Chat with Gare Joyce

Joyce looks at the current financial crisis and its relation to the sports world by looking at various issues including the status of luxury suites, the rollback of salary caps, the value of franchises and athletes' personal investments.
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Gare Joyce (1:02 PM)
Hello! I'm sure somewhere Professor Wright, my Ecomonics 101 instructor, is laughing. I hope I'm up to the task.
Robert (Orlando)
Will we see any teams fold because of this?
Gare Joyce (1:05 PM)
The easy answer is that it will be worse for some teams in smaller markets and fragmented markets. Certainly if it's a situation where you have 2-3 teams in your market, with money tight for consumers, fans will probably narrow it down and attend less games. In the large markets, we will see a falloff in luxury suites. So what I'm saying is the misery will be spread around. The smaller markets are probably going to be the most exposed.
Gare Joyce (1:06 PM)
Teams that have real ownership of their market .. like a Portland .. where they are the only show in town, should be fine. Teams like the Giants, established franchises, are going to weather the storm one way or another.
Darek (Chicago,IL)
Hello Gare. Lets face it, this country is in a recession, maybe even a depression. Looking at the 2 new baseball stadiums opening in New York next year, how do they expect "Joe sixpack", in Palins words, to afford the crazy prices of game tickets ? for the money, stay at home, watch the game on t.v., and use what you saved to pay your utility bills. I used to go out a lot, but now it's netflix for my wife and I.
Gare Joyce (1:08 PM)
Well, I think we are going to see a freeze on ticket pricing. I think that will be true across the board. If the recession deepens or is a real downward spiral, on the entry level, the bleacher seats and such, might even be discounted. To that extent, that will bring revenues down somewhat but the real tightening will come in premium seating. The games might end up being more accessible for Joe Sixpack and Hockey Mom and less accessible to those who are used to sitting in the premium seats.
Aaron, Porcia Italy
Do you think the current economic state will lower baseball salaries?
Gare Joyce (1:10 PM)
In the short run, no. In the longer run, possibly. I think the NHL will be the first to see a rollback in salaries just because of league revenues coming down and the cap on payroll being tied to league revenue. They will feel a squeeze. That will happen next year. I suspect we won't see a fall in NBA revenus this year but possibly next year. It's all a domino effect. NFL has a solid revenue base. Baseball will probably flatline for awhile but the squeeze will still be felt in the smaller markets.
Jason
What would you say should be the single biggest worry for sports fans?
Gare Joyce (1:13 PM)
I would say sports fans should be worried about every other possible way an ecomoic downturn might hurt them. If fans are having trouble making their mortgage payments or have to shorten their holidays or dip into 401Ks, sports seems awfully small beside that. As for your teams, I would think the major pro franchises have enjoyed explosive growth in their market value. If they stopped growing and stay where they are or even roll back a little, it's hardly the end of the world. A lot of other things should probably be the focus of sports fans or any citizen's concern right now.
Cody (Dallas)
Of the three major sports leagues in the U.S., which do you feel will struggle the most? I tend to think MLB since they have had trouble filling seats even before the financial crisis started (even in last season's playoffs).
Gare Joyce (1:15 PM)
I would say the NFL is the best insulated against it. MLB and the NBA are neck and neck I think behind that. The NBA might feel a tightening first. Given some of the layoffs they have had recently, maybe that is hard evidence. I also think baseball is positioned in the short run pretty favorably given their price points on tickets. The price of an NBA ticket makes it easier for fans to say no or walk away.
John (Tampa)
What will happened when/if most mid-upper tier tickets, or even whole sections are owned by corporations?
Gare Joyce (1:19 PM)
For this coming season, those tickets are paid for. The upcoming season in NHL and NBA, those are sold. Same with NFL. Nothing changes this year. Where we will see some fall-off is renewals for MLB this offseason. This will give us a pretty hint at what the effects of the downturn are having on sports. I suspect baseball will probably freeze prices for premium tickets for luxury loges, etc. MLB realizes there is no way they can absolutely count on or take for granted those premium tickets like they have in the past. Special packages, aggressive marketing, they will try to move those tickets in some way but we can only guess on what the response will be.
