As regular readers know, we at SbB are quite certain that a bloodbath looms for many, many franchises out there. The combination of a history of outrageous salaries and a worsening economic climate means that all of a sudden, there probably aren’t 30 teams in any sport (with the possible exception of the NFL) who can all be both competitive and profitable. In instances like hockey, it may not even be close.
But though our earlier musings have focused primarily on the NBA and NHL, it’s definitely worth noting that the largest economic disparities in major sport occur in baseball, and while those small-market teams haven’t historically shown major signs of distress (unless they’re, say, the Expos), these are unprecedented times for major sports, and even in the hallowed ranks of the nation’s oldest professional sport, someone’s probably going down. And if the NEW YORK DAILY NEWS is right, two such someones are the Oakland A’s and Florida Marlins.
Suppose you’ve got a product that exists in a relatively finite market. Its value is directly related to the amount of money it can generate, whether by its own sale or by the sales it can generate while in your possession. Suppose that you, as an owner, enter into obligations based on that projected value or the projected sale. Then, this being America in 2009, the bottom completely drops out of that market, and you’re left in a financially untenable situation with an “asset” that suddenly isn’t worth nearly what you expected. So, are we talking about home owners, banks, and mortgages… or the professional sports landscape?
(Look behind Derrick Rose. You see a fellow Bull, three Charlotte Bobcats, and about six of their fans.)
Bill Simmons recently released an impressive column detailing the woeful state of affairs in the NBA from a balance sheet perspective (seriously, it’s a must-read). Obviously, nobody’s going to give him hard numbers; if even 20% of Simmons’ anecdotes and predictions are true, it would be an open call for investors and partners of franchises to flee in terror. But Simmons has enough to forecast a coming dark era for the league, and probably the rest of American sports as well. The, ahem, money quote* is after the jump. Read more…