Athletic Economy: Running on Debt

Ah, sports – the home of the multi-million dollar paid athletes who live the lives we – most of us Generation-Yers in our quarterlife – all wished we could live. If only we had approached gym class with about as much enthusiasm as we do for happy hour, as opposed to spending every week coming up with excuses (I’m allergic to grass!).

Many sporting events and leagues, however, are actually quite affected by this recession. Athletes are now giving thought to how they are spending their recently acquired fortune, unlike before when athletes simply found the most efficient ways to go broke.

Yet, the problem doesn’t start at the athletes.

Let’s look at the organizations – companies like the NFL (National Football League for non-Americans) have had to scale back their staffing in order to survive despite the fact that it makes so much money off of advertising, TV rights and tickets.

The NFL is not the only one though; the NBA (National Basketball Association) has also fallen under the staff cutting group cutting 9% of its staff. Major League Baseball (MLB) and the National Hockey League (NHL) seem to be exempt from these measures. However, with both organizations not making any noticeable staff cuts, they do have teams which are heavily in debt. 

For us football (American soccer) fans, FIFA has, for the most part, escaped the recession. Many pundits, however, say that this is only because of the 2006 World Cup and the money it made from this. Don’t forget – the World Cup & football on a whole is the second most watched event in the world – beaten only by the Olympics.

Which leads to my next point – heavily indebted teams. Do a Google search for “sports teams in debt,” and you will find that the NFL and its teams carry roughly $9 billion worth of debt; while the MLB comes in at $3.1 billion.

The NBA – who has not disclosed actual debt numbers –limits borrowings for each of its 30 teams to $175 million each, or $5.25 billion at most. This comes in stark contrast to the recently held drafts where millions of dollars were spent to recruit college players for the upcoming season.

Even soccer (football) teams have been experiencing monetary issues. As a result of global financial crises, large companies such as AIG can no longer afford to sponsor these soccer team. These corporation have found themselves heavily indebted or in receivership (as is the case with AIG), and more or less.

As for motorsports, more sponsors are going broke and breaking their sponsorships. Formula1, who has already lost a major manufacturer in Honda, is seemingly about to lose BMW as well. Despite the setback, F1 has begun implementing cost-cutting measures to ensure the continued support of the sport.

Now, most keen readers will realise that I have left out track and field athletics as a category of debt-ridden sports. This is simply because the sport is currently not experiencing any form of noticeable debt. Is it because track and field is better managed or makes a larger income than all other sports? Perhaps it is because the recently held Olympics and World Championships have made so much money that the organisation hasn’t had to worry about monetary problems?

Or is it because a combination of Usain Bolt, Yelena Isinbayeva, and Heille Gebreselassie have come together and are secretly using their inhuman abilities to rob banks and privately fund the IAAF? Most people would go for the latter, but that hasn’t been proven so I can’t comment any further on that. Although my first guess would be a combination of the 1st and 2nd options…until I get proof.

I have come to a conclusion that most readers may disagree with, but allow me to explain. What is the difference between the MLB, NBA, NFL, and the NHL, IAAF, the World Motosport Council, and FIFA?

In case you haven’t realised, the latter four organisations are all non-U.S. organizations (minus the NHL which is joint U.S. and Canadian) and these four are all quite fine monetarily.

Does this mean that U.S.-based companies simply are managed by incompetent buffoons? Not necessarily. Under these conditions these sports could not have become some of the most popular and most watched sports in the world. Yet, it leads me to question the managerial skills and level of competency of those responsible.