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More on the Impact of Credit Crisis

The credit crisis and economic downturn is affecting sports in a myriad of ways. One sign that the impact is deeper than perhaps first believed are reports from the NBA that the league has laid off 80 employees, which amounts to about 9% of its workforce. In addition, Commissioner David Stern recently said that he expects tickets sales throughout the league to "drop modestly."

The New Jersey Nets, whose move to Brooklyn will be delayed at least a year by the downturn as groundbreaking on its new arena has been delayed, are employing a novel, for the NBA at least, "buy now, pay later" promotion for season tickets, which certainly reflects the times. It seems to be working too.

Also significantly affected are college athletic departments who have been receiving large donations that are either gifts of stock or are pledges to be paid over time and the donor intended to use stock sales to meet his or her pledge. With the market downturn, those gifts will be increasingly hard to collect. Exhibit A for this problem is Oklahoma State whose record $165 million gift from T. Boone Pickens is tied up in Pickens' hedge fund, which has sustained heavy losses this year. OSU is certainly not the lone ranger in this category as the market travails are affecting colleges and universities large and small. Only those institutions with the staying power to wait out the crash will escape with minimal damage.

Full post as published by Sports Biz on October 21, 2008 (boomark / email).