Will the credit crisis flatten big-time sport?
Columnist By Spiro Zavos, 13 Oct 2008 Spiro Zavos is a Roar Expert
- Tagged:
- Australian rugby, John ONeill, Northern Hemisphere, Rugby League, Twenty20, USA
The New York Yankees are apparently having few difficulties in selling off the hugely expensive corporate boxes in their new ballpark. But as the world credit crisis deepens this might change.
However, there are so many billionaires in the USA that the couple of hundred boxes should be safe enough for the Yankees to bank on.
I’m reminded of the Hunt family, the Texas millionaires who bought the Dallas Cowboys in the 1960s. When they were told by some journalists that the team lost a $1 million the year before, one of the family mused for a while and then replied: ‘In that case we’ll be bankrupt in a couple of hundred years times.’
Right now the suggestions from people who should know is that while there will be some problems, in general the huge sponsorships of big-time sport will continue.
The UK Telegraph, for instance, has looked into most of the world sports and has concluded that right now the sponsorships will carry on. The Texas billionaire, Sir Alan Stanford, for instance, is intent on pushing ahead with his $20 million Twenty20 series in England next year.
There will be some spectacular failures, though, given the steep dive in the profits of financial institutions and the collapse of share prices around the world. The US market is at a 10-year low, with all the gains made in the decade wiped out. Some of the big bank sponsorships will now disappear.
So too will once-wealthy club owners like West Ham United’s Bjorgolfur Gudmundsson who has lost his fortune with the banking crash in Iceland.
Incidentally, this case points to the way that clubs in a number of sports in Europe have made themselves vulnerable by being taken over by wealthy individuals. This raises the issue of how some of the A-League clubs in Australia are going to get on if the crisis hit their owners.
Also, one would think that the franchise idea put forward by the ARU’s John O’Neill might have to be put on the back-burner. Macquarie Bank which is one of the strongest supporters of rugby had its share price down to $28 on Friday, after being as high as the $80 a year ago.
Rugby League has its TV contracts established for the next year or so and with the relative strength of the Australian economy, the localised nature of the sport has an advantage, for once.
Cricket has the Twenty20 game’s popularity and the vast numbers of Indian fans to keep the game afloat with money for years to come.
One benefit for Australian rugby is that its contracts with News Ltd are written in US dollars. With the Australian dollars plunging from almost parity a year ago with the US dollar to below 70c recently, the ARU has had a bit of windfall.
The days of gratuitous expenditures and outlays on players and their trips and training camps, though, is probably over. One would think that player contracts in sports like rugby will be pruned and that the excessive amounts of money offered to southern hemisphere players to play in the northern hemisphere will be cut back.
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- Explore:
- Australian rugby, John ONeill, Northern Hemisphere, Rugby League, Twenty20, USA
October 13th 2008 @ 9:59am
oikee said | October 13th 2008 @ 9:59am | Report comment
France rugby will be affected, dramatically. They are run by billionaire owners who are very fickle about money, also something that has been talked about and i think millster is a great supporter of,,, the salary cap. At least by having one the wages for players wont or should not go down alot, you wait to see the fall-out of the english and europian football after this world crash has settled, there was already talks about having one in their comp, this will bring it back on the agenda.
October 13th 2008 @ 10:02am
oikee said | October 13th 2008 @ 10:02am | Report comment
Super league in england has already just signed a 3 year deal so they are pretty safe also. The expansion into france and wales looks good now. At least they know there money is secured.
October 13th 2008 @ 10:08am
True Tah said | October 13th 2008 @ 10:08am | Report comment
oikee,
the money is only secured if they receive an upfront payment.
If a PayTV provider goes bankrupt over the next three years, then its far from secure.
October 13th 2008 @ 10:14am
oikee said | October 13th 2008 @ 10:14am | Report comment
Thats right Pippinu, and he ruled out expansion awhile ago, maybe he knew something, maybe he (Gallop) is not the fool most people believe him to be, And yes the new franchises will be affected, but i dont think they should not go ahead, we are talking 3-4 years time. By then all should be restored in public confidence, but also by then the codes who have ridden the down-turn well will be able to move forward faster. Be interesting to see who has made the best progress.
October 13th 2008 @ 10:16am
oikee said | October 13th 2008 @ 10:16am | Report comment
There money is secured by local t/v deal not pay tv. BBC. If that goes broke then we are all in trouble, not just sports.
October 13th 2008 @ 10:18am
oikee said | October 13th 2008 @ 10:18am | Report comment
If they are looking at cost cutting i think there lousy 50 million will not be threatened, maybe the 1 billion for soccer will be the likely cost cutter.
October 13th 2008 @ 10:20am
Pippinu said | October 13th 2008 @ 10:20am | Report comment
oikee
none of the comps’ CEOs are fools – they are all very capable, and all perform solidly in the media spotlight.
Some have criticised Gallop for not taking sufficient risks – but my view is that he has to deal with the current landscape, and not the one that existed 15 years ago; and we’d all agree that the establishment of the Titans on the Gold Coast has been an outright success (and a very good strategic move).
October 13th 2008 @ 10:30am
oikee said | October 13th 2008 @ 10:30am | Report comment
Agree, and everyone thought that perth were a real chance of entering the comp, but for some reason he dismissed the idea. Well at least put it on the back=burner for now. League cannot lose alot of money in the present market, most of the clubs have survived without alot of help from the nrl. A.F.L has got alot of cash, so they should ride the storm out, depends on how far they go with the push into other states. World cups will also be affected. League will be ok at the moment, most tickets have already been sold and tv deals done.
October 13th 2008 @ 11:21am
oikee said | October 13th 2008 @ 11:21am | Report comment
Just reading that last paragraph again of yours pippinu, about the afl expansion, they really need for this to go ahead, if they faulter at all then you could expect alot of fall-out from this. Yes we are in a economic down-turn and they will lose millions trying to get it off the ground, but what awaits them if they dont go ahead is the ridacule they receive by not expanding when they have said they can and will. I know its not a good or fair assumption to make but alls fair in love and war. At the very least the gold coast soccer team have a billionaire to ride out the hard times. And he can also switch to the titans if he gets bored with soccer.
October 13th 2008 @ 11:54am
Redb said | October 13th 2008 @ 11:54am | Report comment
Oikee,
yeah like ridicule is going to put the AFL off. There are plenty to stick the boot in, one way or another. move on.
I doubt the AFL’s proposed Gold Coast team has too many problems. The AFL has to make long terms decisions for the bettement of the code it will be trying to avoid the mistakes of rugby league which failed two or three times before they got the Titans right.
Redb