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SBJ/November 12 - 18, 2001/Marketingsponsorship
Theres no longer nowhere to go but up for sports biz
Published November 12, 2001
It's payback time for the sports business, after almost two decades of enduring growth in media contracts, ticket prices and sponsorship fees. Whether the industry has reached a plateau or will begin moving downward remains to be seen. In stock-market parlance, it's called a market correction. Cases in point:
There's no stronger indication that growth in sports is over than Major League Baseball's vote for contraction. There are many factors influencing this issue, and, in the end, it may just be posturing by the league to soften up the Major League Baseball Players Association for contract talks. But in sports economic terms, the indicators are clear: Support from fans and governments in certain markets has eroded. Expansion in baseball and most likely in the other leagues is dormant and quite likely dead for the foreseeable future.
Rumblings about the possibility of the NFL giving its broadcast partners some relief in rights fee payments because of the weak advertising marketing. The league's four network partners will pay out $2.1 billion this year in media rights fees, a figure that advertising sales won't come even remotely close to covering.
The future of rights fee payments is uncertain, at best, even for top-shelf properties like the NBA. There's no better spinmeister in sports than NBA Commissioner David Stern, but even he has to be concerned about the direction in negotiations for the league's new television contracts.
"We remain optimistic that our future television arrangements will be valued higher than our current contract," Stern told foxsports.com last month.
If Stern can stay even with the previous deal, consider it a victory. So much of the NBA's growth over the past two decades has been a result of fortunate timing, but this time, the league is at a bad place at a bad time.
A drop in the NBA average ticket price for the 2001-02 season. This ends the upward spiral of ticket inflation for the major leagues. Since Team Marketing Report started tracking average ticket prices in 1991, no league — and only a few teams — has ever started a season with lower prices than the year before. It's still no bargain to attend an NBA game, but at $50.13 a ticket, that's 2.3 percent lower than last year.
Ad support may dwindle for everything but major sporting events. There might have been a bit of posturing and gamesmanship involved, but a recent round-table discussion of sports advertisers and broadcast executives demonstrated that the rules are changing in the sports advertising business. As the participants in this ESPN-sponsored event indicated, advertisers will be reluctant to get involved with so-called fringe programming. That could mean a drop in advertiser interest in broadcast events like figure skating and gymnastics and portend even a greater decline in online ad spending.
Looking for one more reason why the growth in our industry has abated? The deciding fifth game of the National League Division Series between the Diamondbacks and Cardinals drew fewer viewers than "Surviving Gilligan's Island" on CBS.
Alan Friedman (email@example.com) is the founder of Team Marketing Report.