U.S. sports leagues prepping for worse 2009

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By Ben Klayman

NEW YORK (Reuters) - Next year will reveal whether recession-weary consumers and companies open their wallets to support their favorite athletes and teams, but many sports are already planning worst-case scenarios.

With fans eating fewer hot dogs or cutting out days at the ballpark, and companies reducing advertising, sponsorships and expensive tickets - all major revenue sources for sports, various teams and leagues could suffer, top sports executives said this week at the Reuters Media Summit in New York.

"It's unlikely that we won't suffer (in 2009)," said Tim Finchem, commissioner of PGA Tour, the main U.S. golf tour. "What we're seeing now is a pullback on spending by corporations ... and those things come home to roost in ways that can negatively impact us."

Signs of possible weakness are already apparent as such sports as the National Football League, Major League Baseball, golf and NASCAR each have felt different kinds of pain -- from sponsors reducing spending to lower attendance to job cuts.

"There used to be a theory ... that we seemed almost to be recession proof," MLB Commissioner Bud Selig said. "This is different clearly."

Baseball has responded by freezing employment and league budgets, while many teams did not raise 2009 ticket prices.

NO SACRED COWS

Sports leaders have every reason to be wary, said Nick Brien, chief executive of Interpublic's Mediabrands, which controls agencies that handle billions of dollars in ad spending for such clients as Johnson & Johnson and Home Depot Inc.

"The mentality has been that these have been a separate budget ... don't touch it. All that has been changed," he said. "Those sacred cows are now being challenged very seriously."

General Motors Corp, which has warned it is running short of cash and is seeking a government bailout along with Ford Motor Co and Chrysler, already has slashed spending in motorsports, golf and sports-related advertising.

In downplaying expectations for 2009, Selig declined to make predictions for baseball's 2009 revenue and attendance. This year, baseball had record revenue of $6.5 billion, while attendance slipped slightly from a record in 2007.

Selig said no sponsors have asked at the league level to rework their contracts. He will have a better idea early next year whether that revenue will be squeezed.

The PGA Tour's Finchem said the sport, highly dependent on the auto and financial sectors, has held talks with companies in such sectors as energy, environmental and retail to line up new sponsors if current corporate backers pull out.

Even the most popular U.S. sports league, the NFL, has felt the slowdown's effects with a few empty seats in its stadiums, said Eric Grubman, the league's top business executive. So far, ticket sales are running about 1 percent behind last year's record attendance of 22.3 million.

"The no-shows are up a little bit," said Grubman, adding the slowdown's real impact may not be felt until next season.

The weak economy also has raised costs for such things as stadium financing, and has also hurt advertising, sponsorship and consumer spending, he said. In response, the NFL has cut a "substantial" amount of travel and entertainment, and promotional spending.

"Our revenue reduction is quite small, but it looms large because the margins at the National Football League in total are not enormous," he said. The NFL's revenue last season topped $7 billion.

However, Grubman said the sport was insulated in the short to medium term by its TV deals, which generate about $3.7 billion a year. The sport's popularity also offers protection.

NASCAR was hit earlier in the year by high gas prices as its fans drive long distances to attend races. However, it is still suffering despite lower prices at the pump because it is heavily tied to sponsorships, which companies are cutting.

NASCAR CEO Brian France said sponsorship revenue will grow more slowly in 2009 than 2008, and possibly decline, as the effects of the slowdown, especially in the critical auto sector, are felt.

"Next year, we will not obviously make that kind of a gain," he said. "The question is, are we going to back up?"

(Reporting by Ben Klayman; Editing by Derek Caney)

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