Instead of lamenting the loss of the Sonics to Oklahoma City, maybe we should be congratulating ourselves for intelligent financial planning? Even before the financial woes of the past weeks, professional sports, particularly the National Basketball Association, have been struggling.
Consider the perfect storm of problems, as outlined in this Wall Street Journal story. With banks in deep trouble, they are no longer good prospects for putting their names on new arenas. The recent decision by Key Bank to extend its naming-rights sponsorship of KeyArena, at much lower cost and for only two years, is a good illustration. Lucrative television contracts are no longer lucrative. To cover costs, sports teams have to charge premium prices. That takes spiffy new arenas and stadiums that many cities and states are unwilling to subsidize. And now comes the sputtering economy, forcing fans to economize and the teams to resort to discount ticket deals.
One result: the NBA announced this week it is laying off 80 employees, 9 percent of its staff. Some stadiums such as the Florida Marlins new ballpark are stalled, while others (in Dallas and New York) are having little luck landing a naming sponsor, which normally requires a 15-20-year commitment that firms are nervous about signing. In Seattle, the problems would be compounded by the defection of fans from all the losing teams.
Owners paying high prices to acquire teams and feed them must also be wondering about the wisdom of those investments. In Oklahoma City, Aubrey McClendon, one of the key backers of the team raided from Seattle, has just had to sell 94 percent of his stake in Chesapeake Energy Corporation, raising $569 million to cover personal margin calls.
So do we have a pro-sports bubble? Looks that way. The sobering up will probably translate into an unwillingness to dedicate state money to fixing up KeyArena as part of luring a new team to play there. The NBA, meanwhile, is likely to start concentrating on cities such as Oklahoma City, where the team can be the sole major league sport and local swells can be found who want to pony up. The other expansion will be in Asia, eager for world publicity and Western trappings. Maybe we should be looking for a better role for KeyArena than arena-in-waiting?