Recession looms for NFL and Super Bowl
Since it entered the televised era in the 1950s, the National Football League has known only good times.
Wars, economic slumps, and oil embargoes barely registered on its balance sheets. The league seemed recession-proof.
This time, the league is feeling the squeeze. In the next two years, teams could see declining revenues and football players, especially those at the lower end of the scale, could see pay cuts.
Cheaper Super Bowl seats
The belt-tightening has already begun. The league announced last month it would trim 150 of its 1,100 staffers. This weekend's Super Bowl, the biggest US sports event where Americans will down acres of pizza and enough guacamole to fill Tampa's stadium with avocados 18 feet deep, has seen fewer parties, some TV ad cancellations, and -- gasp! -- the first price cut in Super Bowl tickets in history, according to the Associated Press. (Some $700 seats now cost $500.)
The outlook for next season looks worse. NFL Commissioner Roger Goodell says the league is looking at making it cheaper for people to attend the games. "We have to cut our costs," he said Friday
The deep recession “will mean that some teams don't sell out their stadiums,” says Andrew Zimbalist, professor of economics at Smith College and author of several books on sports economics. If teams don’t sell out their games, they can’t broadcast locally. Sponsorship dollars will diminish, he adds. “Salaries will go down.”
TV deals a cushion
The NFL’s television contracts – its main source of revenue – run through 2011 or later, partially shielding the league from the economic storm. Other streams of revenue, however, are drying up.
“All sports are in a little bit of trouble because they depended so heavily on corporate clients, and the NFL is probably one of the most exposed,” says Robert Boland, professor of sports management at New York University’s Tisch Center for Hospitality, Tourism and Sports Management.
The biggest collapse in revenue: the market for naming stadiums.
The Dallas Cowboys have not found a corporation willing to pony up the necessary cash to christen its new stadium, due to open in August. The New York Giants are in a similar quandary, after German financial-services giant Allianz pulled out after an uproar over the firm’s old ties to Nazi Germany. Reportedly, the deal was worth some $20 million to $30 million for a 20- to 30-year agreement.
Player salaries at risk
Although team payrolls may be expanded next year because of the NFL’s labor contract, analysts expect some pay cuts will hit players eventually if the economy doesn’t turn around.
Salary cuts? Layoffs? Maybe this pricking of the Super Bowl bubble will return America's focus to the game itself (click here for an analysis).
After all, the "Greatest Game Ever Played" occurred years before skyboxes, $3 million-pre-30-second ads, or even the Super Bowl itself. It was the 1958 NFL championship, where the Baltimore Colts defeated the New York Giants 23 to 17 on national TV in a sudden-death overtime.
A memorable day. And no one cared about the ads.