SBD/Issue 21/Finance

NBA Will Add Jobs Internationally, Despite Domestic Cutbacks

Stern Believes The NBA Has An "Enormous
Opportunity" To Increase Int'l Business
NBA Commissioner David Stern Sunday said that the league will "continue to hire in Europe, the Middle East, Asia and South America because there is 'enormous opportunity' to increase business," according to Jon Saraceno of USA TODAY. Stern yesterday said that the NBA's domestic workforce "would be slashed about 9%, or roughly 80 jobs." Stern said of the '08-09 NBA season, "We think we'll be up in revenue. But I just can't say for sure whether we'll be up or down in attendance, because it's just so touch-and-go because sports tickets are very much disposable income." Magic COO Alex Martins said, "While I understand the economic challenges, I would tell you we have not experienced a slowdown here" (USA TODAY, 10/14). In Akron, Pat McManamon wrote of the NBA's domestic layoffs, "Wouldn't you think a league like the NBA could afford to absorb losses through givebacks rather than costing people jobs?" The cutbacks seem "to be a signal," and the "question is when the full impact hits the sports economy, and how strong the blow" (, 10/13). Kings VP/Business Communications Mitch Germann said that the team is "not planning to make any layoffs." The Kings tomorrow will host the Clippers in an exhibition at Spanos Center in Stockton, California, as a "way to solidify and geographically expand their fan base" (SACRAMENTO BEE, 10/14). The WALL STREET JOURNAL's Matthew Futterman reports Nets President & CEO Brett Yormark is "20% short of his goal of selling 1,600 new full-season tickets to make up for the drop in his renewal rate" (WALL STREET JOURNAL, 10/14).

SKATING AWAY FROM PRESSURE: NHL Commissioner Gary Bettman spoke with media prior to last night's Canucks-Capitals game and said of the economy, "I have no doubt that over time, if its long enough and bad enough it will have some impact, but based on what we see right now, our business seems to be strong. So no, we're not contemplating any layoffs right now, but we are going to monitor our revenues and watch our expenses very closely." Bettman also addressed the credit market, and noted that it "hasn't been a serious issue, because no teams are actively looking to relocate or be sold." Bettman: "I suppose it could become an issue if someone has a refinancing, and they're having trouble doing it. But we have great relationships with our lenders and at least as we have this conversation its not posing any immediate issues" (, 10/13). Meanwhile, AHL President & CEO Dave Andrews in his blog wrote of the economy's impact on the league, "The AHL has a distinct advantage over some entertainment alternatives in that we appeal to a broad demographic across 29 cities in North America, and we have a terrific product at an attractive price point." Andrews added, "As with every business we will need to face this challenging economic environment with innovative and creative marketing strategies and increased use of technology to connect with our fans. But above all, we will need to avoid the downward spiral that would result from reducing investment in our sales and marketing efforts" (, 10/10).

MARKET WATCH: In DC, Maske & Lee write the NFL, NBA and MLB could "largely ignore the economy's ups and downs because they had guaranteed revenue from national television contracts, and fans and businesses seemed eager to continue to spend money on tickets and advertising sponsorships." But analysts said that the "current climate is different." Sports Business Group President David Carter: "Everybody that spends money in sports is going through some belt-tightening." NFL Giants President & CEO John Mara said, "This business has been thought to be recession-proof for a long time. But I don't think any of us has seen anything like this for a long, long time." Stern said, "Sports, I don't believe, can exist apart from that reality. The only thing that will probably increase will be television viewing as a low-priced alternative to spending money going to the movies, going out to eat, or going to the event itself possibly." An NFL franchise source said, "It's a time of uncertainty for everyone. I'm anxious to go to this (owners') meeting and see what people say about how things are going in their markets." Carter noted, "What we could see is some franchises being sold or relocated." Meanwhile, Wizards President of Business Operations & CFO Peter Biche said that the team "has maintained the number of season ticket holders from last season, about 11,500, while suite and club level packages are on pace" to top last year. Biche said that the "major challenge for the Wizards is with corporate sponsors, which 'might be an area where we're flat.'" Capitals President Dick Patrick said that the team "hasn't felt the effects in the downturn in ticket sales," but noted that there "had been a slowdown in ... sponsorship sales over the past month" (WASHINGTON POST, 10/14).

