports management at New York University.
Sports executives are watching the economy closely, sharing tips for saving money and making their game experiences more attractive to cost-conscious consumers.
“Any time there's a disruption in the economy like has occurred over the last couple weeks, you obviously worry,” Major League Baseball President Bob DuPuy said in a telephone interview. “Every business worries.”
Financial markets were roiled by a confluence of crises this week that threatened the stability of national economies and the global banking system.
Anxiety surged after the failure of investment bank Lehman Brothers Holdings Inc and an $85 billion government rescue of giant insurer American International Group.
Some analysts believe that even the large US sports leagues, which historically have been recession-proof, should worry. “I don't think there's any question the leagues have to be concerned about the economy,” said Randy Vataha, president of Game Plan LLC, a sports investment bank in Boston and former professional football player.
Baseball has not lost corporate sponsors and still expects record 2008 revenue of about $6.5 billion, but attendance is expected to decline one-half of one percent instead of setting another record as first projected, DuPuy said.
Major League Soccer is on track for record ticket revenue and has seen no softening in corporate business. “Certainly, we're mindful of the challenges everyone in this country is experiencing with the downturn,” Commissioner Don Garber said.
Nevertheless, the league has not changed expansion plans, and Garber is confident new owners will pay expansion fees of $40 million for the next two teams, and even more after that.
Companies are likely to cut spending on expensive seats, sponsorships and possibly even stadium naming rights deals that run as high as $20 million a year in the case of Citigroup's tie-up with the New York Mets baseball team, analysts said.
“There's a little belt-tightening going on in terms of watching expenses, but the growth rates are fine,” said Robert Tillis, chief executive of Inner Circle Sports, a New York merchant bank focused on the sports industry. “Citi is not going to pull the naming rights just because the financial sector is struggling.”
National Football League Commissioner Roger Goodell recently said even the most popular US sports league is feeling the pinch.
“Our costs are rising and our league revenues are under pressure,” he said in an Aug. 19 memo to employees obtained by Street & Smith's SportsBusiness Journal. “This means we must carefully control our costs on a daily basis and aggressively identify new sources of revenue.”
Analysts said the NFL is protected more than other sports thanks to its national television contracts, which represent about half of the league's revenue, and because most of its tickets are bought well in advance on a season basis. The NFL also has enjoyed sellouts in its first two weeks of games. - Reuters __


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