Baseball is counting pennies on everything from seats to sponsorships as it prepares to play next season in an economic slowdown.
With the Philadelphia Phillies and Tampa Bay Rays about to open the World Series tonight at sold-out Tropicana Field, three other teams -- the San Francisco Giants, Seattle Mariners and Cincinnati Reds -- are freezing the cost of tickets for 2009. The Washington Nationals, Oakland Athletics and San Diego Padres have lowered tickets by as much as 25 percent.
The credit crunch and fallout from the Standard & Poor's 500 Index falling 35 percent for the year is also hurting corporate sponsorship. The Mariners lost Washington Mutual Inc. after it was saved by JPMorgan Chase & Co., and the Arizona Diamondbacks need to find an advertiser on the pool in the right-field stands after Riviera Pools filed for bankruptcy.
``The economy has become an agenda item in planning meetings across sports, and certainly here in Arizona, we have spent a fair amount of time internally discussing various ramifications,'' said Jeff Moorad, the Diamondbacks' chief executive officer. ``We have already seen some impact and are bracing for more.''
Major League Baseball is planning to hold meetings after the World Series to discuss the best way for teams to operate in an economic slump. The sport this season had record revenue of $6.5 billion and attendance 1 percent below the all-time high set last year, said Bob DuPuy, the league's president.
Consumers are slashing spending and cutting back borrowing amid falling home prices and increasing job losses. U.S. retail sales dropped for the third straight month in September and a gauge of consumer confidence fell the most on record in October. Economists are predicting a global recession.
World Series
So far, it hasn't affected the World Series, baseball's best-of-seven-game championship. Tickets that have been put on sale so far have sold out, at $50-$250 each. Fox has sold about 97 percent of its advertising slots for the first five games, with rates up by ``mid to high single digits'' from last year, network spokesman Lou D'Ermilio said.
Baseball competes with the National Basketball Association, National Hockey League, National Football League, movies and concerts for entertainment dollars. Of the four major sports, baseball had the lowest average ticket price of $25.48, according to Team Marketing Report, an industry newsletter. Still, baseball teams have to fill the seats for 81 home games, twice as many as the NBA and 10 times the NFL.
Phillies President David Montgomery said baseball can be an escape for fans dealing with economic hardships.
``In the tougher times a sporting event is still an entertainment option that's available to fans and maybe some more significant expenditures like vacations are not,'' Montgomery said. ``We have to keep an eye out and be cognizant of what our fans are faced with.''
Value Pack
Teams are promoting the affordability and value of going to baseball games. The Texas Rangers are selling a package of 10 games for $99 and may expand all-you-can-eat sections, while the Houston Astros are examining more discount plans.
``Everything is about giving value to the best of your ability,'' said Pam Gardner, the Astros' president for business operations.
While ticket sales account for the majority of revenue for teams, the industry is supported by $5.4 billion in national television contracts with Walt Disney Co's ESPN, News Corp.'s Fox and Time Warner Inc.'s Turner Sports that run through 2013. The teams also receive money from MLB.com and will begin to get payouts from the MLB Network, which starts broadcasting Jan. 1.
``We have positioned ourselves the best we can,'' DuPuy said. ``Until we model it and get team projections for next year, I don't know if our revenue will be higher or lower, but I would think holding our own would be admirable.''
No Cuts
The NBA is cutting back because of slowing season-ticket sales, firing about 9 percent of its U.S. workforce. Baseball has no plans to cut staff, DuPuy said.
The New York Yankees and Mets, who are both moving into new ballparks next season, operate in the center of the economic unrest that has caused the downfall of Wall Street firms including Lehman Brothers Holdings Inc.
Neither team said it has felt any financial fallout. The Mets sold out 49 luxury suites for as much as $500,000 a season, while the Yankees have seven left to sell at $600,000.
Outside of New York, teams may be hit in the corporate suites as well as the bleachers as companies cut back advertising and entertaining, said sports banker Rob Tilliss. General Motors Corp., a baseball sponsor, won't buy time in the NFL's Super Bowl to cut costs.
`Trickle Down'
``This will be a slow trickle-down effect, not a big-bang theory,'' said Tilliss of Inner Circle Sports in New York. ``Companies are being pinched as we head into recession (if we aren't already) and presumably that results in cutbacks in their sports spend.''
The Rays are banking on increased corporate season-ticket purchases after their worst-to-first season. That may be curbed by the slowing economy.
``Our deficiency is business support,'' Tampa Bay President Matt Silverman said. ``The whole economy won't help, but I don't think it should significantly detract from companies supporting the team.''
(Source: Bloomberg)
