REGIONAL REPORT : So Far, Sports Escaping Brunt of Economic Woes

While most of the nation squirms in the midst of job layoffs and wage freezes, sports executives continue to move ahead somewhat obtusely, ignoring what is and relying on what always has been--that sports are recession-proof.

By awarding outlandish salaries, scrambling for new franchises and raising ticket prices, this select group of entrepreneurs appears to be disregarding the standard economic indicators to rely on one of its own--the fans.

Consider:

--Angel season-ticket renewals are down only 4%, but a club executive blames increased ticket prices and the “horrible” team they had last season, not the recession.

--Dodger officials say their ticket sales are unaffected.

--Forum officials say the Kings and the Lakers haven’t suffered, although advance sales were down for other types of Forum events, such as the Moscow Circus and the Ice Capades.

--Despite rising costs, revenues at top-ranked Division I football schools still exceed expenses.

A recession? Apparently not for this industry.

“When times are bad, people want more entertainment, not less,” said Leonard Koppett, author of several books on the business and sociology of sport. “Maybe a couple will have a few less beers or bring their own sandwiches instead of buying a hot dog, but they will still go to the game.”

A less expensive sport to attend, such as baseball, can even benefit during a recession, Angel Vice President John Hays said.

“People start to use entertainment that is closer to home rather than trips to Mexico or Hawaii--entertaining in their back yard,” he said.

Sports was not exempt from the Great Depression of the 1930s, but it didn’t fare that poorly. Several NFL franchises collapsed, and attendance at major league baseball games declined from an annual average of 9.2 million in the pre-Depression decade to 8.1 million in the ‘30s. Still, overall attendance in professional sports declined slightly less than 13%, while other industries suffered greatly.

The corporate dollar spent on sports entertainment does tighten in a depressed economy. Take, for example, the 1982 Super Bowl in Pontiac, Mich. Faced with endless unemployment lines and a nationwide recession, Detroit’s automakers involved in promoting the game replaced the normal lavish entertainment with less costly functions.

Steve Greenberg, deputy commissioner of major league baseball, says that when people say sports are recession-proof, they are referring to attendance.

“This recession has affected the rate and amount of advertising,” Greenberg said. “On the local level in baseball, this is not a good time to try and sell billboards in stadiums, for example, or ads for the programs. If clubs are negotiating local radio and television rights fees, they are bound to be affected by the advertising rates, which have fallen dramatically, not just in baseball but in all forms of entertainment.”

Perhaps because of the “entertainment” nature of the industry, issues that directly affect sports seem to do so in an obscure way. Often, these issues seem to elicit a passive reaction from sports officials.

In the energy crisis of 1973, while Americans awaited the inevitable rationing of gasoline, and sat in long lines and could not purchase gas on Sundays, sports had its own set of serious problems.

Arnold Palmer’s private jet was grounded. Stan Smith had to take a ship home from England after losing in the first round of Wimbledon when he was bumped from an overbooked airliner. Kareem Abdul-Jabbar didn’t start a game for the Milwaukee Bucks because of leg cramps after a coach flight to the West Coast.

At its annual winter meeting, baseball responded to the energy crisis by appointing a national coordinator to work with clubs on conservation. Commissioner Bowie Kuhn also asked teams to schedule regular commercial flights instead of charters. But that was the extent of it.

“We are fortunate that we have some time before the season starts,” Kuhn said at the time. “It would be premature to reach any more definitive decisions at this point.”

Operating in an economy all their own, baseball executives have been touting for years that theirs is the cheapest ticket in town, as though that automatically makes it affordable.

Since 1981, Dodger and Angel ticket prices have nearly doubled. This season, however, the Dodgers kept their general admission and reserved ticket prices the same, at $5 and $7, respectively, raising only the box seats from $9 to $10--a move that affects mainly season ticket-holders.

The Angels raised their ticket prices this season an average of $1 in every category, with prices ranging from $4 for general admission to $11 for field and club level.

“The rise of ticket prices in baseball is not out of line with inflation,” Koppett said. “When you figure it costs $55 for a Broadway show and $30 to $35 for a football game, and people pay $250 for courtside seats at Laker games, baseball is an inexpensive way for a family to entertain (itself).

“In most major league sports, the season-ticket business is the base, and season ticket-holders are primarily affluent and are the least directly affected by hard times. Season tickets are a once-a-year decision. Once you make it, that’s it.”

Claire Rothman, general manager of the Forum, said that season-ticket sports events held there, such as Laker and King games, have not been hurt by the recession, but other events have.

“At events like the Ice Capades, advance sales were down, and when we were deeply in the throes of (war), it didn’t get a good walk-up (sales on the day of the event),” Rothman said. “With the Moscow Circus, its advance sales were lower than in the past. But with the better news of the war being over, we have started to see the walk-up and the fresh money--people buying for today and the next few days.

