The One Big Thing: Sports Recession

Ross Coleman

Who said sports are recession-proof?

Sadly, this is something that we are figuring out for the first time during this economic crisis.

And we are learning this in a very aggressive way.

The Houston Comets of the WNBA, one of the original eight WNBA teams and winner of the first four WNBA championships, announced this week that they would be ceasing operations.

I know the WNBA is not one of the more popular sports but this is a major franchise that doesn’t have the money to operate. Scary.

Men’s golf, women’s golf, NASCAR, and even the Olympics are all sports that are in quite a bit of trouble.

Has anyone noticed that we are seeing less and less PGA golf on TV? I know that Tiger Woods is out, which has hurt viewership, and in return, some sponsors have backed out.

However, if you have ever watched a golf tournament on TV, you may have noticed that the sponsors for most of the events are companies like AIG, UBS, and other financial companies that are in deep trouble.

Even General Motors, which that had one year remaining on a 10-year endorsement deal with Woods, ended their deal early with the World’s Best Golfer because it helped to free up a great deal of money that GM needs in a time like this. GM has also said that they will not spend advertising dollars on a Super Bowl ad.

Two of the most competitive teams in NASCAR have also decided to merge to save money. Petty Enterprises is going to merge with Dale Earnhardt Racing to form what would be, in all likelihood, a super team – one that many experts believe will hurt the landscape of racing by forcing the little teams out.

British Olympic Minister Tessa Jowell has even said that, had they predicted the economic turmoil, they would not have bid on the 2012 Olympics in London. Beijing Olympic organizers spent almost $4 million per athlete at the summer games this year. Compare that to the $75 thousand spent in 1984 for the Olympics in Los Angeles.

Sponsors like Johnson and Johnson had to pay roughly $100 million for their sponsorship for this year’s games. Compare that with the $4 million in 1984.

We have also just entered into one of the biggest free-agency periods for Major League Baseball. This year, it is usually not a time to be frugal, especially if you are a team like the Yankees trying to get back into national prominence.

The Yankees just offered the season’s top free agent pitcher, CC Sabathia, a deal for $140 million for six seasons. If signed, it would be the most expensive contract for any pitcher in MLB history.

According to Wayne DeSarbo, director of the Center for Sports Business Research at Penn State, “Star players are going to get their money. It is going to be the middle-range guys who are going to get squeezed.”

I think it will be even more drastic than that. Back in 1997, the Florida Marlins were in their infancy as a baseball team, yet they won the World Series title on homegrown and inexpensive talent. Then during the offseason, they held a fire sale to unload any player who demanded a higher salary.

The result was another championship in 2003, after they were able to develop young talent yet again.

More and more teams will be relying on their younger talent to take the team to where they want to go. Then, when those younger players are approaching the time when they would be able to make more money, they will be sent elsewhere.

However, baseball commissioner Bid Selig has done a good job on making sure that teams don’t take out the struggling economy on the fans. For the first time in years, attendance dropped. But Selig has made it clear that, in order to encourage more attendance, teams are not allowed to raise ticket prices.

For teams like the Mets and the Yankees that are moving into new multi-million dollar stadiums, the financial crisis is going to be an ugly beast to have to deal with.

Then there is ESPN.

With fewer and fewer fans being able to afford to go out and attend sporting events, they are forced to watch it on the television. ESPN receives higher amounts of viewers and sponsors get the captive audience they are hoping for.

In fact, ESPN is doing so well the company just signed a $500 million contract with the NCAA to start broadcasting all college football bowl games beginning in 2011. The price tag that ESPN paid is double the current contract.

Local teams like the Dodgers, Angels and Lakers have stated publicly that they are not feeling the effects of the economic crisis. However, if things keep going the way they are going, it’s not a matter of if, but when.