Neither should be considered much of a bombshell. A six percent decline in ticket sales is a reasonable estimate, but it’s probably a high end guess if the economy doesn’t show any signs of recovery by August or September. Unemployment is going to be high well past that point, so the teams will have to rely on consumer confidence more than anything else.

The other key question regarding ticket sales is what the prices of those ~75 million tickets will be. MLB is saying that two-thirds of teams have either cut or frozen ticket prices; once some teams fall out of contention, we’ll probably start seeing even greater cuts. So regardless of how many total tickets are sold, we should see a bigger decline in gate receipts than in attendance — at least for the 28 teams that aren’t playing their home games in a brand new stadium in New York City.

On the media side, this has been the area I’ve been most bullish on both in the short- and long-terms. The media industry is struggling because the old formats are becoming harder and harder to monetize. But the great majority of people still watch sports games the same way they did thirty years ago: live, and with commercials. That makes it a tremendous ad platform, particularly relative to taped programming or written content. As it gets harder to reach a mass audience, marketers will love sports more and more.

Of course, for 2009, this will only matter for teams that own their own RSNs, as well as MLB Network. But it’s a good sign moving forward, especially for teams that have local TV contracts coming due in the next year or two.

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Towards the bottom of another excruciatingly negative article, there’s this cap-busting line:

The sport may still come close to matching last year’s record revenue.

Baseball officials cited higher-priced tickets in the New York Yankees and Mets’ new stadiums, as well as the additional sales generated by this spring’s World Baseball Classic and the newly launched MLB TV Network.

This is more or less the scenario I gave in my first BP column: the economy drives small-market teams’ revenue down, but the big teams move into new stadiums, driving league-wide revenue higher. The cap/floor stays the same (or even goes up a bit), even though many teams’ purchasing power has decreased.

Obviously, that’s a dangerous set of circumstances. But the current system will actually help small-market teams, since the Yankees and Mets will be paying more in revenue sharing. And although teams won’t actually see any hard cash from it yet, MLBN’s $200M or so will help boost the total industry number (I wouldn’t expect a significant contribution from the WBC, as the article suggests).

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This is the one area I’m most bearish on. Gillett disagrees:

“What we’re seeing world wide are smart sponsors increasing their advertising,” Gillett said at SportAccord, an international industry conference in Denver. “An economic downturn is the only time you can increase market share at a cheap price.”

Gillett says he has recently again increased advertising deals with Coca-Cola, Best Buy, McDonald’s, and Stanley Tools across his three properties. The eyeballs are certainly there for the taking: Gillett’s Liverpool FC club drew 2 billion viewers (sic… I’m assuming) in a recent match against Manchester United.

Note that those sponsors are all doing very well (especially McDonald’s, the ultimate recession play), and Gillett has some very valuable properties (Liverpool, Canadiens, and to a lesser extent Petty Motorsports). So he seems to have the right mindset, and if his teams are making it work, hats off.

But corporate sponsorships will probably be one of the big drags for many small- and mid-market teams. This is a brutal advertising climate, and even if sports marketing holds up better than the broader market, that could still mean a 10% aggregate decline. If other big market teams are seeing the same trends as Gillett, the smaller teams could end up taking a disproportionate amount of that hit.

Strange as it sounds, this might end up being a long-term positive if these small market teams are forced to innovate. For many teams, corporate sponsorships simply involve ad signage, TV commercials, and radio spots. This means there is always a finite amount of inventory, limiting the products a team can offer. If the team does well, sales go up; if the team loses, sales go down. No answers or buts. That’s not a good equation, especially in an environment like this.

The most obvious answer is to increase the amount of products available. Small market teams won’t have the capital or the scale to replicate what the Red Sox are doing with Fenway Sports Group, but they could easily expand their existing sponsorship deals beyond the walls of their stadiums and radio networks. Local marketers, more than anyone else, are looking for ways to cut costs. Every single small- or mid-market team should be asking their current clients how they can help them do so, as a way to expand their own relationships, and get the other side that much more invested.

On a side note, there’s been a lot of negativity regarding the sports industry lately. And on some level, it’s fair; sports will get hit by this economy just like any other industry. But sports are very recession-resistant, if not recession-proof. There are plenty of reasons for this, not the least of which is that most leagues and teams are now very diversified.

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A huge risk/reward play certainly, but considering 80%+ of the network’s revenues are more or less guaranteed, it could be worth it. If the network is only bringing in $300 million in 2012, as is currently projected, you would have to think that would be a pretty big disappointment.

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I don’t like discussing politics here, mainly because it usually just makes people angry, but also because Dayn Perry does a great job of covering sports-related politics stories at Spolitical. But this is too egregious to pass up (hat tip: Dayn):

Today, U.S. Rep. Bill Pascrell publicly released a letter he wrote to Treasury Secretary Tim Geithner, requesting that the Obama administration act to block Barclays bank from leasing naming rights for the arena—a move that, if realized, would be a major blow to the project …

Mr. Pascrell, a Democrat who represents an area full of New Jersey Nets fans just west of the Izod, wrote to Mr. Geithner that he should block the naming rights deal, which has not yet closed, because Barclays received monies from embattled insurance company AIG, which itself received tens of billions in federal bailout dollars.