Tony, Grand Blanc, Michigan
With the nba, do you think this opens the door for stars like Lebron and Kobe to leave for Europe leagues?
Gare Joyce (1:23 PM)
Honestly, I don't see that. I could see it perhaps affecting mid-range players. Your semi-superstars. But I would think that LeBron and Kobe, the monies they make on NBA courts is at some point, after how many tens of millions, immaterial to them. The money they make away from the court on endorsements outstrips it. If a Spanish League offered a multiple of his salary, I'm sure his profile would take a big hit, even if it was a much larger salary number. He becomes LeBron across the Pond and we can't see him on a regular basis. That would make him less popular with corporations. He has a draw to want to stay here. But for players below his profile, there very well could be money in play that would entice them. Already I think Europe is a real alternative. In hockey, there are some signs the Russian league with oil billionaire money is in a position to compete for players. How seriously? It's too early to say. There were rumos Malkin would be offered more than twice his salary. I get the idea that Russia will look like a more legitimate competitor for talent with the NHL taking a significant hit.
Stephen (Baton Rouge)
With the increase in Gas prices and the current economic situation, is there any chance of NASCAR shortening races?
Gare Joyce (1:26 PM)
I expect to see revenues fall off rather dramatically in NASCAR. Stephen is on point here talking about gas prices making it almost prohibitive for both drivers and fans. I think we will see attendance flatten if not come down a bit. In terms of the actual races, the racers don't pay for their own gas. But the teams traveling from event to event and the fans driving to the venues is a big concern. I see a downturn in sponsorships, just like we've already seen a downturn in sponsors in the English Premier league. Everything is year to year with sponsorships and as such, NASCAR is more exposed to the whims of the market than the other leagues which have longer term deals.
Jon (Phoenix)
In my opinion, sports are exactly what we need to take our mind off of the current economic crisis. Sports and alocohol that is.
Gare Joyce (1:28 PM)
Yeah, it's a point that the sports economists made. The value of sports franchises and the like in the hard times hasn't plummeted the way some other industries did. In tough times people want to escape and that is what sports in the 30s were about. Sports after 9-11. It gave us reasons to believe in the tough times.
Gare Joyce (1:28 PM)
We can all use heroes.
Jim, Onawa, Iowa
Will there be any effect on the minor leagues?
Gare Joyce (1:30 PM)
Again, I think price point helps minor leagues. As is the case with major sports. The teams will likely lock in ticket prices on the cheapest seats available. You probably wont see any major or minor franchise aggressively running up the price of the bleacher seat. Just not going to happen. Fans would balk at that. It's easy to justify a trip to the minor league park when you feel like you aren't being gouged. And premium seating is not as big an issue with minor leagues. It's a cheap night out so they are pretty well positioned.
Erik (Omaha, Nebraska)
What about college sports? Will the overall economy, especially with regard to gas prices, eventually lead to more regional games and less travel, etc., for sports like basketball and baseball?
Gare Joyce (1:33 PM)
It will certainly be more of an issue for the smaller schools and programs. They will be pinched by the expense of traveling. Their smaller fan base might be more difficult to get out to the games. Again, I would say that the expenses of running a program will go up across the board but really I don't expect to see Ohio State deciding not to go to USC because of the price of a plane ticket.
Dan, CT
is it true Arod is gonna bail out wall St?
Gare Joyce (1:36 PM)
Maybe A-Rod and Beckham? If A-Rod can bail out Wall St. and Beckham can bail out all the British banks, that would be good. A-Rod is probably more of a symptom of the culture that created the Wall St. mess than a savior. Thanks to everyone for asking questions. Sorry I couldn't get to all of them but I hope all of your jobs and investments are safer than mine! Take care!
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