As economy dips, sports businesses sweat
Wake up and good morning. Nine days into the new year and concerns are on the rise about how the sports business -- from baseball to golf -- will be hit by a very rough economy. First up: Major League Baseball because spring training is just weeks away and the regular season begins in April.
Some interesting remarks came out of Alabama this week in a Montgomery Advertiser story in which Houston Astros owner Drayton McLane warned that, given the current national economic climate, baseball faces an uncertain financial year. He spoke in a town called Prattville and cited the local baseball team -- the Montgomery Biscuits, which is a minor league affiliate of the Tampa Bay Rays -- as one of many with a "challenge" ahead this season. Said McLane:
"Baseball is going to be the first professional sport that is really going to see what impact the recession has because we don't start until April. When the NFL season started, that was before the recession really got going and they were selling their sponsorships and season tickets before there were problems."
In addition to sustaining season ticket sales, the effects of the economy can be seen in free-agent signings, McLane told his audience. While the New York Yankees have committed more than $420-million to three free agents this offseason, there are more than 120 free agents who haven't signed.
McLane also cited the Tampa Bay Rays, which had a great year from a team composed largely of home-grown (and cheap) talent. But eventually, these young stars will hit arbitration. "When you develop good players and they become arbitration-eligible, you either sign them to big salaries (or lose them)," McLane said. "That's what we've struggled with over the years with Jeff Bagwell and Craig Biggio, Lance Berkman as he came along, or Roy Oswalt."
Not that baseball is alone feeling the economic heat. The pro golf circuit also feels a squeeze. A Rex Hoggard story at golfchannel.com raises questions about sponsorship support from two historically key golf backers -- finance and autos, industries especially hurt by the recession. Of the Tour’s 41 FedEx Cup events in 2008, 15 were either sponsored or presented by financial institutions. Five tournaments in 2008 were sponsored by auto manufacturers. Quoted in the story is Gerald Goodman, the tournament director of the Transitions Championship near Tampa:
“Any financial firm is backing off on any type of hospitality. They are examining every dime they are spending now and every tournament will feel that.”
Goodman says sales of corporate tents at the Transitions are off between 20 percent and 50 percent. And The Sports Business Journal recently reported that spending on hospitality is off at 10 of the 14 first-quarter events this year.
-- Robert Trigaux, Times Business Columnist