Economic Impact on Sports

A few months ago I wrote a post about how the lagging economy might affect our favorite sports. I'd like to reintroduce the topic with a few more specific predictions/possibilities for what the future might hold.

Without going into too much detail, the economy sucks right now because there's not enough debt to go around. Companies use debt in order to expand, or even just to run their business day-to-day. Example: A bar uses debt to buy a month's worth of alcohol, which they sell over the course of a month. Without that debt, the bar can't buy the booze, then can't sell it, then it goes out of business. Then all the bar's employees are out of work, they can't buy as much stuff at Best Buy, then Best Buy goes out of business, and so on, and so on.



FEWER BOWL GAMES:
College football's postseason is 34 Bowls deep these days. These Bowls are fueled by corporate sponsorship. But companies are trying to go lean in order to survive, which means cutting advertising and promotions. Furthermore, the attendance at Bowls games has already been down this season, and 2009 might be even worse. People have less money to spend on a trip to Shreveport or Houston to see their favorite team play in the Independence Bowl.

The big games will be fine, and unfortunately, so will the BCS.

THE NHL IS FUCKED:
The NHL is going to have to cut its salary cap in 2 seasons, which will squeeze every good team that's near the max payroll. The League might have to contract teams if it keeps losing money. Teams like the Bruins, Rangers, Canadiens, Maple Leafs, and Red Wings are doing well, and will continue to do well. But the teams down South, and in smaller Canadian markets (Calgary, Alberta, Ottawa) will be going through some tough times, and might be deleted or relocated.

The Phoenix Coyotes have already asked for an advance on their revenue sharing money. They might have to declare bankruptcy. Other NHL teams are in similar predicaments.

SELL! SELL! SELL!
We've already started to see this here in Boston. The New York Times wants to sell their share of the Boston Red Sox, for about half what it used to be worth. Almost every company in the world is desperately trying to generate cash to keep themselves afloat. Selling assets like a sports team is an easy way to get this cash. But who's going to buy?

How do you buy something big like a sports team? By borrowing money (debt). But nobody is lending. And nobody is willing to borrow for something that's essentially a toy for super-rich people to play with (See: Mark Cuban).

THE YANKEES JUST MIGHT GO BANKRUPT:
Right now the Yankees have enough cash, a discounted Stadium all their own, and tons of reliable revenue. They're the only team in baseball that isn't acting as if there's a recession. This off-season they've committed nearly half a billion dollars to players. Right now they're still sitting pretty. But two or three years from now, if the economy hasn't rebounded, they might be royally fucked.

Imagine if half the companies that buy luxury boxes from the Yankees go under, then those posh, expensive cash generating boxes would be nothing but closets with a great view of the field. Season ticket holders are likely to dwindle if the economy stays stagnant. As are the casual fans who go to 3 or 4 games a year with the family. People won't be paying $25 for Derek Jeter t-shirts (although that money is divided among all 30 teams).

The Yankees are committing huge sums of money in a very dangerous economic climate. It's like driving to the mountains during a blizzard. You might make it, and if so, the skiing will be great; but you might get blown off a cliff and explode in a fiery maelstrom of death.



THINGS WILL BE CHEAPER:
Notice how cheap gas is these days? How about all those 40% off sales before Christmas and those 70% sales right after? One good thing about a recession is that prices drop for pretty much everything, especially non-essential and/or recreational things like sports tickets.

What are the odds the Pats increase ticket prices? If anything, they'll go down. And it will be even better for fans in cities with smaller fanbases and less success on the field. If I lived in Florida, I could probably get Marlins tickets for $5 for an entire weekend series. Hell, they might even pay me to go to games.

And imagine the deals you'll get at minor league parks and college games. Can anyone say 50 cent beer night?

-The Commodore