Industry Outlook -- SERVICES
It's common knowledge that sports is big business and has been for years. More surprising, perhaps, is that, unlike most other industries, it seems impervious to the usual business pressures.
Despite hand-wringing by team owners over high salaries and other operating costs, 1997 was another year of intense fan interest and mostly higher revenues for the big four professional sports leagues. And 1998 looks as good, maybe better. Baseball is rebounding. Hockey is set for more expansion. Basketball is a few billion dollars richer after closing a stunning new TV deal. And football is close to an extremely lucrative TV contract. The only storm cloud: Labor unrest in the National Basketball Assn. could imperil the 1998-99 season.
For the most part, it seems owning a pro sports franchise is a license to print money. The National Football League, for example, is expected to strike a four-year deal before the Super Bowl worth $7 billion or more, a hefty hike from the $4.4 billion contract that expires at the end of this season. It's notable that the networks are willing to pay more for football despite slipping ratings and franchise shifts that have left major markets--Houston, Cleveland, and Los Angeles--without home teams. "In the final analysis, you want it because you don't want your competitors to have it," says former CBS Sports President Neal Pilson, now a TV consultant.
HARD BARGAIN. Television may provide critical leverage for the NBA if, as expected, the league chooses to reopen collective-bargaining talks with the players' union. The new four-year deal with NBC and Turner Sports pays the NBA $2.65 billion, twice the old agreement's value. A contract provision also guarantees the league its initial payment even if a lockout or strike cancels some or all games.
The pay negotiations promise to be arduous. NBA officials assert that 13 of the league's 29 teams lost money last year and cite rising player salaries as the chief culprit. But it may be their own fault--a salary cap intended to slow the growth of team payrolls has been largely ineffective. This year, because of a variety of loopholes, at least 20 teams will exceed the salary limit of $26.9 million.
Major league baseball, which has had more than its share of problems, is climbing back. Attendance last season was the second-highest ever. The commissioner's job, vacant for five years, should be filled by mid-February. And expansion franchises in Phoenix and St. Petersburg are poised for a quick start. St. Pete's team, the Tampa Bay Devil Rays, has already sold 2 million tickets for 1998. Seats for its opener were snapped up in a scant 17 minutes.
Hockey, the smallest of the pros, is also gaining muscle. The National Hockey League intends to add four more teams by 2000, including the Columbus (Ohio) Blue Jackets and the Nashville Predators. Hockey in Nashville? Rest assured: If they play it, fans will come.By Mark Hyman in BaltimoreReturn to top
-- Two months before the Super Bowl, NBC sells out all ad spots--at a record $1.3 million per spot
-- Major League Baseball attendance is at near-record levels as two new teams join the roster
-- NBA owners are expected to reopen collective bargaining, raising the possibility of a lockout or players' strike
-- Baseball owners continue to bid up players' salariesReturn to top