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MARKET ANALYSIS. Financial crisis could have profound effect on local teams, and it could've been worse

Neil Best

October 12, 2008

The engine of the local economy has seized at the worst time for New York teams as they complete an unprecedented building boom.

Right? Sort of. But it could've been even worse. What if the credit system had gone kaput two or three years ago? Might one or more of our sports palaces never have been built in the first place?

"Yes, absolutely, I think that could have happened," said Giants president John Mara, whose team has partnered with the Jets to build the most expensive stadium in American history.

Said Mets executive vice president for business operations Dave Howard: "I think that is highly probable."

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It is not yet clear what all this will mean for the Nets' planned arena in Brooklyn, whose opening now has been pushed into 2011.

The Lighthouse project, including renovation of Nassau Coliseum, remains in the planning stages and has not had to tackle financing yet; the hope is the worst will be over by the time it does.

Meanwhile, the area's four baseball and football teams have many things to worry about, even if credit is not among them.

Many concerns are common to any business, particularly one peddling non-necessities such as club seats and $9 Budweisers to people with shaky jobs and cratered 401(k)s.

Some are especially important in sports, such as naming rights and other sponsorships.

Amy Poehler recently described the financial crisis this way on "Saturday Night Live": "Basically, if your commercials air during golf tournaments, you're done."

True enough, but equally true of many companies that typically purchase naming rights.

The Mets locked in Citi before the current troubles in the banking industry. What about the Giants and Jets, though? They were talking to Allianz, the German financial services giant, before the alliance blew up amid controversy over the company's ties to the Nazis.

Now what? How many companies can afford $25 million or more a year to see their name in lights over the Meadowlands?

"Anybody with a major-ticket sponsorship in the marketplace is struggling to find a partner," said Rob Vogel, president of The Bonham Group, a Denver-based firm that specializes in sponsorships.

Vogel added that one edge for New York over other markets is its ability to attract companies based outside the U.S. But in this climate, even that might not be enough.

"There will be some pressure put on the price of the deal," he said. "Certainly leverage is on the buyer's side. It's incumbent on the sellers to be creative."

The Mets have announced sponsorship agreements with Anheuser-Busch and Delta and are close to four more. The Yankees reportedly will be sponsored by Bank of America in a non-naming rights deal.

Another key revenue-generator in the new stadiums is suites, a luxury that presumably now will be more difficult to justify. But Howard said the Mets already have sold out their 49 suites, which cost up to $500,000. He stressed that suites are a good value but conceded that starting to sell them early last year helped.

"Timing is an important factor in a lot of business dealings and associations," he said.

The Yankees declined to offer specifics on suite sales or other effects of the economic crisis. A spokeswoman, Alice McGillion, said, "We have not seen any effect but are keeping a close eye on it, as everybody in the industry is."