Did you see the Dow?

For those of you who read the Wall Street Journal, you will enjoy their article on sports and the economy found here. My favorite part of the article is the following quote:

"We're not just competing for people's entertainment dollars anymore," said Brett Yormark, chief executive of the National Basketball Association's New Jersey Nets. "We're going up against milk and orange juice."

Now maybe this soundbite is an exaggeration, but I think it has some merit considering how the Dow hit 8,000 last week and nearly wiped out 2 trillion dollars in stockholder value. Here is what I would add to the WSJ article:

1) I've noticed that Redskins fans have taken out loans against the value of their homes to pay for season tickets. Now, with housing prices in decline and foreclosure rates on the rise, fans might struggle not only to make payments on their homes, but also to pay off additional expenditures linked to the declining value of their homes. But then again foreclosure rates are pretty low around the DC area and both Vegas and LA, two of the hardest hit areas in terms of foreclosures, do not have football teams. So maybe this downturn won't hit the NFL or Redskins in the short-term, assuming the markets and values of homes stabilize. But then again, it's going to be harder to obtain credit in the future so how will fans finance these purchases? Maybe it will get easier to get season tickets in the future...

2) Corporations now own a majority of Redskins season tickets. And I think it's safe to assume that they also own the majority of season tickets in other major cities. So with the credit crisis hitting Wall Street and soon to hit Main Street, how are business going to justify season tickets when their firms are laying people off or cutting back on marketing costs? I know the cost of tickets isn't a lot of money in the grand scheme of things, but it still seems like a bad thing to have around if you're laying off workers, at least symbolically. But then again, is the incremental amount of happiness clients get from attending sports events worth the investment for companies trying to win deals or contracts?

3) Entertainment usually thrives during economic downturns. Why? People need a distraction to make them feel good while their jobs or money are going down the toilet. It's same reason why Hollywood thrived during the Great Depression.

4) I've thought this for a long time, but you can't deny how expensive it is to attend professional sporting events. Frankly I don't understand how regular families of four, probably making close to the average household income of 40-50k per year, can afford to pay Dan Snyder $400 for tickets, $100 for food, and $50 for parking. And honestly, considering how badly Snyder has managed our team, who in their right mind would pay that much money to see the stinking Redskins?

5) The state of California's economy will almost certainly preclude the NFL from moving there in the next few years. That's not say it won't happen, but I think that the recent spate of foreclosures and rising unemployment will probably make the investment difficult to justify for a potential owner. For example, how will they pay for the new stadium when no one is lending on Wall Street? Or, how will they sell tickets when the price of everyone's home is underwater?

6) I'm worried about the NHL, despite their recent comments suggesting that the league is not in trouble due to the economic crisis. Aside from individual franchise ticket and advertising sales, the league does not have a major TV contract which bolsters the weaker teams in the league. And many leagues, like the NBA and NFL, rely on these types of contracts to keep less profitable teams like the Bills in business. So will the NHL be able to keep it's weaker teams afloat and continue paying lucrative contracts to their budding stars? I hope so. I plan on enjoying the Caps this year...