home
Fri May 18, 2012
RSS
Kathy Willens, AP Images
Home attendance dropped 13% at Yankee Stadium - their first year in their new ballbark.

Why Fans Stay Home

By Brian Werner, Missouri – April 2010

Coming with start of spring, opening day in Major League Baseball is a time of possibility. Whether grounded in reality or not, fans have a renewed hope that their team will make it to the playoffs this year. Yet with levels of unemployment hovering just below 10% attending even one professional sports game for many families will be a great sacrifice.

The league as a whole is hoping that as the economy slowly starts to recover, more fans will come back to the ballpark. Even though many teams froze or even decreased ticket prices, attendance was down 6.6 percent in 2009 from the year before.

While in many of the relatively mild recessions of the past few decades, professional sports proved to be more resistant to downturns than other areas of the economy, things have been different this time. That’s according to Dr. Andrew Zimbalist, Professor of Economics at Smith College and one of the top sports economists in the country.

Zimbalist, the author of a number of articles and books on the subject (Baseball and Billions: A Probing Look Inside the Big Business of Our National Pastime, The Bottom Line: Observations and Arguments on the Sports Business, and the forthcoming Circling the Bases: Essays on the Challenges and Prospects of the Sports Industry) said this recession however, is more severe than anything we’ve seen since the Great Depression and significant job, income, and wealth losses have definitely taken a bite out of most peoples’ discretionary spending.

Ticket sales, which have typically stayed fairly robust during downturns, dropped in many sports. Sports this time around haven’t been immune to the job cuts we’ve seen throughout the economy either.

“We certainly have had extensive job losses,” said Zimbalist. “The NBA a year and a half ago lay off 11% of its front office – the NFL has done something similar to that….from what I’ve seen it’s roughly the same order of magnitude as what we are seeing throughout the whole economy.”

More than just the severity of this recession, there has been a dramatic shift in the way that professional sports do business.

“Sometime around late 1980s and early 1990s, the economic model of professional sports changed in the US,” said Zimbalist.  “Major league sports became much more dependent on the economy and the success and the ability of corporations and their top executives to spend big bucks at the ball park – big bucks on club boxes and luxury seats depended on the success of their corporations which depended on the success of the economy.”

This change was evident in the wave of stadium constructions, which Zimbalist explained comes in cycles every few decades. Within the past 15 years, over 100 of the roughly 120 major professional sports teams have gotten new or extensively refurbished stadiums.

Like the housing bubble, the recent stadium boom was fueled by rising land values and easy credit, with the added benefit of public financing. Just like housing prices, franchise values went up. At least that was the case before the crash.

Since then, a number of franchises have gone for less than they sold for before the crash. The Tampa Bay Lightning of the National Hockey League was recently purchased for a reported $100 to $150 million, down from the $200 paid for the team in 2008.

New stadiums that target the corporate audience with loads of luxury boxes and premium seats have been very lucrative. But while bringing in massive amounts of revenue, teams have exposed themselves to economic fluctuations. An industry dependent on corporate dollars is vulnerable in an economic downturn as companies cut back on expenses like luxury boxes, as well as on advertising and sponsorships.

This has been especially true for individual sports, which are particularly reliant on direct sponsorship. The Ladies Professional Golf Association had eight fewer tour events in 2009 than the previous year. Large sponsors have pulled out of Nascar, Formula 1 racing, and professional tennis.

At the same time new technology makes it easier to watch games from anywhere. With satellite TV packages, TIVO, and streaming online broadcasts, are sports fans just going to stay home? When you’ve got all the Sunday games in HD on a large screen plasma TV, do you really need to put down some serious cash to see the game live? Zimbalist cautions against this type of thinking, which it turns out is not a new phenomenon.

“If you go back to baseball in the 1890s, Western Union had a deal with the National League whereby they would… send messages to the bars in town, giving updates on the scores.  At the time, many owners in the National League worried that that would mean that the fans wouldn’t want to come out to the ballpark because they would be able to find out the scores. And since the 1950s professional sports teams worried first about radio and then television thinking that gee, if the games are on the radio fans won’t have to come to the ballpark any more and certainly if fans are able to watch the games on television they don’t have to come to the ballpark any more.”

So while some might forgo the trip to the ballpark – unable to spend $500 to take the family to watch a ballgame at the ballpark – overall attendance numbers –until the past two years- have kept going up. Zimablist argues there is something unique about watching a game live that can’t be replicated on TV.

“What being at an arena or a ballpark or a stadium enables one to experience in a way that is almost never experienced in our society is a sense of community and exuberance around that community. Somebody on your home team gets a single and knocks in a run and 60,000 people stand up and all cheer together.  However perfunctory you think that is as an expression of community it is an expression of community and it is an expression of joy and you don’t get to do that very often.”

Instead of being a replacement for the live event, technology often works to increase the person’s overall connection to the sport. The NFL, the most successful of the four major sports leagues, is also a sport that is particularly well suited to television. If football is any indication, America’s love of professional sports has not waned yet. The 2010 Superbowl was the most watched television program ever; drawing a Nielsen estimated 106.5 million viewers. The NFL now boasts numerous franchises valued over and around $1 billion.

But the question remains – can professional sports continue to thrive when many consumers can’t afford to go to games? The Boston Red Sox and New York Yankees did comparatively well in 2009 despite having the highest ticket prices in the league. Even though MLB attendance was down significantly that year, revenue went up. The idea that the sporting industry is immune to recessions has not held true this time – though the four major sports have still fared better than the overall economy. While the corporate model has taken a hit, it seems that much of the industry is still poised to recover faster than the rest of the economy.

Leave a Reply

Website Developed by Arc Intermedia