Sunday, December 21, 2008

Professional Sports (NFL, NBA, MLB & NHL) = The Canary in the Mine for Our Economy?

As our American economy seemingly implodes, I look for signs of it in my day-to-day interactions with the world. The signs are not as obvious here in Southern California or Atlanta, but I have seen signs of a weak economy in my hometown Memphis and in New Orleans. Retail establishments are boarded up or have been demolished for vacant lots.

One potential sign that came to me is the state and health of our professional sports leagues. Over the last 30 years, the major professional sports leagues (NBA, MLB, NFL and NHL) have generated enormous incomes and profits for owners, players, coaches and executives. The successful professional sports model is built on continuing success and growth. When I first started watching the NFL in 1979, teams such as the Carolina Panthers and Baltimore Ravens did not exist. The NBA has added and moved so many teams that it would hardly be recognizable to someone just watching for the first time since Magic's first year in '79-80.

If the economy is as bad as various people are stating in the media and print, then this bad economy will affect the professional sports world. Smaller entities are usually more affected by changes to the environment. A smaller sports league is going feel the effects faster than the larger sports leagues. It has already affected the Arena Football League, a league that had been around for two decades.
After days of speculation, the Arena Football League announced Monday that it will suspend the 2009 season in hopes of returning in 2010.

The decision was made by the league’s board of directors during a conference call Sunday night.

“Owners … recognize that, especially in light of the current unprecedented economic climate, the AFL, as a business enterprise, needs to be restructured if it is to continue to provide its unique brand of this affordable, fan-friendly sport,” acting commissioner Ed Policy said in a statement.

The major pro leagues are in still business and show no signs of effects from the economy on the surface. Teams are still signing players to record contracts. Nevertheless, there may be some cracks in the foundation as the NBA has issues this year with attendance.

Over all, N.B.A. attendance is flat — about a half-percent higher than at this point last season on a per-game basis. Cumulatively, arenas are at about 89 percent of capacity, on par with last season.

Also, what happens when corporations can no longer sign leases for luxury boxes due to lack of corporate funds and income? What happens when the corporation cannot buy the naming rights for the local sports arena? What happens when the television rights for the league are actually lower than previous deals? Will it ever happen? I do not know. The NFL will likely be the most immune to any economic effects, because it continually sets paid attendance records.

The NFL set a regular-season attendance record for the fifth year in a row, averaging more than 67,000 fans per game for the second consecutive year, the NFL announced.

However, if we start seeing teams cease operations, teams consolidate operations, decreased television licensing rights fees and/or cancellation of games in any one of the major professional sports leagues, then those particular things will be the proverbial canary in the mine to tell you the economy is indeed in freefall, because we love our sports!

Source: Kansas City Star; New York Times;

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