SBJ/January 16-22, 2012/Research and Ratings

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  • Weighing the impact on attendance as fans’ wallets remain thin

    U.S. economic indicators are trending positive, but Americans are still finding that they have less money to spend after paying their monthly bills. At this rate, it will take years of aggressive economic growth to get back to the spending power they had in June 2008.

    For three years, the Luker on Trends ESPN Sports Poll has been asking Americans 18 and older: “Compared to this time last year, do you think you have more or less money to spend or save after all your monthly bills are paid?” In general, throughout that time, roughly 60 percent have said they had less to spend and 30 percent to 40 percent said much less compared to the previous year (see top chart).

    Even if the economy in general and personal financial conditions were improving, many Americans lost value in homes and stock, and the cost of living has increased over those same three years. So even those who maintained their income have still lost ground.

    While Americans are hurting, American sports fans are hurting less — and the American sports industry is doing just fine. How is that possible?

    FORWARD THINKING With …

    DENNIS HOWARD

    PHILIP H. KNIGHT PROFESSOR OF BUSINESS,
    UNIVERSITY OF OREGON

    Your book points to a future when increasingly only the rich can attend games. What are the implications?

    “High attendance costs, higher media quality and fuller schedules are leading to a substitution of experience from the live event to the living room or digital screen. Media can sustain an existing love of sport, but can love be built without going to games? Eighty-five percent of Americans are fans, but only 16 percent make over $100,000 and can afford to attend games regularly. With the current migration to media-based business, is the industry betting it can maintain and grow fan bases without attendance? If that is true, why are people who cannot afford to go to games still buying tickets? And what happens if they go away?”

    TOM COVE

    PRESIDENT AND CEO,
    SPORTING GOODS MANUFACTURERS ASSOCIATION

    What is your new index telling us to expect for 2012?

    “Americans are saying they plan to be more active in sports and exercise in 2012 and they are planning to buy more footwear and apparel than last year, but they seem more guarded about spending on sports and exercise equipment. That focus may come from retailer emphasis this past holiday season, where promotions were based on footwear and apparel. Product innovation may spur pent-up demand. On the business side, manufacturers and retailers seem cautiously optimistic for 2012. But this is the baseline for our index. Now we will be able to report the trends on a quarterly basis.”

    Since 1994, roughly 86 percent of Americans have been sports fans and 30 percent have been avid sports fans. The love of sports has been stable as consumer confidence has tumbled and discretionary income has disappeared. In 2011, while 44 percent of Americans 18 and older who are not sports fans said they had much less to spend, 28.6 percent of avid sports fans said they had much less to spend. The stable percentage of fans and avid fans over the years suggests economic conditions have not eroded sports interest. Rather, since 1994, those individuals who are better off financially tend to be bigger fans. Further, while younger men tend to have the most sports interest, older women are most likely to report having less money to spend and are the least interested in sports.

    While less so, sports fans are clearly affected. Nearly two-thirds have less to spend, with 1 in 3 typical fans and 1 in 4 avid fans saying they have much less to spend after paying bills.

    From Luker on Trends, those who play sports weekly are less affected as well, with only 51.9 percent saying they have less to spend. In its new quarterly Sports & Fitness Confidence Index report, “The Pulse,” the Sporting Goods Manufacturers Association said spending was down in 2011 but is more hopeful for next year in some categories. The growth is in apparel and footwear, which can double as everyday wear. But Americans are expecting to spend less this year on sports equipment — in other words, spending on direct sports experience.

    I had the opportunity to read advance text from the latest edition of “Financing Sport” by Dennis Howard and John Crompton (which is a must read coming out in late 2012). They have a sharp focus on the increasing importance of the highest income households to sustaining the direct experience aspects of the sports business ­— regular attendance at games and events in particular. In a recent conversation, Howard talked about how stadiums that were built during economic boom times assumed boom-time revenues would support them.

    The more we talked, the more the conversation centered on what will happen to attendance for major sports in America over time. Ironically, it may well be the case that the inability to pay for direct sports experience is driving the migration to the new center of the sports business universe: new media. While spending is down, viewing and consumption of digital information is up, along with associated revenues. In my September column (Sept. 26-Oct. 2 issue), I reported on the stunning shift in fan preferences from attending games to watching them through media. The reality is we have more, easier and more vivid access to sports now through media. And it’s paying the bills.

    As you read this column, try not to sell short the importance of attending. Remember that if you work in the sports industry, you have unusually free access to attend. You are not a typical fan. I keep remembering what John Walsh from ESPN said about this in my 2009 column on the economy: We are cashing in on the love of sports that was built 30 years ago on $5 tickets to major league games.

    Can kids build a love of the game without attending? Will watching games in vivid clarity on a pad be as fulfilling if there is nobody there in stands to cheer on the teams?

    Here’s a wild closing thought: What if the sports media market gets so strong we can afford to reward the biggest sports media users with honored free attendance and people no longer pay to go to games?

    Rich Luker (rich@lukerco.com) is the founder of Luker on Trends and The ESPN Sports Poll.


    FUTURE FIVE

    The role of technology in sports is gaining attention for future impact, moving into the No. 4 and 5 slots this quarter.

    Rank (Pvs) Issue Score (% 1st-place votes)
    1 (1) State of U.S. economy 176 (52%)
    2 (2) Ability of middle-income American families to spend money on sports 167 (17%)
    3 (3) How financial pressure that companies feel will affect sports investments 135 (9%)
    4 (6) Competition sports faces from tech and entertainment marketing 120 (4%)
    5 (7) Impact of continued tech development 116 (17%)

    Note: Results from a panel of 23 industry leaders. Participants ranked each of 10 issues with 10 points being assigned for a 1st-place vote, nine for a 2nd-place vote, down to one point for a 10th-place vote. Percentages have been rounded. Only the top five are listed


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