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So we have all cancelled the early retirement plans and started stockpiling baked beans. The global credit crunch has had a world wide effect, but what impact will it have on the Australian sporting landscape? And if there is a football war going on, what will it do to the war chests?
Wearing a different hat than that of a humble Roar columnist, I spoke to the NBA’s commissioner David Stern last week about the financial robustness of the competition, given that plenty of football fans in Europe are nervously watching the news as their chairmen deal with eye-watering debts as assets often secured by the football club plummet in value.
Stern was confident that the system of debt limitation and salary caps would help limit the exposure of the franchises to the problems of the wider business world.
He is a strong advocate of strong central regulation, which was interesting given that he hails from a country that prides itself on being the home of market liberalism (or at least, was until the word ‘bailout’ was on everyone’s lips).
His jargon would have almost had him in front of the House Committee on Un-American Activities during the McCarthy era.
Stern argued the cap prevented the owners from “spending to oblivion” and it was clear he had little time for the business models of the Abramovich’s of this world.
However, it was equally illuminating given that it seems only yesterday people were claiming the need for the abolition of such caps in Australia.
We were told, “there is no limit on what a CEO can earn.”
We are now finding out the precise problem with such a situation.
It is interesting to note that the sports facing the biggest problems currently are ones who weren’t policed by a salary cap.
There is even talk of one being brought into European football. However, I’d be quick to dismiss that as hollow rhetoric.
Stern admitted that season ticket renewals are slower this year in the NBA, but he believed that this coupled with an increase in new season ticket purchases as well as opportunity for an increase in general sales.
Still, the experienced commissioner did agree that sporting tickets fell into the category of “disposable income” and when this gets tight, the competition for that income increases.
In Australia, with greater scarcity of the punter’s dollars, our football codes have the tougher challenge of making the spending decision of the fan tip in their favour.
First of all, let’s dispel the myth that the economic downturn is bad for everybody.
That is simply not the case.
Already seeing an upturn in fortunes are Domino’s pizza (nothing makes you feel better about a plummeting house price than an extra large Hawaiian), Tie Rack (a new tie might make the boss think twice about firing you, despite you spending the last eighteen months on Facebook) and, interestingly, movie cinemas, as people seek escapism and simple pleasures.
This last one was especially salient for sporting administrators as the line trotted out is often that lean economic times automatically equate to a drop in attendances.
I’m not so sure this should be the case.
Surely if the credit crunch means it is more likely someone will fork out their hard earned to watch the latest offering from Adam Sandler over 93 minutes, then they might also want to take the opportunity to also watch their team strut their stuff.
Anyone who has spent any time listening to talk back radio will no doubt have heard the tales of woe of the cost of a family man taking his kids to the footy.
I’ve never heard the same complaints about the cost of getting them in to see Wall E on the big screen.
But maybe that has something to do with our mindset: we feel like we can complain to our local footy team but not to Hoyts.
Despite the general admission to most club games being comparable to a full priced ticket at the movies, it does seem that people need to be enticed more to attend the footy than they do to roll up to the multiplex.
It is often argued that ticket prices shouldn’t be dropped because it then appears that you are cheapening the product.
However, in the English Premier League, newly promoted West Bromwich Albion actually cut the price of season tickets to a three year low at the same time as going up, despite having a greater wage bill to sustain.
It was all about locking supporters and guaranteeing income rather than allowing their fate to be dictated by whims of form during the season.
But if we are not watching games at the ground, we seem to be doing so at home.
The crunch is likely to have a big impact on the next wave of television deals that football codes have been eying off since the ink dried on their last one.
Sporting CEOs have resembled Enron executives as they seemingly pluck an enormous figure out of the sky and claim this is their new target for the next deal.
It was an easy job because everywhere was awash with cash, but now that this isn’t the case, it is likely the respective bean counters are starting to revise their figures as the cash to support those deals are drying up over night.
And if that happens, there may be a few questions to consider.
How might the AFL fund their raid into Western Sydney without the next bonanza of TV cash?
What effect will any drop in funding have on the NRL grants system?
And with the Foxtel deal keeping most A-League clubs afloat, what happens if the big increase that has been banked on at the end of the current deal simply doesn’t arrive?
I had coffee recently with an A-League insider who claimed their next television deal would surpass the NRL’s. It was simply a matter of the clubs surviving until then.
That survival suddenly might not be so simple.
What of John O’Neil’s grand plan to see private benefactors from the big end of town pouring cash into rugby franchises?
As Spiro has pointed out in a previous article, they might have a few other things on their mind at present.
The collapse of TV money has had disastrous effects on sports in the past in both the UK and Germany. And while it may seem a little dramatic to predict the downfall of a channel in Australia, it might not be so radical to predict some serious belt tightening.
Then again we might have said that before C7 checked out.
My prediction is that fans of one code will have plenty of optimism about their chosen sport but dire predictions about the health of others,
This off-season could have more drama than most.
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