Friday, January 30, 2009

How Will the Economic Crisis Affect MLS?

I wonder often about how the MLS will weather the economic crisis. What is the political euphemism- recession or downturn?

Martek tells me sports do not suffer during difficult times, in fact, they do better. The belief is that in seeking relief from hard realities, people turn to escapism by drinking more and following their favorite sports teams.

While that may be so, this does not mean fans are spending money. The auto industry and big alcohol are vastly reducing their marketing ventures in cost trimming efforts. Typically, auto advertising comprises the lion’s share of all TV commercials. With Detroit automakers fighting to keep their corporations alive, these numbers have dropped significantly and expected to be even bleaker in 2009.

Micheal Brush gives similar news about the porn and alcohol industries:

“Market lore says people keep spending on sex, booze, butts and slots in hard times, no matter what. Sin is supposedly recession-proof.

But the widespread weakness among so-called sin stocks suggests the downturn has converted a lot of sinners into saints. “

What this means in relation to MLS Team sponsorships and advertising remains to be seen.

Can you imagine what would happen to the EPL if Sky’s advertisers were to recede, leaving enormous holes in its advertising lineup?

While not trying to be a doomsayer, I suggest teams and the MLS should batten down for a potential storm.

What do you think? I am interested in hearing from much more informed sources (mine are speculative).


Martek said...

I continue to believe that the entertainment industry is relatively recession-proof. Though perhaps I should say that the entertainment industry is uniquely positioned to be recession proof. They can fail in hard times like any business of course. And the continuing credit crunch is going to be hard on LOTS of otherwise-recession proof businesses.

That being said, MLS, with relatively low ticket prices (compared to other major US sports leagues) should be fine when it comes to attendance. And with lower rights fees, I can see the league being more attractive to television networks, especially the year before a World Cup.

These are just a few quick thoughts off the top of my head. Let me get my afternoon caffeine buzz going to think on this some more. Be back in a bit.

playtherapy said...

Using the EPL model, the majority of League financing comes from TV revenue. One thing I forgot to write is ESPN's November decision to eliminate their regular Thursday night MLS broadcast. Poor ratings were cited.

If spending on advertising is reaching new depths where "bottom feeders" (the name for those who advertise only when the adevertising rates due to poor sales are lower than the limbo) are becoming the majority- I believe this will affect sports who do not enjoy high ratings or enormous fan bases. I mean, if a network needs to reduce costs, who gets the plug pulled?