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Is Moores Jumping Out Just in Time Again?
In the past, pro sports has been considered somewhat recession-proof. Not this year, and perhaps not in 2010. Attendance is already sagging, despite the slashing of some seat prices, even in the affluent National Football League. Ailing sponsors, particularly in the auto and financial industries, are dropping out. Those sports promoters getting fat bailouts from the federal government are hearing from critics, some of whom are shareholders.
There’s a bright side: fiscal woes of states and municipalities, along with the lending freeze, may put a crimp in the stadium-subsidy scam. The construction industry hopes that the Obama administration’s big infrastructure stimulus package will help fund pro sports stadiums, but gnawing water, sewer, road, highway, bridge, dam, and maintenance needs around the nation may squelch such insane babblings.
Early this month, when he said he (along with a small and unidentified group of investors) had reached an agreement to buy the San Diego Padres, Jeff Moorad said that “sports teams will be challenged going forward as all businesses will be in the short run.” John and Becky Moores, who own a reported 90 percent of the team, are getting a divorce and claim that is the reason for the sale, which is supposedly to be phased in over several years. However, Moores has shown a canny (and dubious) ability to jettison an investment before a calamity hits; for example, he dumped $650 million worth of Peregrine Systems stock, almost all he controlled, before the company collapsed in scandal. Padres attendance is already in decline, as is the team’s performance. Moores, who promised he would bring in good players if the City would give him a fat subsidy, has pared the payroll to bare bones as the team founders in the field.
Taking the family to pro sports events used to be cheap entertainment. But that was before cities massively subsidized new stadiums and owners jacked up prices. In 1991, going to a Padres game cost $73.16, according to teammarketing.com. That included tickets for two adults and two children, four small soft drinks, two small beers, four hot dogs, two programs, two caps, and parking. By 2006, two years after the subsidized Petco Park opened, the cost was up to $180.32. It has risen since 2006: last season a premium-brand beer cost $9 and a hot dog $4.
Everyone is watching baseball’s New York Yankees. The team moves into a $1.3 billion subsidized stadium this year. Tickets for seats behind the home dugout, which were $150 a game in 2007 and $250 in 2008, will go to $850 in the new stadium. The Yanks have had trouble selling the 51 luxury suites that go for $600,000 to $850,000 a season. Wall Street’s collapse has caused stiff white-collar unemployment in New York.
Philip Porter, economist at the University of South Florida, has just done a study of ticket prices after a subsidized stadium is completed. “Owners keep prices low until they get referendums for stadiums, and then they raise the prices substantially,” he says. “The bottom line is that professional sports is a luxury, not a necessity,” thanks in large part to price escalations after subsidized stadiums are built.
“The nature of the person in the stadium is changing, especially in football and basketball,” says Rodney Fort, professor of sports management at the University of Michigan. “The typical fan is upper-middle class, and in basketball, more than that.” Baseball is not quite as expensive, and “hockey is still reasonable.”
Bud Selig, commissioner of Major League Baseball, has warned owners that the current economic crunch could be severe. The National Football League has experienced a 1 percent drop in attendance this year, even though many tickets had been purchased prior to the economic mayhem. The league has slashed this year’s playoff prices by 10 percent and dropped some Super Bowl tickets to $500 a seat from $800, according to Forbes.com. The league has trimmed employment, as have the National Basketball Association and Major League Baseball.
It is no secret that pro football is driven by gambling. (Ever wonder why the sports pages give the line on games?) Gambling is down sharply this year. Casino stocks have cratered. Native American casinos are hurting coast-to-coast, including in San Diego. Less wagering on games could translate into lower attendance and lower TV ratings for football and other gambling-dependent pro sports such as basketball.
Other sports are cutting back. Take car racing. The National Association for Stock Car Auto Racing (NASCAR), which depends heavily on support from Detroit-related companies, will cut back its season and the number of cars that compete. Ditto for Formula One, which features sleek racing cars. The Arena Football League, which had been growing in recent years, canceled its 2009 season, pending agreement with the players’ union. The Professional Golfers’ Association of America shouldn’t lose any tournaments this year, but it is concerned about 2010, when contracts with bank and auto sponsors expire. The Ladies Professional Golf Association could have trouble with tournament sponsors this year.
