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America’s worst financial crisis since the Great Depression of the 1930s has sparked layoffs and cutbacks from US sports leagues as sponsors struggle financially and ticket buyers worry.
But as Wall Street shudders, the sports realm has seen little immediate trouble, partly because many sports sponsorship contracts are already in place and also because games bring many people relief from economic worries.
“We’re all feeling the pinch, some more than others,” National Football League commissioner Roger Goodell said, adding that no layoffs were in the works but “some significant belt-tightening” is expected.
US sports fans spent a record $US32 billion ($A45.4 billion) at 2007 events, according to Street and Smith’s Sports Business Journal, but ticket prices alone have jumped 5-10 percent for US leagues this year.
National Basketball Association commissioner David Stern said his league will cut about 80 jobs, nine percent of its US work force, and expects season ticket sales and possibly attendances to fall but revenues to rise.
“We made the decision some months ago the economy was going to be a bit wobbly so we began a belt-tightening,” Stern said.
The NBA’s Charlotte Bobcats laid off about 35 employees last month and considered dropping radio coverage, a typical promotion and revenue source.
“We don’t know attendance will be down. We expect to see some softness,” Stern said. “Clearly, as business gets affected by the slowdown, spending will get affected. So sports, I don’t believe, can exist apart from that reality.
“The only thing that will probably increase will be television viewing as a low-priced alternative.”
The NFL receives $US3.73 billion ($A5.29 billion) annually from network television deals that do not start expiring until 2011. Owners will consider boosting the season from 16 to 18 games per team to boost revenues.
NFL owners opted out of a labor deal this year because they said players receive 60 percent of gross revenues.
“With developments in the last couple of weeks, there are risks in the marketplace,” Goodell said. “Those risks are shifting to owners. It’s something we remain sensitive to.”
Major League Baseball attendance fell 1.1 percent this year from a record 79.5 million people in 2007 to a second-best-ever 78.6 million, commissioner Bud Selig said, noting revenues hit a record $US6.6 billion ($A9.37 billion) this year.
“Even economists are trying to feel their way through it. Who knows what is going to happen? There is concern,” Selig said. “Given the economic times, our gross revenues for the sport are at all-time highs.”
Selig said economic woes and bad September weather caused the attendance drop, adding that seven clubs set ticket sales records in 2008 but all clubs must be wary of ticket prices.
“It’s something we have to concern ourselves with in the future,” Selig said. “We should be very careful not to overprice ourselves.”
Baseball is in the second-year of a seven-season TV deal with Fox worth $US1.8 billion ($A2.55 billion).
National Hockey League commissioner Gary Bettman said season ticket sales for the current season are up four percent league-wide and single-game sales have grown 13 percent, calling those figures remarkable in this economy.
“We haven’t seen any impact on our business,” Bettman said.
Baseball’s New York Yankees and New York Mets and the NFL Dallas Cowboys, New York Giants and New York Jets – iconic sport clubs – have new stadiums under construction and the costs for each have jumped with the weak economy.
Seattle rejected building a new arena and lost its NBA team to Oklahoma City while the New Jersey Nets ownership is finding the credit crunch a setback in getting a new arena in Brooklyn built.
There are fears of empty corporate luxury boxes and seats, the very revenue sources many of the newest US arenas were built to include.
Several US PGA Tour tournament sponsors have been hit by the crisis, bank Wachovia even bought out by Wells Fargo. PGA Tour commissioner Tim Finchem does not forsee a prize money drop but has concerns about some major backers.
“We feel very good about where we are from a sponsorship standpoint. Thus far, we have not suffered any major damage,” Finchem said. “Clearly, if the instability were to continue for a sustained period we’ll have real challenges.
“It is of major importance to us. Major concern. We’re very focused on it. We’re talking to lots of companies on a regular basis. We feel delighted that we’re not under more pressure than we are.”
Finchem said the tour has operating reserves for short-term aid to events.
“In a worst-case economic scenario, we could face retrenchment. I don’t see that happening at this point,” he said.
“We can absorb a certain amount of falloff if it were to happen. Every recession we’ve had we’ve come out stronger on the back end. Hopefully that will happen again.”
AIG, a long-time US Tennis Association backer, received $US122.8 billion ($A174.26 billion) in federal rescue money and is not expected to renew a deal expiring in December.
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