Monday, March 02, 2009

Sports Bubble, cont.

The Pig sends along this story suggesting that the NHL is already in trouble. He gives a rundown of the most vulnerable franchises--here's a taste:

ATLANTA

This could be a blueprint of how not to operate an expansion franchise. General manager Don Waddell is by all accounts a lovely man but he has become the Inspector Clouseau of the NHL. Despite having prime draft picks every year the Thrashers rank even below the much-maligned Maple Leafs in player development.

The Hockey News recently ranked the Thrashers 23rd in prospects. And, when they did get a solid player, Waddell has lost him. In eight seasons, the team still is looking for its first playoff game victory.

The team's fan base has eroded. Attendance dropped another 7.9% the first half of this season -- second biggest drop in the NHL. It has cash flow problems which hasn't been helped by a collective agreement that forces it to spend at least $41-million.

Nobody really knows if Atlanta would support an NHL team because, in all honesty, it never has had one of NHL calibre.

If the NHL bought out the owners and folded the team it would be considered a mercy killing. Or, if a less desperate solution is more to Bettman's liking: Keep the team; fold Waddell.

NASHVILLE

A 27 % share of the Predators got tied up in minority owner William Del Biaggio's bankruptcy hearings. Del Baggio has been accused in three lawsuits of providing forged documents to financial institutions to land multimillion dollar loans that he has not repaid. Del Biaggio is just the latest NHL owner being fitted for a pinstripe suit courtesy of the U.S. government. The NHL may lead all of pro sports in the number of owners who could audition for a starring role on Judge Judy.

Meantime, the team can't score on the ice, or with fans. Management revealed it considered buying thousands of unsold tickets so it can qualify for a full share of the NHL's revenue sharing plan. Through 22 home games, the Predators' average paid attendance was 256 tickets short of the 14,000 average required for a full share of the revenue-sharing pool that netted the team $12 million last season.

The plan gives small-market clubs money that the NHL collects from the 10 highest-earning teams. The amount franchises receive falls if certain attendance figures aren't achieved.

Predators lead owner David Freeman made an estimated $50 million selling a medical waste disposal business. So, when it comes to waste you'd think an expert like Freeman would recognize it even if it was disguised as a hockey team. But, he says his reputation as a businessman is at stake, and he wants to make hockey work here. So, as for Jim Balsillie buying and moving the team?

"There is no Plan B," Freeman said.

Pity.


How bad will things get with pro sports? No one knows. My guess is that, in the median-variant scenario a bunch of minor leagues (WNBA, Arena, MLS, MLL) fold, NASCAR retrenches from its quasi-mainstream status, and the NHL loses a franchise (or two).

One of the things that interests me a lot is what happens to the PGA. I don't know a ton about the tour, but it seems heavily reliant on financial services sponsors. If that's true, then that money should dry up pretty fast and, even in an economic recovery, may not return for some time. What does golf do? Cut back tour stops? Cut back purses as they rely more on TV and gate revenue? Is there enough interest in the LPGA to keep that tour going?

3 comments:

PG said...

Want to know what sports will look like after the Sports Bubble bursts? Remember sports in the 1970s? That is kinda what it will look like. And not the good aspects of sports in the 70s, but the worst aspects. Remember, there is no ABA or AFL to fold, they already folded/merged, so expect leagues to contract teams.

NHL: Some southern teams have to go. They never made sense to begin with, now they really don't make sense. Atlanta and Nashville will probably be contracted.

NBA: Bye-Bye Memphis/Vancouver, nice knowing you.

MLB: Washington fans: the dirty secret of DC baseball is that the Lerners never had the money to run a contender. Sure they had enough to buy the team, but they expected the TV deal and stadium to generate far more money than the early returns have brought them. Not to mention the team is very poorly run. Kasten was not architect of the Braves, Schuerholz/Cox were. Bowden has been a disaster. I would not be surprised to see this team go under in the next 5 years. Toss in another team, perhaps Minnesota or Florida (I would say Tampa, but they appear to be on the right track).

NFL: I would not be surprised if an NFL team or two were contracted. I know it is blasphemous and counter to conventional wisdom, but the league is in more trouble than many realize. The mega TV deals that allow the revenue sharing to exist (and keep teams like Green Bay competitive) will surely shrink when they are next negotiated. Advertising revenue is what drives these mega TV deals. Who advertises during the games? Car manufacturers, financial institutions, airlines, and beer companies. Of that group, only beer companies have any chance of continuing their advertising budgets, the other three will cut back drastically. And so I would expect to see the next TV deals to be worth much less than the previous deals.

NASCAR: I think, and hope, that NASCAR recedes back into the niche they previously occupied as a redneck sport shown in the south.

PGA: Should still be strong as long as Tiger is competitive. One interesting possibility would be for Tiger to capitalize on his brand and create another tour. There is a defacto "Tiger Tour" comprised of events he attends. If he were Machiavellian enough he would destroy the PGA by forming his own tour (in conjunction with a major sponsor). He probably would only do this after breaking every last record on the PGA he can.

Alex said...

Same thing is being said about the NBA teams. Probably tied to the stock market problems

Anonymous said...

I bet the NHL is wishing they had awarded that Nashville franchise to Houston now...

PG seems to have an issue with the south in general from the tone of the comments, but how long can those contracting northern cities like Detroit host high end sports leagues and get their "fans" to buy expensive tickets?

I'm not a NASCAR fan, but the only real issue they seemed to have had was fuel prices. I have a hunch they'll continue to attract hundreds of thousands of fans at the stadium and sell ads on TV.