Writer Believes Jets' PSL Auction 
Comes At A "Risky Time"
INDUSTRY BELLWETHER: The Jets starting Sunday will auction off 2,000 PSLs for seats in their new stadium, and in N.Y., Richard Sandomir writes it is a "risky time to sell expensive licenses." The pitch for the PSLs is "one based on scarcity and capitalizing on the once-in-a-lifetime availability of licenses for the 'best seats in sports.'" Jets Exec VP/Business Operations Matt Higgins said, "We went into this four weeks ago with the economy not in great shape. We went into this with eyes wide open." But Clemson Univ. economics professor Raymond Sauer: "I think this is going to test the axiom that sports are recession-proof" (N.Y. TIMES, 10/14).

STADIUM TROUBLE: The WALL STREET JOURNAL's Futterman reports construction on the Marlins' new $515M ballpark that was "supposed to start this fall probably will have to wait for better economic times." Miami-Dade County (FL) Commissioner Katy Sorenson said that she expects support for the park "to dissipate." Florida's real-estate market is "one of the hotspots in a foreclosure crisis that helped to bring down several major banks and spark a selling frenzy in global markets" (WALL STREET JOURNAL, 10/14). Also, the AKRON BEACON JOURNAL reports the city of Goodyear, Arizona, which is "trying to build a spring-training stadium" for the Indians and Reds, is "facing millions of dollars in unexpected costs because developers are wrestling with financial and legal woes." Extra expenses "could include $3.6[M] to complete the art, retail and plaza space at the ballpark" (AKRON BEACON JOURNAL, 10/14). Meanwhile, Liverpool yesterday "rubbished reports which claim they have scrapped plans to move to a new stadium and want to expand Anfield instead." Liverpool's "recent admission that the worldwide credit crunch has forced them to delay construction of a new stadium on Stanley Park fueled speculation that the project might be binned entirely." But a Liverpool spokesperson said, "The story is completely wrong" (AFP, 10/13).

Sabates Thinks NASCAR Should Have A 
Three-Car Rule Rather Than A Four
PERMANENT PIT STOP? Chip Ganassi Racing co-Owner Felix Sabates said of the economy's impact on the NASCAR Sprint Cup Series, "There is a possibility that eight cars could be gone a year from now. ... I think by 2010 there could be eight cars here today that won't be replaced. And you may be shocked who those are. With all the venture capital companies coming into the sport, they are looking for a return, and if they don't see a return, they will close the doors and write it off." Sabates "believes the business model that currently exists in NASCAR has to have a strong economy in order for it to be successful." Sabates: "I think NASCAR should have a three-car rule rather than four. I think they made a bad mistake" (, 10/13). Meanwhile, DEI President of Global Operations Max Siegel acknowledged that he has "heard the rumors" of DEI cutting 80 jobs. Siegel: "That's not our intent, but I was hearing it, too. ... We have no imminent plans to lay off any people or shut down any of our race teams." Siegel added, "The way the economy is and the way the sport is right now, unfortunately a lot of us are in the same position" (WINSTON-SALEM JOURNAL, 10/14).

ROYAL PAIN:'s Darren Rovell reported the Royal Bank of Scotland (RBS) yesterday "was rescued" by the British Government, and the bank, which sponsors three of golf's four major tournaments, is "in jeopardy of leaving the sport." RBS is the official bank of the PGA of America, "one of four USGA sponsors and was a sponsor of this year's Ryder Cup." RBS also is the parent company of Citizens Bank, which owns the entitlement to the Phillies' ballpark (, 10/13). In Manchester, Matt Scott reports English Premier League (EPL) clubs Liverpool FC and Arsenal "will be sweating over the implications of the 'nationalisation' of high street banks yesterday." The two clubs will "be wondering who their personal bank manager will be," after RBS made plans to "sell 60% of its own equity to the government." The two clubs combined "owe RBS-led consortiums more than" US$880.3M. Scott reports EPL club Bolton Wanderers "have the most to fear," as Singer & Friedlander, the "operation belonging to collapsed Icelandic bank Kaupthing, is in administration." Bolton would now "appear to be debtors to a huge list of creditors who are clamouring for their funds" (Manchester GUARDIAN, 10/14).

TIME FOR CONCERN? The HOLLYWOOD REPORTER's Georg Szalai writes after the "recent bloodbath in the stock market, some say it's a question of when -- rather than if -- the next victim among industry leaders turns up," and execs who "own significant amounts of stock in their empires are high on observers' shortlist." Cablevision Owners the Dolan family and Dish Network CEO Charles Ergen are "among the names industry observers on the Street mention as potentially at risk if the financial and credit crunch continue" (HOLLYWOOD REPORTER, 10/14).

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