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And now, “The Recession Has Hit The NFL”

We posted yesterday’s comments about the NBA bailout a little too soon.  We saw in today’s New York Times that “The Recession has hit the NFL” too.  The Times writes,

 When N.F.L. free agency begins Friday, players may get a sense of what retail store managers have known for months: only the need-them-to-survive items will sell quickly at full price, and everything else could be marked down within days… 

 …there is concern that if the recession lingers, normally reliable revenue streams, like marketing deals and luxury box seats, could slow….

Giants General Manager Jerry Reese said general managers were concerned about the guaranteed money that will have to be paid — in the form of signing and roster bonuses — because that requires money in the bank, a potential problem for teams whose margins are squeezed by the rising costs of doing business. 

The article says that the same trends are being seen in baseball.  Teams are reluctant to sign multi-year contracts in this economic environment, opting instead for shorter contracts.  The “must have” franchise players are still (mostly) getting signed, but teams are compensating by cutting back on “mid-tier” free agents, hence the “everything else could be marked down” quote above.  

We wrote yesterday that we were perhaps in the midst of a depression in professional sports.  We would certainly reiterate that point here.  The “infrastructure” boom in tax-payer-subsidized sports stadium construction (and we do use the term “infrastructure” loosely…infrastructure generally implies something of true economic value) is finished, possibly for decades.  Cities that gave tax incentives to teams to build are unlikely to ever see a return on their “investments,” and taxpayers are starting to give such projects far more scrutiny.

 President Obama speaks of a “New Era of Responsibility,” which is absurd given the excesses of his recently proposed budget.  But while the President’s words clearly do not describe himself or Congress, they may prove to be true for much of the private sector and for large swathes of local government sector.  Severe recessions force fiscal austerity and a realigning of priorities.  

The frivolity of the sports and entertainment industries will never disappear, of course.  And to be fair, there is nothing wrong with a mild amount of frivolity; it can provide a pleasant distraction.  But the greatest excesses will likely be consigned to the history books.

When we were living in Dallas four years ago, we saw a TV special about the Dallas Mavericks’ new stadium.  As an example of the infantile excesses involved in that boondoggle (which was taxpayer subsidized), we were impressed to see that owner Mark Cuban installed Sony Playstation video game consoles (or was it a Game Cube?  Well, whatever…) with flat screen displays in every player’s locker.  

Why Mr. Cuban would want his multimillion-dollar assets wasting their time and his money playing video games designed for children is a mystery.  We’ll just have to chalk it up as one more example of the excess froth that is found at the peak of every bubble.  In the “New Era of Responsibility,” we expect to see quite a bit less of this.