What the Wall St. Crisis Means for Sports

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

While lawmakers refine the Wall Street bailout plan, the American and global sports industries are watching closely. The fallout of Treasury Secretary Paulson’s $700 billion bailout plan could determine whether or not baseball teams have the financial wherewithal to be able to pay huge money this winter to free agents such as CC Sabathia and others.

One of the more interesting aspects of the federal government’s $85 billion loan to save insurance giant AIG is that American taxpayers are now underwriting AIG’s $100 million sponsorship of the English Premier League’s Manchester United soccer team. In April, AIG signed the four-year agreement, which dictates that the AIG logo be printed on ManU’s uniform.

It is unknown what will happen with the Giants and Jets’ new Meadowlands Stadium and how the financing of the place may change. Even before the crisis, a collective financial groan was already made by opponents of the football teams, who intend to charge personal seat licenses for games in 2010 and beyond at the new stadium. The Giants’ John Mara did a press blitz suggesting that the team would help fans if they needed financial assistance to buy the licenses and subsequently pay for seats.

Can the Giants, Jets, and Cowboys count on the projected revenues that seemed all but certain just three months ago? It is a question that really needs to be answered, but can’t be until the government comes to a final bailout agreement.

The NFL has been unable to get public funding for new stadiums in Los Angeles and San Diego, and Santa Clara officials have put off the question of funding a San Francisco stadium until after the 2008 season is done. Then there is New Orleans’s lease with Louisiana that is set to expire after the 2010 season: The state is paying nearly $70 million to Saints’ owner Tom Benson between now and the end of the 2010 season to subsidize the franchise’s bottom line as part of a multimillion dollar, long-term deal signed in 2001. Benson has been living off the subsidies for years, even though Hurricane Katrina wrecked New Orleans in 2005 and both Hurricanes Gustav and Ike wreaked havoc in the state this year. Can Louisiana find new monies to keep Benson happy?

In baseball, the Steinbrenner and Wilpon families need to see the language of the final bailout agreement. Both the Yankees’ and the Mets’ new stadiums are being funded by very high ticket prices for luxury boxes, club seats, and nonpremium seating. With Wall Street monies drying up, the two teams may have overestimated the marketplace. New York could lose as many as 64,000 financial sector jobs by April 2010, and that will greatly impact the city’s sports economics if true.

Getting public money for what is a luxury item — a stadium — may be a problem in the short term. The Tampa Bay Rays’ ownership wanted St. Petersburg’s residents to vote on a stadium financial package in a November referendum, but shelved those plans in June. On September 12, Florida Circuit Court Judge Jeri Beth Cohen ruled that a Florida Marlins ballpark would serve the public good and gave a preliminary green light to a facility that would be built at the old Orange Bowl site. But money has to come from somewhere, and that may be a problem from the Marlins ownership, the city of Miami, and Miami-Dade County.

Major league sports also have to worry about marketing partners who might seek smaller partnerships or pull partnership money altogether. Advertisers may cut back on press and sponsorships. Baseball franchises may be the first to feel the impact of the market meltdown this fall, when big-ticket items are up for renewal.

Whatever Paulson, the Congress, and President Bush ultimately agree to is going to affect sports, but it may take months before the effects are fully known.


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