Courtesy of sports columnist Evan Weiner
The fallout from the Bear Stearns meltdown and the drop in interest rates have not impacted sports in New York in terms of ticket sales -- yet. But that doesn't mean that Mets owner Fred Wilpon; the Steinbrenner, Mara, Tisch, and Dolan families; Devils owner Jeffrey Vanderbeek; Nets owner Bruce Ratner, and Jets owner Woody Johnson are not watching the marketplace. League commissioners, broadcast and cable television executives, and others deeply connected to the sports business also have their eyes peeled, and for good reason: The sports world has already lost a start-up football league because of the subprime mortgage crisis.
The All-American Football League, which was scheduled to kick off in April, has announced that it has canceled the 2008 schedule because of financial problems tied directly to the subprime problem. The league is hoping to play in 2009.
"Since inception, the League's finances have been indirectly tied to the $300 billion federally guaranteed student loan asset backed securities market," the AAFL announced on its Web site on March 13. "In August, the subprime mortgage crisis began spreading into other sectors such as municipal bonds and federally guaranteed student loans. The situation, which was considered to be temporary at the time, has continued to worsen."
The AAFL appealed on its Web site for a white knight to come in and salvage the season and even threw in a sweetener: The league would get a TV deal with an influx of cash. But no one came forward, and now AAFL organizers are looking for someone to underwrite the cost of starting a league some 12 months from now. The AAFL was supposed to be one of two football leagues that was going to play in 2008. The other, the United Football League, has released very little information about its business plan. It appears very likely that the UFL will not kick off in August and will try again in 2009.
The commissioner of the UFL, Michael Huyghue, and league officials hope to hold a news conference soon to announce ownership groups, stadium deals, and a television deal. It is believed that Dallas Mavericks owner Mark Cuban will get a team. Newsday has reported that Islanders owner Charles Wang is looking at bringing a UFL team to Long Island, but where that team would play is uncertain, as the only football stadium with any sort of capacity on the Island is at Hofstra University.
Wang may have other problems that need attention before he gets around to the UFL. His Lighthouse Project, which includes a renovation of the Nassau Coliseum, lost one of its major supporters when Governor Spitzer resigned. Although this is a deal that has to be finalized by Wang and the Nassau County Legislature, it certainly would have helped Wang to have the state governor solidly on board in his efforts to get the entire project approved.
The financial crisis has definitely had an affect on Ratner's Atlantic Yards project in Brooklyn. He still plans to build an arena for his New Jersey Nets franchise, but the scale of the project has been cut down because of financing -- or, more specifically, the lack of widely available money for an office tower and three residential buildings on the 22-acre parcel at the corner of Flatbush and Atlantic avenues.
Ratner's project started in 2004 and gained state approval in 2006. The arena was scheduled to open in 2009, but construction has been delayed by lawsuits. Ratner has signed an open-ended deal to keep the Nets in the Meadowlands until the Brooklyn arena is done.
A question facing Wilpon is whether or not the Mets' new stadium will be called Citifield when it opens in 2009: Just how sure is Wilpon that his $400 million, 20-year naming rights deal is secure? After the Bear Stearns meltdown, analysts have been looking at what financial institutions could fail, and Citibank is among the list of candidates that bear watching.
Are the Wilpons and Steinbrenner concerned, though? They should be, although they have been very quiet about the meltdown. These financial institutions have been buying big-ticket items for years at Yankee Stadium. That money has only trickled down to the Mets, considering the differentials in success between the two New York teams from 1996 and 2000. But both the Wilpons and Steinbrenners can catch a huge break right now: Both teams are closing down their parks this year, and both ballparks will be hosting events aside from baseball games in 2008. Despite the economic downturn, neither the Yankees nor the Mets should have any problems with premium luxury suites and club seats sales this year, as the tickets were sold before the Bear Stearns meltdown. If the economic trend continues downward and there are major job losses, the Wilpons and Steinbrenners could expect difficulties, but not until 2009.
The real effect on New York sports teams may not be evident until the opening of the NBA and NHL seasons in the fall. If the financial market loses jobs, and New York officials fully expect a significant loss of positions in that field, that could impact the Knicks' and Rangers' high-end seating, along with that of the Devils, Nets, and Islanders.
The local NFL teams may have it easier -- although both teams have to sell a lot of luxury suites to pay off the bills at the new Meadowlands Stadium that is currently being constructed. Still, it is doubtful that companies will pull back from Jets and Giants games, since there are just four preseason and 16 regular season games to buy.
The NFL pulled in more than $6 billion in revenue last year, but the 32 clubs are carrying a $9 billion debt, most of that tied to stadium construction. The lowering of interest rates should ease the team's burdens somewhat. But the debt still needs to be paid.
In terms of television, CBS did not have any problems getting advertisers to spend money on the NCAA Men's college basketball tournament. Advertisers like sports programming because games reach the 18-34-year-old male demographic, which is tough to target. But during past economic slowdowns, networks did have a difficult time selling advertising, and that could occur again in 2008. Broadcast TV's "crown jewel" events -- the Kentucky Derby, baseball's World Series, the NBA Finals, golf's majors, and tennis majors -- should continue to draw the attention of advertisers.
The American sports world is keeping an eye on Wall Street and the banking industry. While each league -- and each individual team -- might have a different immediate reaction to the subprime mortgage crisis, all teams may eventually have to face the full impact of the Bear Stearns meltdown.
