In 2008, the biggest story of all, sports or otherwise, may have been the economic crisis.
The economic downturn has affected every facet of the sports world. From layoffs to teams folding and leagues canceling seasons, the economic crisis has shown that sports are not as recession proof as some had thought.
In the WNBA, the four-time champion Houston Comets folded after failing to find new ownership. The entire 2009 Arena Football League season was cancelled so the league could work on fixing its economic model. That bad news came after the league saw its New Orleans Voodoo franchise unexpectedly fold. Even in more mainstream sports, franchises are in trouble. The NHL’s Phoenix Coyotes are in such dire financial straits that the league is “taking an active role in trying to find new investors or ownership” for the franchise.
Auto racing has been hit particularly hard this year. With it becoming more and more difficult to secure corporate sponsors, NASCAR teams have been forced to merge, including storied teams Dale Earnhardt Incorporated and Petty Enterprises. Overall, NASCAR expects “expects its take from title sponsorships to drop 20 percent next year.” Honda pulled out of Formula 1, citing a need to cut costs. Closer to home, the 2009 IRL Detroit Belle Isle Grand Prix has been cancelled due to the economy.
Several leagues have been forced to cut jobs as a result of the economic downturn. In October, the NBA was forced to eliminate 80 jobs, 9% of its workforce. The NFL, which will miss its revenue goal by $50 million during the fiscal year, cut 150 jobs in December — 10% of its staff. Hundreds of jobs were cut in NASCAR, which endured its own “Black Monday” the day after its season ended. Following the cancellation of its season, the AFL “lowered the boom on most league employees” by cutting all but five of the jobs at its New York headquarters.
The economy has also had an effect on the sports media. Layoffs at newspapers targeted the sports sections. Newsday eliminated the ‘sports columnist’ category during one wave of cuts. FOX canceled its MLB pregame show to cut costs. And several sportswriters, from Jack McCallum to Jackie MacMullan, accepted buyouts throughout the year. Cuts and downsizing resulted in coverage of sports like golf, the NHL and NBA being reduced.
The economy’s impact on the auto industry — in particular, the Big 3 automakers, General Motors, Ford and Chrysler — has also had a major effect in sports. The Big 3, which spend approximately $500 million on NASCAR each year, are cutting spending on the sport. Ford and Chrysler in particular are cutting their NASCAR budgets by 20% and 30% respectively.
With the Big 3 combining to spend “more than a third of their television advertising budgets on sports-related commercials,” their struggles figure to impact advertising in a major way.. In November, General Motors canceled its high-profile endorsement deal with Tiger Woods. None of the Big 3 automakers have spent money on advertising during the Super Bowl, and GM in particular has cut back on ad spending during the NFL regular season. In October, NFL Commissioner Roger Goodell said that NFL ad revenues were dropping because “advertisers are pulling back, both on a local and national level.”
NBC has seen demand slow somewhat for Super Bowl ads since the start of the economic meltdown in September. With NBC charging $3 million per 30-second spot, some are asking the question, “will [NBC] have to start lowering the price to get others onboard?” Former advertisers FedEx, SalesGenie and Garmin are joining the Big 3 automakers on the sidelines for this year’s game; FedEx had previously bought ads during the previous twelve Super Bowls.
Heading into 2009, there is little doubt that the economy will continue to be a major story. Some sports have already endured their worst case scenarios, such as the AFL. Others seem to be teetering on the edge, such as NASCAR, which depends heavily on sponsorships and on funding from automakers. How will the financial crisis affect sports like the NHL in 2009, which depends heavily on attendance and as such is “more susceptible to the ups and downs of the economy“? How many more events will be cancelled — or worse, how many more teams will fold?
The story of sports media this year may not so much what has happened already, but what may be in store next year. Quoting Buffalo Sabres Managing Partner Larry Quinn, “A lot of these things don’t hit you immediately, but there is a 12-month cycle involved … and going out, it’s looking pretty scary a year from now.”
