The Economy Of Sports

by Deidre Woollard (RSS feed)
Oct 20th 2008 at 3:03PM

So far most of the news I've heard about sports teams in this economy has been pretty positive. New stadiums are still being built and luxury suites are being filled. But Gary West writing in the Fort Worth Star-Telegram has a piece that points out that sports are going through their own cost-cutting measures. Attendance is down at professional baseball games. The NCAA is curbing spending on postseason travel and the Grand Prix du Canada, the only Formula One race in North America is struggling to find funding. And layoffs have even come to the NBA which is cutting their work force by 9%.

More than ever professional sports depend on revenue from advertising, sponsorships and naming rights but with many corporations in trouble those opportunities are drying up. As the Dallas Morning News reports the Cowboys have a new $1.1 billion stadium expected to be completed by next June and they are looking for a naming-rights deal that could be worth hundreds of millions. There are less and less companies now that would be interested in a deal of this magnitude.

And Nascar, which has risen to be one of the most popular sports in the U.S. is really feeling the pinch. General Motors, Chrysler, Sears Holdings and Chevron will cut or drop sponsorships next season. Perhaps more than any other sport this economy has a dramatic effect because it takes so much money to compete. Dario Franchitti, the 2007 Indianapolis 500 winner, was forced out of the series by a lack of sponsors and teams from names like Petty, Waltrip and Earnhardt may enter 2009 with unfunded cars. Nascar may even have trouble filling up their 43-car fields because so many teams have had trouble finding sponsors.

Certainly professional sports aren't going anywhere. Watching sports has always offered distraction and succor in tough times. Cheering for our teams lets us experience both joy and defeat in a way that doesn't impact our daily living. But in a time when companies are forced to cut back, sports teams, which are businesses too, will be forced to readjust. Some franchises may have to close. Teams that have relied on lucrative corporate suites deals may have to focus more on getting regular customers into seats.

Tags: nascar, nba, nfl, sports

Filed under: Sports

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Racetrack_Owner Oct 20th 2008 5:37PM

Many of the motorsports-related issues you're describing are largely unrelated to the current economy. It is tremendously expensive to host an F1 race and the numbers really don't work for anyone. The new F1 facilities around the world are government-owned for a reason. NASCAR and their many spinoffs have been in decline for awhile now. There is a lot of controversy in the world of Indy, and while the sponsorship situation is being affected, Indy in particular is a bad example because there is a lot more going on there than just economic impact. Some series, such as the various drag racing Nationals and the American Le Mans road racing series, are still posting record-setting crowds each and every weekend. Historically gas prices and a weak auto sector is more damaging to motorsports, but the business has weathered those downturns pretty well on this cycle (and now oil is headed down again).