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  1. #1
    Atomic Punk chefcraig's Avatar
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    Default Sports Illustrated: How The Changing Economy Is Affecting Sports

    This is a fairly interesting (albeit lengthy) article from SI.com about the economy's impact upon today's sports fan, along with the franchises themselves.

    The changing face of the sports fan

    By Pablo S. Torre, SI.com

    If you're a typical sports fan -- you know, the kind who worries about gas prices, tuition and the trade deadline -- New York's new stadiums might look as if they belong behind a boutique window.

    In the Bronx looms the skeleton of Yankee Stadium 2.0, a coliseum with half as many bleacher seats as its predecessor but more than three times the luxury boxes. In Queens, the Mets traded Shea's 20,420-seat hull of an upper deck for Citi Field and its 54 suites, burnished by leases priced firmly in the six figures. Even the Barclays Center in Brooklyn, future home of the Nets, will have 118 luxury suites in a venue designed by the Pritzker Prize-winning architect Frank Gehry. And across the Hudson River? The Jets' and Giants' new Meadowlands Stadium, opening in 2010, has incorporated personal seat licensing -- the process by which fans pay somewhere between $1,000 and $25,000 for the sheer right to buy season tickets. (It's an investment opportunity!)

    So what about this economic downturn, you ask? How can these teams upgrade their arenas so strikingly amid government bailouts and a subprime mortgage crisis and the declining dollar?

    The tough economic times are affecting the different leagues in different ways. The NBA and NHL have been proactive in trying to keep ticket prices affordable. College football fans have remained fiercely loyal to their teams, but schools are taking a hit with higher travel costs. Meanwhile, NASCAR and high school sports have felt the economic downturn the most.

    Sports aren't recession-proof anymore, but all in all, the major pro sports have flourished while other sectors have atrophied. Last season, the multibillion-dollar NFL set an all-time attendance record for the sixth-consecutive year, while baseball also enjoyed its highest spring-training numbers in '08. Impressively, MLB and the NBA then followed up their '07 figures -- the leagues' third- and fourth-consecutive attendance records, respectively -- by effectively holding constant, dipping this past year by statistically insignificant marks of between one and two percent.

    "If we look throughout history," Clemson economist Raymond Sauer said, "the relationship between attendance and the economy does not appear to be cyclical."

    What makes these milestones even more historic is tickets cost more than ever. Team Marketing Report calculates that it now takes $396.36 for a typical family of four to attend an NFL game, $281.90 for the NBA and $191.92 for MLB -- each mark an all-time high. (Gas not included, naturally.) And economists tell SI.com that the gate will continue to boom.

    Why? A rise in popularity is only one reason. Despite today's wilting economy, the reality is that our most popular sports are also climbing the social ladder. Higher-end customers are gladly paying more and more to take middle class consumers' old seats at the game -- and for the time being, at least, they have the disposable income to keep the turnstiles spinning. Said Temple economist Mike Leeds,"Joe Sixpack is becoming a thing of the past."

    A look in the stands

    If you've recently heard a native Bostonian lament "Fenway isn't Fenway anymore," you're not alone. Though the charming 96-year-old edifice has survived amid rumors of a Yankee Stadium-type reconstruction (and yes, the prospective blueprint, abandoned in 2005, included twice as many luxury boxes), the atmosphere nowadays still seems palpably different from a decade ago. Less authentic, even.

    At Fenway -- as elsewhere around the country -- surging ticket prices and the team's success have seemingly drained institutional memory, bringing in wealthier fair-weather fans and ushering out the diehards. The addition of Green Monster seats in 2005 was an endearing gesture, to be sure, but it also created some of the priciest tickets in the house. That's no accident: Ever since Baltimore's Camden Yards ignited the stadium-building revolution in 1992, the architectural designs of arenas have precisely targeted a demographic that wears pinstripes -- and not the ones on a replica jersey.

    "If this downturn continues to have less of an impact on sports than previous periods," Leeds said, "it's in part because in terms of gate attendance, the business has hitched its wagon to the higher-end customer."

    All of it adds up to a skewing of fans we might have expected to see at games. At law firms and banks, the pro sporting event has become a full-on social and networking experience that signals class and cultural currency. No franchise would eliminate the bleachers altogether, of course; that would be a public relations nightmare. But in replacing the multi-purpose, municipal ballpark with a breed of compact, single-use arenas, teams can raise prices and make cheap seats less plentiful all at once.

