All Things Bubba

Because how can you not love a baseball player named "Bubba"?

Tuesday, November 18, 2008

How recession-proof is sports?

Robert McKee, in the dedication of Story, his acclaimed book on screenwriting, tells how he came to write screenplays for a living:

...I deduced that the best possible life includes as many rounds of golf as possible, and therefore, I would become a dentist. "Dentist?!" my mother laughed. "You can't be serious. What happens when they cure all teeth problems? Where will dentists be then? No, Bobby, people will always need entertainment. I'm looking out for your future. You're going into show business."

McKee's mother was a product of the Depression. Amusingly, one of my cousins recently switched from dental school to medical school for similar reasons. Someone told him that they were working on a vaccine for cavities, and dentists would all be out of work. (He's now a surgeon.)

So for at least 80 years now, we've been expecting progress to make dentists obsolete. Hasn't happened. Perhaps our faith in progress should be tempered a bit.

And though screenwriting worked out for Mr. McKee, I'm not sure his mother's advice will continue to hold. Previously recession-proof things like gambling, drinking, smoking, and yes, entertainment, may not be recession-proof this time. Partly because this downturn is looking a lot worse than previous ones, and partly because companies got greedy during the good times, and jacked up prices.

And what about sports?

As the economic downturn continues, many also will be watching closely to see how much it will affect people’s appetite for sporting events. Rodney Fort, a professor of sports management at the University of Michigan, expects that sports revenue will be impacted by the downturn, with hockey and baseball feeling more of a pinch than basketball and football.

Still, he said it’s hard to say how much any sport will be impacted at this point because there isn’t reliable data from similar downturns in the past. While it’s true that attendance famously rose at sporting events during the Great Depression, Fort said it’s not clear that revenue also improved.

Fort also noted that the sports industry has changed substantially in recent decades. Not only has television revenue become much more important, but ticket sales have become more dependent on high-income fans and corporations willing to shell out for pricey boxes and season tickets.

I do wonder if the Yankees will have trouble filling all those expensive luxury boxes. I think they're almost sold out for next year, but this looks like it will be a multi-year downturn, with the Wall Streeters who were expected to buy those pricey tickets being especially hard-hit. New York state's finances are a mess, in part due to the Wall St. collapse. Already, some Yankee fans in my office are complaining about the tax breaks they gave the Yankees on their new stadium.

And the Yankees' cash cow, television rights, might take a hit as well.

Even if they are cutting back elsewhere, many have believed that people will continue to think of their cable television as another utility, like water or electricity, and keep paying the bill even when their budgets get tight. But this time around, Flickinger said his research is showing that premium television is one of the first items people are cutting back on in parts of the country that have been hard-hit by layoffs or other labor strife.

“The first thing to go is cable, the second thing to go is the phone, the third thing to go is the second car and then the fourth thing to go is the house,” Flickinger said.

Sports is the most expensive item on the cable menu. If people start cutting back, there will be a lot of pressure on sports teams and leagues to lower their prices.

People are nervous in my office. There are rumors of pay cuts and maybe even layoffs coming. One of my coworkers told me that she canceled her phone, Internet, and cable today. She has a cell phone to use for phone calls, and will do without cable and Internet. It will save her $100 a month.

Another of my coworkers is giving up Giants season tickets that his family has had for generations. The new seat licensing fees mean it would cost him $70,000 to keep his tickets. That's probably more than he makes in a year. He just can't afford it.

I have a feeling the teams charging these ridiculous prices are going to regret it.

posted by BubbaFan, 8:39 PM


I don't understand how the Yanks sold most of the luxury boxes/seats. Wall Street fell apart in Sept. The tickets weren't sold till after then, right? Who's buying them?

commented by Anonymous Anonymous, November 23, 2008 5:10 PM  
You know, I'm not sure. I read on another blog that next year was already almost sold out. I didn't check the info, so maybe it's not true.
commented by Blogger BubbaFan, November 23, 2008 7:38 PM  

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