Exploring the Economic Squeeze in the Sports Industry- Erika Klein

Back in 2008, like many other industries, the sports industry took a heavy hit as well. USA Today reported that the NBA was laying off 9% of its domestic workforce and its season ticket sales were down. Compared with the news coming from Wall Street, the wide world of sports was still living fairly large.  But the world’s worst financial crisis since the Great Depression was beginning, slowly but surely.  Through extravagance, incredible demand and all-world greed, sports had risen so high that it had to fall.  It was predicted that if sports was is in the process of an economic realignment, it would not hit us right away, it would happen over time.  

At the same time, Forbes was reporting that sponsorships were down, attendance was slipping and staffers were being sent to the unemployment line.  The NBA Commissioner said the league said he was concerned about the economy’s effect on the league, but he did not plan to scale back aggressive plans to grow the business in China and other overseas location.  At the top of the endangered sponsor list was General Motors, traditionally a huge sports marketer that spends about $500 million annually to reach fans. GM was more concerned with saving as much money as possible and mocing cars that with salvaging the image of their company.  In turn, the company made big cuts; scaling back its college sports presence from official sponsorships to in-game advertising only.

Also, The Wall Street Journal reported that some stadiums would be in jeopardy, opposed by taxpayers and public officials who do not think investments in sports facilities are justified in the climate.  The economic downturn came at a particularly bad time for teams trying to sell their most exclusive sponsorships, naming rights to new stadiums.  In the past, such rights frequently fetched nine-digit sums.  

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