    Consider the NFL season-ticket holder. For many teams, waiting lists for season tickets stretch for miles, ready to be bequeathed from generation to generation. But thanks to the one-two-three punch of tighter incomes, surging ticket prices and personal seat licenses, lifers like Jim Merritt, 45, now have a decision to make. The 23-year Jets season-ticket holder has been tailgating for decades, but now he wonders if he should buy the one-time PSLs (in his case, a projected $5,000 for each of his three seats) just so he can buy his tickets (for a projected increase to $120 per seat, per game, up from $80 this year) and required parking pass (another $20 per game).

    "I'm not affluent -- I mean, I do fine -- but at what cost do I want to see these games?" Merritt says. "At some point, do I want to put that money toward something else? Should my family go to Europe on vacation for a month instead? My conscience may not let me buy these things. And what they're doing is pricing out the people who really care if the team wins or loses."

    Merritt has yet to make his decision, which speaks, at the very least, to the singular love of sports that still drives this country. But for the middle class, the strategy behind season tickets has permanently evolved. If you keep them, you're being handicapped more than ever before; and with the institution of PSLs, which can also be sold off at their owner's whim, the net effect is to raise prices for everyone else in the primary and secondary markets.

    "At first, I used to go to as many games as possible and take my friends for pure enjoyment, and I never looked to sell tickets or make a profit," Merritt said. "Now the Jets are essentially telling me that a PSL is an 'investment opportunity for the future.' Do I even want to worry about making money like that? Do I want to worry about needing to sell off certain tickets and boosting them to a certain price?"

    http://sportsillustrated.cnn.com/200...omy/index.html

    continued...
    Last edited by chefcraig; 10.08.08 at 10:58 AM.
    "The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man."
    George Bernard Shaw

  2. #2
    Atomic Punk chefcraig's Avatar
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    Default Continued...

    What it takes to get there

    Adding further to the pressure on fans is another cost on the rise: transportation. The peripherals surrounding sports, particularly in non-metropolitan areas, are becoming more and more expensive, from the climbing cost of gasoline to the price of food.

    It's no coincidence that a number of baseball teams like the Texas Rangers responded to this reality in 2008, offering promotions such as $5 gas cards with the purchase of a ticket, all-you-can-eat seats and two-for-one specials. "It's a recognition by owners and league heads that sports for certain people is not really recession-proof -- even though it may be recession-resistant," said Leo Kahane, editor of the Journal of Sports Economics.

    Economists say you should thus expect to see fewer families of four at the stadium. More people who are single and more fans who will go out with a group of eight-to-10 friends, spending more than $100 each and treating the game as a one-off experience.

    "Already, if you turn on the television today, I don't think you're seeing the same families from 10 or 15 years ago," Colorado College economist Aju Fenn said. "With all the costs involved, they just may not go to as many games as before."

    And if you can't afford to go? Good news. Luckily for the health of the teeming sports-industrial complex, fans priced out of the stadium might still spend to follow the action, whether it's on HD television, through a special cable package, on satellite radio, via cell phone or online. From the hot-stove to the preseason, corporations presently have more opportunities than ever to deploy tentacles that draw fans into the game and generate revenue, without ever giving them a seat. MLB's Advanced Media subsidiary, which runs its online and digital operations, is reportedly worth $450 million alone.

    "People across the country are seeing their disposable income being whittled away," said UNC Charlotte economist Craig Depken. "So they're beginning to ask themselves: Do I really need to go? My guess is that if you stand out on some street corner and asked average people how many games they physically traveled to last year versus this year, you'd see a real difference."

    Premier entertainment

    We are far removed from the $6 tickets of Super Bowl I in 1967, a game played in front of 31,054 empty seats at the L.A. Coliseum and from the Yankees playing the Red Sox at Fenway in front of 11,000 people, as happened more than once in 1960. Nowadays, such scenes are unimaginable.

    Last NFL season, for instance, advertisers competed to fork over $2.7 million for 30 seconds of Super Bowl commercial airtime. This year, with five months remaining until Super Bowl XLIII, NBC has already one-upped itself, selling 85 percent of its advertising inventory at a record-high $3 million per 30-second slot. Said NBC's head of ad sports sales, Seth Winter: "We see the end zone right now."

    Regrettably, most fans can't say the same. The price for a seat at Super Bowl XLII was $700. On the online reseller StubHub.com, one customer actually traded $90,000 in February for 14 seats to watch the Patriots and Giants in Glendale, a mark-up of 918 percent per ticket. As Michael Hershfield, founder of the competing site LiveStub.com, once quipped, "You gotta mortgage your home to get into the game."

