Sports face weak corporate spending

By Ben Klayman - Analysis

CHICAGO (Reuters) - Smaller crowds are only the first domino to fall for U.S. sports leagues, which could see lower corporate spending, flat or declining revenue and stagnant team values in a global recession, analysts said.

To cope with these problems, league executives have begun offering deals on tickets, cutting jobs and in the case of the National Football League, reopening its labor deal with players to reduce costs.

While revenue remains strong in many sports, officials no longer see the sector as recession proof.

"We've taken an incredible leap with the pricing of tickets that is going to come back to haunt the major sports," said Michael Cramer, professor of sports management at New York University.

"It's not just the people at the bottom end," added Cramer, who is former president of Southwest Sports Group, which owns the Texas Rangers baseball and Dallas Stars hockey teams. "It's the people at the top end that don't have the money."

Signs of a slowdown abound, including a decline in regular-season attendance for Major League Baseball, soft season-ticket sales for the National Basketball Association and an NFL memo citing revenue pressures.

Throw in cutbacks by sponsors in such struggling industries as financial services and automotive, and the U.S. sports industry is facing more trouble.

"We'll cross our fingers like everyone else and hope that there's some type of economic recovery and any negative impact on our business will be a minimal one," National Hockey League Deputy Commissioner Bill Daly told Reuters this month.

Nevertheless, Daly said early signs were promising, as season ticket sales were up 4 percent and the league expected record revenue topping $2.7 billion.

Baseball also remains on track to report record revenue of $6.5 billion, but per-game attendance during the regular season slipped almost 1 percent. Commissioner Bud Selig warned teams this month not to overprice next year's tickets.

Fan frustration is rising along with ticket prices.

Brad Beam, a national sales manager for a technology company, used to attend 10 professional games a year in such sports as football, baseball and hockey, but he cut those due to the weak economy and high ticket prices.

"I'd rather spend $30 at happy hour, drinking three or four beers and eating appetizers with my buddies and watch it on TV," the 41-year-old St. Louis Park, Minnesota, resident said of a Minnesota Vikings NFL game.

SPORTS STRIKES?

Things could get worse for fans if a recession leads sports leagues to seek lower-cost deals with players, resulting in strikes, said Neal Pilson, head of his own New York sports consulting firm and former president of CBS Sports.