Economy Puts Sports on Defensive, Sort Of

No matter the field of play, teams are cutting sponsorships and freezing ticket prices — unless, like Citi, they're shell out $400m for a Mets stad...
Stephen TaubDecember 11, 2008

C.C. Sebathia’s seven-year, $161-million deal with baseball’s New York Yankees notwithstanding, the global recession has the sports world down in the count, as well.

While some companies cancel their corporate sponsorships, some football and baseball teams are freezing ticket prices for the duration. And, in fact, one sport came dangerously close to cancelling its next season.

Earlier this week, General Motors Corp. chose not to review its sponsorship deal with the Pittsburgh Pirates after one year. “It was a very significant deal for us,” team President Frank Coonelly told the Associated Press, which stressed that GM’s Chevrolet division had pledged to honor its agreement with Major League Baseball that runs through 2010.

4 Powerful Communication Strategies for Your Next Board Meeting

4 Powerful Communication Strategies for Your Next Board Meeting

This whitepaper outlines four powerful strategies to amplify board meeting conversations during a time of economic volatility. 

GM spokesman Pete Ternes told the AP that the company “is looking at” Major League Baseball sponsorship contracts that expire at the end of the year, as part of an effort to cut the company’s promotional and advertising budget 20 percent. “We’re reviewing all our sponsorship as contracts come up, which include Major League Baseball,” he said. “We have national agreements with Major League Baseball, and most of these (we’re reviewing) are at the team level.”

Last month, GM’s Buick terminated its nine-year relationship with golf superstar Tiger Woods. The Detroit News reported that Buick signed Woods in 1999 to a five-year deal and agreed to a new five-year deal in 2004 reportedly worth more than $40 million. In addition, Buick earlier had said that it would stop providing courtesy cars at a number of PGA tournaments, according to the paper, which also pointed out that GM previously had announced that it would not advertise during Super Bowl XLIII, and that Cadillac would not advertise during the 2009 Masters.

In addition, Chrysler withdrew as a major sponsor of college football’s Motor City Bowl, while Ford Motor and Chrysler’s Dodge division have backed out of supporting the NASCAR truck series.

Elsewhere, Frontier Airlines its dropping sponsorship deals with a number of Colorado teams and arenas, including Kroenke Arena Co.’s Pepsi Center, home of the NHL’s Colorado Avalanche, the NBA’s Denver Nuggets, the Colorado Crush of the Arena Football League and the Colorado Mammoth pro lacrosse team, according to the AP, citing bankruptcy court documents. Mammoth and Crush players travel on Frontier.

The airline has signs in the Denver arena and ads on the Zamboni ice-surface machies at Avalanche games. “We are going to be left looking for another option in airlines,” Luke Stahmer, Crush vice president of operations, told the AP.

Meanwhile, DHL, which recently exited the U.S. market, is trying to terminate its sponsorship deal with the Atlanta Braves and its national deal with Major League Baseball.

Still in the sponsorship game to the hilt is insurance giant AIG, which has received more than $150 billion from the government. It is still paying the British soccer team Manchester United $125 million. And closer to home, another troubled sponsor that isn’t cancelling a hefty corporate sponsorship is Citigroup. Its name will scream from the New York Mets’ new Citi Field, scheduled to open in 2009. A deal calls for the bank, which was recently bailed out by the federal government, to shell out $400 million over 20 years.

Months before the signing of lefthanded pitching ace Sabathia, the Yankees reported having trouble moving all its 51 luxury boxes, priced at $600,000, at its new stadium. “There’s no getting away from the fact that the world is different than it was, so traffic slows,” chief operating officer Lonn Trost told the AP. “We can see that the economy is affecting the traffic that is coming around. Listen, nobody can avoid it…. So we’re trying to work with our fan base and understand what their needs are.”

The economy has certainly impacted sports employment. On Tuesday, the National Football League said it is cutting more than 10 percent of its headquarters staff. In September, the National Basketball Association eliminated 80 jobs. And Major League Baseball Advanced Media, which runs the sport’s Internet division, laid off about 4.5 percent of its employees, according to the AP.

Meanwhile, a number of NASCAR racing teams have recently begun laying off employees.

The situation has become so dicey that the Arena Football League reportedly was flirting with cancelling or delaying the start of its 2009 season. However, on Wednesday it fired off a brief press release stating that “despite rumors and reports to the contrary,” all its teams are continuing to work towards ArenaBowl XXIII. “As it has previously stated, the AFL continues to work on long-term structural improvement options,” it added.

That was followed, however, by this: “Some of the options may impact the 2009 season. There is currently no timetable for an announcement of any kind. We remain grateful to our fans for their enthusiasm and patience.”

Among the sports teams announcing the freezing of most ticket prices are baseball’s Cincinnati Reds, Boston Red Sox, Houston Astros, and Pittsburgh Pirates. And several that are lowing some prices include the Oakland Athletics, San Diego Padres, and Washington Nationals.

Football teams already announcing ticket-price freezes for 2009 include the San Diego Chargers, San Francisco 49ers, and Jacksonville Jaguars.