[May 14, 2008: Whole Foods Market CEO at a Loss of Why Sales are Slowing]
I've written as well, I believe discretionary entertainment will also take a hit (ex video games) - RVs, boats, even sporting events ALTHOUGH most sporting events are now populated by the upper 10% whom this slowdown will hit last, and corporations. But I just cannot imagine the average football game where parking is $30, concessions are $50 for a family of 4, and tickets are $150-$200 being at top of mind for the bottom 80% in this country. Things like NASCAR which caters more to middle America will take a hit.
[Jun 24, 2008: IBD - Heating, Electricity Rates Rising]
Without wages rising much, the pie of spending must draw down from one place (sporting events, camping trips, entertainment, non essential travel, Vegas, boating, eating out at restaurants, buying that extra pair of shoes) and go into essentials. This is pooring of America 101, and why sentiment gauges continue to fall to ungodly rates
[Oct 14, 2008: WSJ - As Economy Weakens, Sports Feels a Chill]
I've been watching intently for the first signs in the sporting world since this is (a) one of the last things Americans want to give up and (b) ticket prices have gotten to a point where many families of the lower 2/3rds to 1/2 in America were frozen out a long time ago - hence the slowdown means the upper 1/3rd (and corporations) are finally getting hit. Here we go. I do believe this will lead to the first deflation in ticket prices and concessions in many many years. What would be really shocking would be seeing athletes median salaries go DOWN year over year - when is the last time that ever happened? Never, in my memory. I think it's a distinct possibility if things drag out as long as I believe they will.
[Nov 14, 2008: November 2008 Thoughts/Roadmap]
#2 Sports - I predicted last year that sports will take their first hit in America - we discussed this in May , June, and October. By that I mean spending at stadiums, merchandise, and the like. I said it would start at the NASCAR crowd and move it's way up to other sports - remember much of middle class America has been priced out of many sporting events; it's now corporate driven. Based on the corporate retrenchment combined with economic stress moving up the food chain from poor to working poor to middle class to upper middle class to lower upper class... I see sports taking a real hit in 2009 and 2010. It would be a major outlier to call for salaries to ever take a hit but I will be interested to see if we ever reach a point like that (but not until 2010)
Here we go... the NBA's Commissioner David Stern warns of the first fall in salary cap (ever) in the league
- As commissioner David Stern warned at All-Star Weekend, the NBA is bracing to have the salary cap (and luxury-tax threshold) go down this summer for the first time ever. The picture might be even gloomier in 2010.
- With season-ticket renewals expected to plunge because of the weakness of the economy, some league executives expect the cap to fall significantly, which could have serious ramifications for a number of teams.
- .... one NBA executive told ESPN.com. "It's really ugly. Owners are scared to death right now."
- Finally, let me share a juicy tip from a league source on the state of the salary cap. Basically, the situation will be worse than many people expect, and the luxury-tax level next season will be set even lower than what several teams are currently planning for. The implications will be huge as we head into next season.
- Here's the more interesting part of what I was told: Next season's luxury tax might just be the tip of the iceberg. The salary cap (and thus the tax level) could drop massively in 2010; my source used the term "bloodbath."
- All this would be a prelude to the labor negotiations for a new collective bargaining agreement in 2011. If money gets as tight as some project, things could get ugly.
- Teams are already panicking about being over the luxury tax during this "bloodbath" season (in terms of the owners' extra-NBA holdings). If the luxury tax line shrinks substantially, everyone is going to be worried, and teams will be fighting with each other to lose contracts to below-cap teams.
- We're waiting for New Orleans to break up a team that came a game away from winning the No. 1 seed in the West last season because of the 2009-10 luxury tax, and that's incredibly sad. Multiple that by 10, and that's what we could very well get over the next season.
- Phoenix is trying desperately to exile a 26-year-old all-NBA first-teamer to get under the line. Think about that. This isn't solely a product of Robert Sarver's fidgety ways, or some sort of bad juju in the Valley of the Sun. Multiple teams might be doing this by next February. San Antonio cannot pay the tax -- let alone a few million in tax. Could Tony Parker or an expiring Manu Ginobili hit the fire sale trade market?
Not so much fellas - even a lowly blogger could see this coming.