Generally, when one considers the economy (especially a struggling one), notions of taxes, banks, the stock market and inflation come to mind. Certainly, arenas of entertainment, especially those related to sports, are furthest from our minds. Simply put, the entertainment industry has always seemed impervious to economic downturn, a market saturated as naturally as one could possibly be; after all, at some point, everyone needs a little break. In fact, some have argued that times of economic depression can actually benefit the entertainment industry, as people move to find enjoyable escapes from their financial frustrations. And history only confirms this principle; it is no coincidence that both Hollywood and the sports industry prospered during the Great Depression.
The recession of 2009 and beyond, however, is one of a kind and has already impacted sports, both locally and on a national level, more than any other economic crisis has before. While there is no doubt that fans will feel the effects sooner rather than later, the franchises and organizations themselves have displayed the early negative results most.
The Atlanta sports community has certainly felt the impact, as the local Tour de Georgia, one of the marquee road cycling races in the United States, recently announced that the event has been cancelled for 2009, largely as a response to lack of sponsorship. In the past two years, the race has relied on the Sate of Georgia for $400,000 of its $3.2 million budget. The state, however, is facing a budget shortfall likely to exceed $1.5 billion, making the road race less than a secondary consideration. The Atlanta Falcons have also felt the economic burn, as the team recently closed its Atlanta Falcons 365 store locations at both the Perimeter and Lenox malls.
“While the economy is certainly affecting all retailers, we are making this decision mainly based on our desire to focus our efforts on our online and Georgia Dome sales,” said Falcons president Rich McKay in a recent interview.
THE LITTLE GUY
The national sporting scene has been hit just as hard, especially second-tier leagues such the Arena Football League, the WNBA and the LPGA. With the reeling economy in mind, the AFL announced late last month that it will suspend all play for the 2009 season. What will eventually come of the struggling WNBA we cannot be sure, but we do know the league will be without one of its traditional powers in the future, as the four-time champion Houston Comet franchise has decided to close its doors for good. Similarly, the LPGA has taken a “wait-and-see attitude,” though it has also already made significant concessions, reducing its 2009 tournament schedule by at least five events after losing five title sponsors for the new year. Additionally, the Atlanta Silverbacks men’s soccer team has been forced to cancel its 2009 season in the USL (though the women’s team will continue playing).
Less of a niche sport than the aforementioned, even NASCAR is looking for cover. The association has lost a number of corporate sponsors and some of its most successful teams have been laying off workers. To ensure its survival, Petty Enterprises, one of NASCAR’s most prestigious teams, is seeking a merger with another team, while Honda recently announced it would no longer compete on the Formula 1 circuit. NASCAR has also suspended testing at its sanctioned tracks for next year, believing the move will save tens of millions of dollars.
And while NASCAR will certainly live to see another day, one has to wonder what kind of impact a long-term recession will have on the future of smaller sports, those that lack and, therefore, cannot rely on significant broadcast revenue or major corporate sponsorships.
THE BIG BOYS
America’s major sports have also proved vulnerable in the poor economic times. The NBA recently laid off 80 employees, nine percent of its domestic work force. As commissioner David Stern sees it, “The economy will impact everyone, every place.” And, if the National Football League is any indication, Stern is right on: long regarded as the most popular and successful sports entity in the world, the NFL has also been forced to cut back, recently laying off nearly 10 percent of its staff.
Yet, even in such a harsh economic setting, over the long haul, the major sports will certainly subsist. The NFL, MLB and NBA are all protected by multi-year TV and sponsorship deals with 60 to 70 percent of their revenues already contractually committed. Still, their economic struggles are significant and will have a dramatic impact on fans. With teams in each league looking to offset declining revenues, an increase in the price of attending their events will no doubt become a source of compensation. The Chicago Cubs recently increased the average price of their 2009 tickets by six to seven percent and, with the Yankees spending an absolute fortune on their new confines, the price of seeing a game in New York is sure to eliminate most consumers from contention.
And, as the future of small-market leagues is perilous at best while the big-time sports find themselves searching for temporary salvation, only one thing is for sure: the American phenomenon that has become live sports entertainment will be dramatically impaired for some time to come.
Janovitz can be reached at sjanovitz@scoreatl.com.
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