    In that spirit, eBay bought StubHub for $310 million in early 2007 ($74 million more than J.P. Morgan paid for Bear Stearns in March and $60 million more than Barclays paid for Lehman Brothers' North American investment banking and trading unit in September). On StubHub's Web site, the World Series (average secondary ticket price: $1,036), BCS Championship ($1,362) and Super Bowl ($3,540) each sparked traffic in excess of 1,000 seats sold, with the latter two events setting all-time company records for sheer dollar volume moved. This July, StubHub moved its 15 millionth ticket (a Red Sox-Yankees ticket for July 4, if you were wondering).

    But there's more. In perfect synergy, the Jets announced an unprecedented partnership with StubHub last month, wherein the best seats at the new stadium -- dubbed the "Coaches Club," complete with "private 20,000 square foot bar and lounge designed by Nobu architect David Rockwell" -- will be awarded via auction. It takes $5,000 per PSL to have the chance to bid.

    The bottom line

    The harsh truth is that only when those precious luxury suites start to go unclaimed -- thus portending a loss of corporate windfall -- will leagues truly begin to worry. For the time being, they have the audience, the revenue and an ever-visible, ever-popular product.

    "A lot of us behave like we're addicted to sports. We live our lives through it," Southern Utah economist Dave Berri said. "Just think about the things we support with bumper stickers. No one has a car that declares that they're a fan of Starbucks or Tom Cruise."

    Recently, NFL commissioner Roger Goodell warned of a potential slowdown in an internal memo. While he stressed that individual teams' bottom-line budget projections will be secure for the coming fiscal year, he conspicuously observed a simple detail that has long been true for other American businesses: "Costs are rising and ... revenues are under pressure."

    If the economy doesn't recover soon, sports executives fear corporations will ultimately scrutinize shrinking margins and decide how important it is to have a physical presence at games, whether it be through advertising, naming rights, luxury boxes or corporate season tickets.

    "While we have seen dramatic growth in recent years for things like corporate hospitality and sponsorships, we are worried about that continuing," Red Sox executive vice president Sam Kennedy told the SportsBusiness Journal. "We haven't seen any dramatic cut, although we have had some 2009 planning with sponsors who have told us stories about their business that aren't pretty."

    For the time being, the turnstiles will continue to spin -- even if it's no longer the average fan who's coming through the gate.

    http://sportsillustrated.cnn.com/200...omy/index.html
    "The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man."
    George Bernard Shaw

  3. #3
    Atomic Punk onefootoutthedoor's Avatar
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    Thanks for posting, chef.
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  4. #4
    carpe damn diem billy007's Avatar
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    The thing that is most disturbing is the part about families not going to the game. Nothing better as a kid, I think, than going walking into the ol' ballpark (or stadium or arena). In my opinion, it helps solidify kids love of the game. To me, the sport that has the most to lose is baseball. Basketball I think will always be popular, just because it's so easy to find a place to play and you only need two players to start. Football is all over tv on Saturdays and Sundays and can be visually interesting to a kid. But baseball has never translated well on television, and with today's coverage, it's even worse. Even my kids are complaining about the "Frank TV" commercials, and they only saw an inning here and there! It's also not a game that is easy to just gather a group of your friends together and go play - you need a decent sized open space for starters, and they don't leave much of that laying around any more. So kids aren't at the ballpark, it doesn't really interest them on tv, and they're not really playing neighbourhood pickup games, so there's no surprise that the number of American players playing the game has dropped - and will continue to do so. Also, those kids that don't become fans of the game won't be teaching their kids the game either. So eventually, the teams will become foreign dominated (not that there's not a good deal of that now, but it will be even "worse") and I think that will cause a lot of people to lose interest. Probably part of the problem why soccer never caught on here - just not enough Americans involved in the sport for us to care!

  5. #5
    Atomic Punk edwardv's Avatar
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    Sports survived the depression of the 30s it will this one too. Worst comes to worst the owners and players take less and go from billionaires to millionaires and millionaires to welloffaires. Sports is a great diverson when your loosing everything.

  6. #6
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    I personally would love to see some of these players not making obscene amounts of money ... I have no issue with them being well paid for a relatively short career but there has to be a "line" somewhere.

    Many of those players are excessive and horrible rle models I don't want my kids watching or following them anyway. I LOVE sports. I love baseball, football (high school college NFL) but I just couldn't justify the outrageous pricing of seats.

    We take the kids to select games here and there and it's awesome, they love it but it isn't a routine outing... and both my kids are girls...

    Good article Chef!
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