“The decision to spend is more conservative. Instead of mommy and daddy and the two kids, you see the two kids and one adult. We had a discounted morning show that cost $8 instead of $12.50 to $17.50. They flocked to it.”

Hays said the Angels noticed that season ticket-holders sent in their money for renewal closer to the deadline this year, holding onto it longer. “We have experienced a slight decline in season-ticket renewals, but you can’t blame that on the economy,” Hays said. “We had a horrible team last season and we increased our ticket prices. Normally, we have a season-ticket renewal of 99%, and this year it is 95%, so we aren’t off that much.

“I expect that because of the recession, daily tickets will be purchased close to the date of the game, rather than (much) ordering in advance, but I can’t measure that yet because we haven’t opened daily sales.”

Rothman warned that there is a huge benefit in advance sales as opposed to walk-up sales. “At the end of a run, you can say, ‘Gee, we wound up close to last year in people and dollars,’ but there is a big difference. You have the use of the money in advance sales and you can plan. You can’t plan in walk-up.”

The Dodgers, whose annual payroll rose from about $21 million to $35 million in the off-season, said they watched the Persian Gulf War closely.

“(The war) could have had a major impact on us, but the recession is not that big of a concern,” said Bob Graziano, Dodger vice president of finance. “Because of terrorism at public events, security and those (kinds of) issues concerned us a bit more. If anything had happened at the Super Bowl or at a public place, people would have been more resistant. We are still concerned, but not the same.”

Despite rising costs at top-ranked Division I football colleges--which rose at double the rate of inflation in the late 1980s--revenues are still ahead of expenses. College sports are mostly funded by college boosters, who are the least affected by a recession, according to Koppett.

The NCAA, whose operating budget comes mainly from television rights fees for the men’s basketball tournament, should be in good economic shape for a while because of its nearly $1-billion contract with CBS. The network, which paid the NCAA $60 million to televise the championship last season, will pay $140 million annually for the next seven years.

Before the Persian Gulf War, the news was filled by attempts to label the state of the economy--a downturn, a marked downturn, a depressed economy, a recession.

At the same time, the headlines on the sports pages were markedly different. The San Francisco Giants started the spending spree by signing pitcher Bud Black, who has a career record of 83-82, to a $10-million, four-year contract. The Dodgers followed by allocating $36.65 million for the contracts of three players. The Yankees contributed by signing a 54-75 pitcher to a three-year deal worth $5.95 million. Then they followed that by offering pitcher Mike Witt, whose record is 27-40 the last three years, a three-year contract worth $8 million, $2 million more than anyone had offered him.

When the war began, stories of the recession were overshadowed, but baseball’s spiraling salaries continued to make big sports news. The Dodgers, for example, ended up signing seven players to contracts each worth $2 million or more annually.

“This is not just a blue-collar recession, it’s been a white-collar recession also,” Greenberg said. “Workers from Manhattan and throughout New England have lost their jobs and, yes, reading about the high salaries is bizarre with that juxtaposed. But it is the market that is absurd.

“Owners have to sign players by March 10 or they become free agents, so the owners are not being insensitive by signing players to these salaries when a war is going on. But the salary market is like the junk bond craze of the late 1980s or the former wild real estate buying craze in California, where everyone thinks the market can only go up. Well, if you study economics, you know that sooner or later, it has to come down. . . .”

Baseball’s contract with CBS, $1.08 billion for four years, expires at the end of the 1993 season. Already, CBS has reported a first-year loss of $55 million, apparently due to the softening of the advertising market and a four-game World Series. The network expects to write off $115 million more over the remaining three years.

Broadcast rights fees historically have risen, but Greenberg said that may not be the case this time, making it “unreasonable” for clubs to negotiate player contracts and spend money in the future that they are not sure they will have.

For the recession to have a major effect on sports, according to Koppett, it would have to continue past the expiration of baseball’s contract with CBS.

“Right now, no club is so poor that they can’t afford what is going on, but it could be that way in a few years if they keep going at the same percentage of escalation as now,” Koppett said. “They are paying exorbitant salaries to routine players. Some do have difficulty, but that is poor management.

“The warning signs are on the horizon.”

THAT’S ENTERTAINMENT

Many say attendance at various sports and entertainment activities has been largely unaffected by a sluggish economy. A list of various 1991 ticket prices, ranging from lowest to highest. Season-ticket prices excluded. Dodgers: $5-$10 Angels: $4-$11 USC football*: $18-$27 UCLA football**: $8-$10 Raiders: $15-$33 Rams: $15-$30 Lakers: $8.50-$90 Clippers: $10-$25 Kings: $10-$65 Phantom of the Opera: $32.50-$50 * $18 all games except $25 (Penn State); $27 (UCLA) ** $8 all games except $10 (BYU) Times researcher Jim Cady contributed to this story.