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Can A National Quasi-Religion (Pro Sports) Go Broke? (Also Could The Prem League?)

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http://www.oftwominds.com/blogaug14/pro-sports8-14.html

Attending costly games is on the margins of the household budget. When the credit card gets maxed out, attending is no longer an option.

Please understand I'm not suggesting professional sports isn't the greatest thing since sliced bread: I'm simply asking if attending pro sports games has become unaffordable to the average American.

Who cares as long as we can watch the games for free on television, right? That raises another issue: in the next recession, will advertisers still pay billions of dollars for broadcast TV ads on sports channels when ads on mobile devices distributed via Big Data analysis can directly target the (shrinking) populace who still has disposable income to spend?

Before we look at the money side of pro sports, let's note the glorious shared experience of "our team" winning and hated rivals losing. Sports is one of the few experiences that unites a remarkably diverse populace, and one of the few spheres of life that isn't politicized to ruination.

We all get to live vicariously through sports, and the stranger cheering beside us is suddenly a "friendly" in a largely hostile world.

With apologies to Dallas Cowboys fans: Joe Montana to Dwight Clark-- The Catch in January 1982: (Cowboys fans have many memorable moments to savor, including a number in this game)

(2:24)

The problem is that attending a game is prohibitively expensive. A seat in the nosebleed section might only be $15, but there's parking (or train fare), and the $10 beer and the $10 hotdog. That's $40 - $50 for one fan or $80 for two people.

Given that the average wage is $44,000, $80 for "cheap seats at the game" is not inconsequential. Given that many clubs are now pricing tickets by demand, it's easy for two people to spend $200 to attend a game.

How many people can afford to attend games on a regular basis without maxing out a credit card or drawing on a home equity line of credit (assuming there's home equity to tap)?

Cities desperate to retain pro franchises are on the hook for hundreds of millions of dollars spent building $1+ billion stadiums. Many claim that they'll recoup the money from hotels and shopping malls built adjacent to the stadium, but this gargantuan cash flow has yet to actually materialize.

The winner take all dynamic of our pop culture has driven salaries and team overhead costs into the stratosphere. This pushes costs so high that teams literally can't afford a losing season. Alas, not every team can win the conference, much less the championship.

The assumption that TV ad revenues will continue to support the enormous costs of the system is rarely questioned. The ads have to work to make sense, and in an economy in which the average wage earner is making less money every year (measured by purchasing power rather than nominal dollars), and more and more of the dwindling income is devoted to healthcare, taxes, debt service and essentials, there are two questions here:

1. What good is an ad if the viewers have no disposable money to spend?

2. Rather than pay to broadcast an ad to every viewer, few of whom are in the market for whatever item you're selling, why not target the core audience directly with mobile ads?

UK football faces a similar problem, the Prem League is way more expensive than American football if the above costs are accurate.

Even watching the lower leagues aren't cheap. If we went to the local club even sitting in the cheap seats would cost probably around £90ish for 5 of us, if we bought a program had a pie and a drink we'd be spending £120+. Naturally it's an expense we can't afford.

Still I'm sure many can.

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I found baseball to be a relatively cheap sporting experience, much more so than football. circa $10 for a cheap ticket on the night, and the beer was about $6/ "pint". This was almost a decade ago though.

More recently I paid (I kid you not) £20 to watch Livingston vs Partick Thistle. At times it looked like they were playing baseball too.

Edit I guess we all know what happens when football clubs hit the skids- we uncover the taxpayer-backed loans made by RBS in the boom years which were probably nothing more than an instrument for fanatic employees to get a regular box seat at big matches, and the taxpayer is left with the prawn sandwich crusts.

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The biggest cost (like many businesses) is labour.

Player wages are essentially leveraged to club income, let's say c 50% or less in well run, profitable clubs.

So falls in revenue caused by structural changes in revenue streams will be reflected in player wages over time. Exactly the opposite of the way is has developed over the last 20 years.

With the EPL revenues have been driven largely via media and commercial channels rather than stadium receipts, fans going to games has been a shrinking % of overall revenues.

So, if revenues dropped all that would happen for well run clubs would be that player wages would fall as contracts are renewed. Since it would be structural then it would affect all major clubs across, say, Europe.

There will no doubt always be poorly run clubs, like Leeds and Liverpool, who will of course get into financial difficulties. No question about that. But the model for well run EPL clubs is self-adjusting.

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I don't think you're correct. If a club is a targeting wages as a percentage of revenue they will have to let go of their 'big name' players who command higher salaries if results start to go against them. This in turn could result in a drop in revenue so they would have to either bring in cheaper players or let go of the next tier. I don't think it is 'self-adjusting' in the sense that it happens automatically in contracts. You can adjust down but your quality will suffer. Other clubs backed by billionaires will continue to pay stupid wages, out-competing you.

Also if attendances are less important why are more clubs looking to build bigger stadiums?

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I don't think you're correct. If a club is a targeting wages as a percentage of revenue they will have to let go of their 'big name' players who command higher salaries if results start to go against them. This in turn could result in a drop in revenue so they would have to either bring in cheaper players or let go of the next tier. I don't think it is 'self-adjusting' in the sense that it happens automatically in contracts. You can adjust down but your quality will suffer. Other clubs backed by billionaires will continue to pay stupid wages, out-competing you.

Also if attendances are less important why are more clubs looking to build bigger stadiums?

Because they have builders on the board? ;)

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It seems to me the elite money men have weedled their way into very aspect of our daily lives are are milking the sleeple for every penny,

Correct your Countship.

Up here football is a religion, and the followers are only too willing to keep filling up the money-trough.

I work with a lot of guys who are on continental shifts, which means they are at work four Saturdays out of every eight. Yet they cough up for Sunderland and Newcastle season-tickets even though they can't attend half of the games...!

And they've all provided their wives and bairns with all 3 of this seasons replica shirts at upwards of 40 quid a pop.

And they've all got maximum Sky Sports in every room in the house.

Aye, the elite money men must jizz in their pants over these poor deluded fools...

XYY

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I found baseball to be a relatively cheap sporting experience, much more so than football. circa $10 for a cheap ticket on the night, and the beer was about $6/ "pint". This was almost a decade ago though.

I went to a New York Mets game recently, certainly wasn't cheap. Ticket was $35 or so, but the food and drink was seriously expensive, something like $11 for a pint and we are talking an American pint which is smaller than a UK one, noticeably so.

The food was also very expensive around $10 for a hot dog, and don't be thinking this was some milk and honey, land of the free, good bless America super monster size affair, you get a bigger hot dog at Arsenal for less. Found that to be generally true in the states, I was rather disappointed by the food in the US, both in terms of the size, quality and level of service, there were a few highlights but not that impressed given the reputation.

Was far more impressed with what was on offer from the Twenty20 game I recently went to, cheap tickets, reasonably priced beer (relatively) and a great array of food for a decent price. The food seemed to be from outside vendors in vans and stalls invited in and it showed, no dried up burgers but and handful of horrible chips.

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