All Things Bubba

A-Rod's pal Warren Buffet once said, "You only find out who is swimming naked when the tide goes out." Well, the tide is fast receding, and looks like a lot of people were skinny-dipping.

Among them is one Robert Allen Stanford, now accused of running a Ponzi scheme to rival Bernie Madoff's. And it appears some Yankees have been affected. Their assets were frozen by the feds, and now they can't pay their bills.

Stanford scandal ensnares Yankees' Damon, Nady

TAMPA - Johnny Damon, earning $13 million this season, cannot pay his bills.

Xavier Nady, earning $6.55 million, cannot purchase an apartment in New York.

The Stanford Financial Group scandal extends to Major League Baseball.

Later in the article, Damon says, "The whole financial world is all messed up right now." Truer words were never spoken. The Dow fell below its 1997 level today, and though it recovered a bit late in the trading day, closed at a six-year low.

Especially hard-hit were banking stocks. Citi and Bank of America got hammered. At one point, 80% of the trading volume on the NYSE today was Citigroup and Bank of America. They are trading below $5 now, which means many institutions are not allowed to own the stock, further depressing prices.

Many experts believe both banks will have to be nationalized eventually. But how that would work is another can of worms. The FDIC was meant to take over the kind of small town bank that existed in the 1930s, not global mega-corporations like Citi. It would be like a mouse trying to swallow an elephant.

Meanwhile, the impact of the recession on sports is growing:

Recession forces colleges to find ways to cut spending

The unrelenting downturn in the economy is a hot-button issue in college athletic departments, the same as at your kitchen table.

"Everybody you talk to, that's the topic of conversation," says Mike Cleary, executive director of the 6,500-member National Association of Collegiate Directors of Athletics. "I don't care how big and how wealthy they are, this is going to impact everybody."

Baseball battles the slump

Sports leagues today are more dependent on economically vulnerable sources of revenue such as corporate sponsorships, luxury suites, and other premium seating. Even if attendance doesn't nosedive, teams could still find themselves swimming in red ink.

Not even pro sports' richest franchise, the Yankees, seems immune. General Motors - once baseball's biggest corporate sponsor - has canceled its sponsorship deal with the team. And even before superstar third baseman Alex Rodriguez was caught up in a steroid scandal, the Yanks were having trouble selling premium seats in their new stadium - so much so that they hired a Manhattan realty firm to market unsold club seats and luxury boxes.

The Pittsburgh Pirates, another team that recently lost GM as a sponsor, have resorted to selling some season tickets at a 25% discount to 2008 prices. In Arizona the Diamondbacks' season ticket renewal rate has fallen to 83% - still respectable, but down from 94% heading into the 2008 season. Hall says he knows of other MLB teams - though he won't name them - with renewal rates as low as 60%. And as bad as 2009 looks, Chicago White Sox owner Jerry Reinsdorf thinks 2010 could be worse if corporations keep cutting back. "Virtually every team is losing sponsors," Reinsdorf says.

I guess it's not all bad news, if it means teams have to be nicer to the fans...

Labels: The Greater Depression