Meanwhile, the banks taking big bailouts from government and the auto companies that have their hands out are getting justifiably sullied in the media. Baseball’s New York Mets have a $20 million naming-rights deal with Citigroup, the huge, hapless bank being rescued by the U.S. government. Bank of America, another mendicant, is reported to be negotiating a similar deal with the Yankees. Wachovia Corporation, which Wells Fargo swallowed in an emergency measure, has its name on two pro facilities and sponsors a big golf tournament. It’s not clear what will happen.
Owners’ economic woes are affecting sports. Billionaire developer Sam Zell loaded media giant Tribune Company with debt; then the newspaper business tanked. The company went bankrupt. Zell has not yet been able to sell the Chicago Cubs baseball team and its Wrigley Field. Newspaper megrims have also hit the New York Times; it’s trying to unload its 17.5 percent stake in the Boston Red Sox baseball team. Jerry Moyes has piled excessive debt on both his trucking company, Swift Transportation, and his hockey team, the Phoenix Coyotes. Now the team wants to renegotiate its stadium lease, even though it gets most of the revenue from the facility. The Coyotes have a 30-year lease and have promised to stay in town that long, notes fieldofschemes.com, but could vamoose by declaring bankruptcy.
With states and cities broke and capital markets frozen, the stadium-subsidy scam seems to be in abeyance. The owner of football’s Minnesota Vikings said if he could get a $635 million subsidy for a $954 million stadium, he could provide 5500 jobs and $500 million to local contractors. This is the state in which a bridge collapse became the national symbol of neglected infrastructure. Upon hearing the Vikings owner’s pitch, state legislators erupted “in paroxysms of laughter,” says the University of Michigan’s Rodney Fort. The legislators responded, “It may create a few jobs for a short time, but we have a long term to think about.” Fort notes that baseball’s Oakland A’s and football’s San Francisco 49ers don’t have their new stadiums and the Chargers haven’t been able to wangle one, at least yet. The establishment is hoping that public frenzy over the current team’s late-season success will lead politicians to give the team a billion dollars’ worth of land, although team lawyer Mark Fabiani admits the City is at or near bankruptcy and financing is two or three years away. A builder in the City of Industry near Los Angeles claims he is still on schedule to construct a football stadium (an assertion that many question). The Chargers could use the threat of moving there as a poker chip. But the old “build me a stadium or I leave” ploy may not work so well now. “I don’t know how other cities will be able to come up with the capital,” says Fort.
Here's something you might be interested in.
Is Moores Jumping Out Just in Time Again?
Is Moores Jumping Out Just in Time Again?
In the past, pro sports has been considered somewhat recession-proof. Not this year, and perhaps not in 2010. Attendance is already sagging, despite the slashing of some seat prices, even in the affluent National Football League. Ailing sponsors, particularly in the auto and financial industries, are dropping out. Those sports promoters getting fat bailouts from the federal government are hearing from critics, some of whom are shareholders.
There’s a bright side: fiscal woes of states and municipalities, along with the lending freeze, may put a crimp in the stadium-subsidy scam. The construction industry hopes that the Obama administration’s big infrastructure stimulus package will help fund pro sports stadiums, but gnawing water, sewer, road, highway, bridge, dam, and maintenance needs around the nation may squelch such insane babblings.
Early this month, when he said he (along with a small and unidentified group of investors) had reached an agreement to buy the San Diego Padres, Jeff Moorad said that “sports teams will be challenged going forward as all businesses will be in the short run.” John and Becky Moores, who own a reported 90 percent of the team, are getting a divorce and claim that is the reason for the sale, which is supposedly to be phased in over several years. However, Moores has shown a canny (and dubious) ability to jettison an investment before a calamity hits; for example, he dumped $650 million worth of Peregrine Systems stock, almost all he controlled, before the company collapsed in scandal. Padres attendance is already in decline, as is the team’s performance. Moores, who promised he would bring in good players if the City would give him a fat subsidy, has pared the payroll to bare bones as the team founders in the field.
Taking the family to pro sports events used to be cheap entertainment. But that was before cities massively subsidized new stadiums and owners jacked up prices. In 1991, going to a Padres game cost $73.16, according to teammarketing.com. That included tickets for two adults and two children, four small soft drinks, two small beers, four hot dogs, two programs, two caps, and parking. By 2006, two years after the subsidized Petco Park opened, the cost was up to $180.32. It has risen since 2006: last season a premium-brand beer cost $9 and a hot dog $4.
Everyone is watching baseball’s New York Yankees. The team moves into a $1.3 billion subsidized stadium this year. Tickets for seats behind the home dugout, which were $150 a game in 2007 and $250 in 2008, will go to $850 in the new stadium. The Yanks have had trouble selling the 51 luxury suites that go for $600,000 to $850,000 a season. Wall Street’s collapse has caused stiff white-collar unemployment in New York.