If a fourth grade class was trying to come up with a way to keep the Nets in New Jersey, this is the logic they would use. After all, if the government can retroactively place a 90% tax on AIG bonuses, why can’t they stop any company that has made money off of AIG from doing business in the United States?

And this, in turn, is the problem with the AIG tax. AIG is now a government agency; if the government wants to renegotiate the company’s bonus contracts, they should. If they want to pay zero bonuses next year, they can do that too. But Geithner et al (essentially the new board of directors) knew these bonuses were being paid out, and chose to leave them in place, figuring that every worthwhile employee that the company still has would leave otherwise. That was a business decision, not a political one. That Congress is getting involved after the fact says more about the government’s ability (or lack thereof) to manage a company than anything else.

I think the White House realizes how dangerous a precedent this tax would be, and also what it would do to the government’s credibility as a business partner. That would be bad news for all of us, since the federal government is now an enormous player in our economy, and pretty much runs our financial system. I don’t expect it to pass the Senate (at least not in the form that passed in the House), nor do I expect Rep. Pascrell’s proposal to gain even nominal support. But it’s a bit scary that we even have to discuss these things.

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Touched on this issue on BP a few weeks back. From Forbes:

The next hurdle: offering live games in fans’ home markets. With lucrative local cable deals driving so much team revenue, MLB has restricted web viewing to out-of-market games, targeting the displaced fan looking to see his favorite team from another city. But Bowman figures fans are just about at the point of expecting content on the web and television alike. The plan is to make in-market games available only to area cable subscribers. For example, only the Yankee fan subscribing to the YES Network would be able to see a game from his laptop on MLB.com while commuting or traveling. He hopes to unveil the service in some cities before the 2009 season ends.

The biggest potential beneficiaries of MLB’s growing reliance on Web dollars: Baseball’s small market clubs. Unlike local cable television, which creates revenue disparities as each club makes its own deal, all online revenue is shared equally.

This leaves MLB and BAM in charge of negotiating with every cable provider that airs MLB games. That’s going to slow down the process, and will probably result in MLB leaving money on the table in the short- and long-term.

But for small market teams, this policy is tremendous. Imagine if all local television revenue was pooled together; this is what MLB is doing with local digital rights, which will inevitably be more lucrative than TV rights at some point in the future. John Henry and the Red Sox realize this, which is why they’ve been fighting for control of these rights for years. If other large-market teams understood what was going on here, they’d probably be doing the same.

The question is, will this setup even be tenable once local digital rights become a huge source of revenue? This might end up being the next major source of class warfare in baseball, and it may come down to who the next commissioner is. Bud is a great friend to small market teams, so it’s no surprise that this is the direction MLBAM is taking at the moment. But if the next boss has more friends in Boston and New York, don’t be surprised if this policy reversed.

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Probably the most fascinating commissioner in history. People love to hate Terrell Owens; people just hate Bud. If you don’t believe me, just check out the comments to that post.

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This one was just a matter of time. Hearst is keeping the online edition, along with a bare bones editorial staff:

Few expected a buyer would be found, and it became clear in recent weeks that Hearst was advancing plans to transform Seattle into a testing ground for switching the traditional big-city daily into a lean Web operation. The P-I, which employs roughly 145 people, will retain just 20 editors and other journalists and hire more than 20 advertising salespeople.

Don’t be surprised if there are more cuts in the next year. Bigger newspapers (including the New York Times) have actually seen their online advertising shrink in the past year, so hiring 20 extra salespeople seems a bit optimistic.

As far as how this will affect the P-I’s sports coverage, expect more on the Seahawks and Mariners (the only two major sports teams in town, now that the Sonics are gone), and more AP stories for everything else. The content should also be shorter, more opinionated, and run on a 24-hour cycle — in other words, more blog-like.

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I was on 104.7 WPGB in Pittsburgh Friday night with Rocco DeMaro, talking about the 2009 Pirates, the team’s long-term prospects, and the value of losing in the short term. For the first time in a very long time, I’m bullish on the Pirates long-term. Listen here:

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We already know a salary cap isn’t all it’s cracked up to be for small market teams. But it might be especially bad for the NHL next year.

Gary Bettman says that the 2010 cap/floor will be in the same range as this year’s. Let’s say the top-grossing NHL teams decided to make some big cuts in player payroll, as some have suggested they will have to. The players are guaranteed 55.6% of hockey-related revenue; if total salaries fall below that number, the cash presumably comes out of a central fund.

This usually isn’t a problem, because payrolls tend to hit the required number, or are at least very close. But what happens if the Red Wings, Rangers, etc start cutting back? The small market teams will end up having to pick up more of the slack, a pretty dangerous proposition considering how badly some of those teams (i.e. the perennially-almost-bankrupt Phoenix Coyotes) are handling this recession.

A cap is always a major concession for the PA, so there has never been a capped league without a relatively proximal floor, as well as a guaranteed share for the players. Unless the league’s teams have virtually equal revenue (as they did in the NFL for many years), it simply doesn’t work for the small market clubs.

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