Is the Sports Business Recession-Proof?
Sports business survives bad times so far but the clock is ticking.
March 5, 2009— -- With the country in the midst of the worst economic crisis since the Great Depression, most industries are struggling, most companies are cutting back and most people are losing money. But judging by the size of his new contract, it appears that Albert Haynesworth, the Washington Redskins and professional football are hardly feeling the effects of the nationwide downturn.
The Redskins have signed Haynesworth, an All-Pro defensive tackle, to a seven-year, $100 million contract that includes an NFL-record $41 million in guaranteed money.
The Redskins are not alone.
The New York Yankees recently dished out $430 million in contracts for three free-agent players -- all this at a time when the country is battling what President Obama called "an unprecedented crisis."
Banks too big to fail -- like Lehman Brothers -- have failed.
Newspapers that survived the Great Depression -- like the 150-year-old Rocky Mountain News -- have died.
But the professional sports world continues to churn out record-setting contracts.
"Are sports recession-proof? That is the question," said Christine Brennan, USA Today columnist and ABC News consultant. "I think the answer is no and we are seeing some evidence of that, but so far the answer seems to be yes and that is a real stunner."
The Redskins' and the Yankees' big money moves have raised some eyebrows in a country that has recently grown accustomed to seeing more lay-offs and pay-cuts than nine-figure deals.
"It is stunning," Brennan said. "You could even say it's appalling."
Contracts like Haynesworth's seem even more stunning because they come as off-the-field layoffs permeate the pro sports world.
The Redskins laid off more than 20 employees earlier this year. The NFL recently announced it would cut about 169 jobs, about 15 percent of its staff. League commissioner Roger Goodell will also take a 20 -25 percent pay cut.
The NBA cut about 80 jobs last fall, 9 percent of its U.S. workforce. In February, the league said 12 teams had decided to borrow a total of $200 million from JP Morgan Chase and Bank of America.
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