Philip Porter, economist at the University of South Florida, has just done a study of ticket prices after a subsidized stadium is completed. “Owners keep prices low until they get referendums for stadiums, and then they raise the prices substantially,” he says. “The bottom line is that professional sports is a luxury, not a necessity,” thanks in large part to price escalations after subsidized stadiums are built.
“The nature of the person in the stadium is changing, especially in football and basketball,” says Rodney Fort, professor of sports management at the University of Michigan. “The typical fan is upper-middle class, and in basketball, more than that.” Baseball is not quite as expensive, and “hockey is still reasonable.”
Bud Selig, commissioner of Major League Baseball, has warned owners that the current economic crunch could be severe. The National Football League has experienced a 1 percent drop in attendance this year, even though many tickets had been purchased prior to the economic mayhem. The league has slashed this year’s playoff prices by 10 percent and dropped some Super Bowl tickets to $500 a seat from $800, according to Forbes.com. The league has trimmed employment, as have the National Basketball Association and Major League Baseball.
It is no secret that pro football is driven by gambling. (Ever wonder why the sports pages give the line on games?) Gambling is down sharply this year. Casino stocks have cratered. Native American casinos are hurting coast-to-coast, including in San Diego. Less wagering on games could translate into lower attendance and lower TV ratings for football and other gambling-dependent pro sports such as basketball.
Other sports are cutting back. Take car racing. The National Association for Stock Car Auto Racing (NASCAR), which depends heavily on support from Detroit-related companies, will cut back its season and the number of cars that compete. Ditto for Formula One, which features sleek racing cars. The Arena Football League, which had been growing in recent years, canceled its 2009 season, pending agreement with the players’ union. The Professional Golfers’ Association of America shouldn’t lose any tournaments this year, but it is concerned about 2010, when contracts with bank and auto sponsors expire. The Ladies Professional Golf Association could have trouble with tournament sponsors this year.
Meanwhile, the banks taking big bailouts from government and the auto companies that have their hands out are getting justifiably sullied in the media. Baseball’s New York Mets have a $20 million naming-rights deal with Citigroup, the huge, hapless bank being rescued by the U.S. government. Bank of America, another mendicant, is reported to be negotiating a similar deal with the Yankees. Wachovia Corporation, which Wells Fargo swallowed in an emergency measure, has its name on two pro facilities and sponsors a big golf tournament. It’s not clear what will happen.
Owners’ economic woes are affecting sports. Billionaire developer Sam Zell loaded media giant Tribune Company with debt; then the newspaper business tanked. The company went bankrupt. Zell has not yet been able to sell the Chicago Cubs baseball team and its Wrigley Field. Newspaper megrims have also hit the New York Times; it’s trying to unload its 17.5 percent stake in the Boston Red Sox baseball team. Jerry Moyes has piled excessive debt on both his trucking company, Swift Transportation, and his hockey team, the Phoenix Coyotes. Now the team wants to renegotiate its stadium lease, even though it gets most of the revenue from the facility. The Coyotes have a 30-year lease and have promised to stay in town that long, notes fieldofschemes.com, but could vamoose by declaring bankruptcy.
With states and cities broke and capital markets frozen, the stadium-subsidy scam seems to be in abeyance. The owner of football’s Minnesota Vikings said if he could get a $635 million subsidy for a $954 million stadium, he could provide 5500 jobs and $500 million to local contractors. This is the state in which a bridge collapse became the national symbol of neglected infrastructure. Upon hearing the Vikings owner’s pitch, state legislators erupted “in paroxysms of laughter,” says the University of Michigan’s Rodney Fort. The legislators responded, “It may create a few jobs for a short time, but we have a long term to think about.” Fort notes that baseball’s Oakland A’s and football’s San Francisco 49ers don’t have their new stadiums and the Chargers haven’t been able to wangle one, at least yet. The establishment is hoping that public frenzy over the current team’s late-season success will lead politicians to give the team a billion dollars’ worth of land, although team lawyer Mark Fabiani admits the City is at or near bankruptcy and financing is two or three years away. A builder in the City of Industry near Los Angeles claims he is still on schedule to construct a football stadium (an assertion that many question). The Chargers could use the threat of moving there as a poker chip. But the old “build me a stadium or I leave” ploy may not work so well now. “I don’t know how other cities will be able to come up with the capital,” says Fort.
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