Leagues tracking economy

By Tim Lemke (Contact) | Wednesday, October 15, 2008

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The downturn in the economy is having a significant impact on the world of sports. Or it's not. Or maybe it just depends on who you talk to.

Over the weekend, the NBA announced it was cutting about 9 percent of its domestic workforce - 80 employees - in the face of lower ticket sales and potentially lower revenue.

But just last week, the New York Mets revealed they sold out every one of their luxury suites for the team's new ballpark, Citi Field, for between $250,000 and $500,000.

NFL commissioner Roger Goodell last week warned that the league was "not immune" to the nation's economic problems and that team owners were taking on "significant risks" in running their businesses.

But NHL commissioner Gary Bettman said Monday season-ticket sales increased 4 percent and single-game sales rose 13 percent.

For sure, the credit crisis and sinking stock market aren't helping anyone in sports, and everyone is likely to be hurt by a drop in ad spending, particularly from automakers and financial companies. Any league with competent management is closely monitoring everything from ticket sales and sponsorships to the ability of teams to refinance debt. But it's hard to draw a strong conclusion about the effects of the economic downturn at this point.

It is important to note that the heads of each league will discuss the nation's economic problems in a way that is most beneficial to them. The NHL is still looking to grow and get back into the consciousness of sports fans after the lockout of four years ago, so it would serve no purpose for Bettman to sound negative. NFL owners, on the other hand, earlier this year opted out of the collective bargaining agreement with its players union, arguing that the players' share of team revenues is too high. With a tense labor battle looming, team owners and league officials may be more willing to use the "we're suffering" line.

Goodell referenced the labor issue when discussing the nation's economic problems last week in Houston.

"I think anytime you are dealing in the kind of economic environment we have you´re increasing the risk to run your business, and that´s part of the issue here," he said. "The owners are taking on significant risks running these businesses. The players get 60 percent of the gross revenues without a tremendous recognition toward the cost of operating, much less the risk. At the core, that is exactly what the issue is and why the owners decided to terminate the agreement."

The NBA is the first of the major sports leagues to announce layoffs, and it may not be the last. It's possible that the NBA is being more proactive than its competitors.

"We made the decision some months ago that the economy was going to be a bit wobbly, so we began a belt-tightening," Stern told the Associated Press.

Sports leagues are also affected in different ways. NASCAR, for instance, has seen a decline in track attendance because high fuel prices have deterred fans from driving long distances - often in large recreational vehicles - to see races. On the flipside, the NHL has been more protected because its fans have a higher average household income than the other four major sports leagues. Along those same lines, the Mets are among the more protected franchises because of the size of the New York market and relative wealth of the population.

There's also a "lagging indicator" phenomenon at work. It likely will take time for a crisis on Wall Street to trickle down and seriously hit the average person's paycheck. And by then, fans already may have spent their money on tickets to see their favorite team.

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