It will not surprise many people that the dismal economic forecast is causing many businesses and individuals to make cutbacks. Middle class Americans are struggling to make ends meet, and the resulting decrease in spending passes their hardship on to retailers, corporations, and other former recipients of discretionary spending. What may be surprising, however, is how widely the ramifications of this pattern may spread. Even professional athletes, who have long been at or near the top of the economic hierarchy, are beginning to feel the pinch.

While the plight of a millionaire may not engender sympathy from those folks packing the waiting rooms of foreclosure attorneys in Suffolk County, it is still worthwhile to examine the emerging trouble of these athletes. Late last week General Motors announced that they were no longer going to be sponsoring Tiger Woods, and while this is not a devastating blow to someone pulling in over 100 million dollars a year in endorsements, it does indicate the state of despair at General Motors. It also likely presages a major modification of professional sports.

Sports agents are having an increasingly difficult time finding endorsement opportunities for their athletes, and likewise team owners are becoming unable to fill ad space at their arenas and stadiums. As consumers struggle, they not only stop purchasing licensed team gear and apparel at high rates, but they also stop pumping as much capital into the companies that advertise with their favorite teams. As the revenue stream dries up, cutbacks must be made at every level along the line.

Team owners who for years counted on a steady influx of advertising dollars may now see their profit margin begin to shrink. As this lack of profitability spreads, we will be far less likely to see players make 10 million dollars a year to sit on the bench. Additionally, as the promise of advertising dollars that caused major battles between networks over broadcast rights for certain sports disappears, it is almost inevitable that the expensive NFL or NBA television contracts will become far less attractive. This will in turn lower the level of exposure that teams and athletes have, which will further diminish their economic viability. Companies are not going to pump advertising dollars into a stadium that will never be on a national broadcast or cable channel, nor into a player who is virtually unknown outside of his local area. The result of this will hopefully be an outreach effort by teams to increase local attendance and enthusiasm. The practices of stations blacking out broadcasts of local teams and owners charging five hundred dollars for football tickets may become a thing of the past. Outrageous salaries will also likely become a historical footnote, which in turn will likely make athletes more accessible to their fans. The fundamental changes that appear to be coming to middle class American workers are going to drastically reshape the economic landscape for years to come. Things that we take for granted may disappear, and things we never thought possible may become normal parts of life. As more people become unemployed, and as less money is available for everyone, even the richest athletes will face drastic changes in their respective worlds. As all unsustainable patterns do, the professional sports financial bubble seems to have burst. –

This entry was posted on Wednesday, February 18th, 2009 at 7:14 am and is filed under Financial Market, General Information, Long Island Foreclosure Firm. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.