Deep Seated Problem

Seats on the floor at an NBA basketball game can run $2,500+ each. Sky boxes at major arenas are in serious six figures a year, with multi-year commitments. Hockey “seats on the glass” and baseball dugout seats can run $500 each in major markets, and when the Mets and the Yankees priced some box seats at $2,500 a game, they were forced to cut back by 50% when the boxes were so “empty.” Premium seats at tennis and golf championships can also run into the thousands. Baseball’s regular season produces 81 home games (plus playoffs where merited), major league hockey and basketball about half that number. Football’s shorter season doesn’t stop boxes or seats on the 50-yardline from being very pricey. And with athletes demanding higher pay, ticket prices are still, in the main, rising. Do the math; you gotta be really rich to afford those seats… or a corporate structure.

The teams love focusing their broadcast cameras on the celebrities in the high-priced seats. Going to a game, even sitting in a sky box, can be a very public experience; there are photographers and news reporters everywhere. It’s pretty common to see “businessmen” partaking of the “game,” both as hosts and invited guests. And with TARP money and government stimulus money flowing all around, companies that routinely paid for such extravagant tickets are being challenged on their continuing right to do so. Shareholders are asking questions, and now serious ethical questions abound as well.

Many corporations are worried about their “decision-makers” being effectively bribed by vendors to do business, and there are usually articulated standards as to the maximum level an executive can receive a business gift before the gift is either fully disclosable (requiring permission from corporate higher-ups) or simply not acceptable. High priced tickets to sporting events are increasingly falling within the purview of those restrictions. And if there is a tax write-off for a business purpose, the IRS is clearly wanted to see exactly what the business purpose was – not an abstract “it’s good for business,” but a notion of exactly what business was accomplished.

Most of us would fight to sit behind home plate at a major league baseball game; it’s a treat that few of us will ever experience. But the likelihood of being on camera is high, and if there are ever “business appropriateness” questions to be asked, those sitting there are mostly likely to have to explain themselves to government or company. The August 15 New York Times: “‘The seats behind home plate, no one wants to be seen there,’ said John Lieberman, the former chairman of the entertainment and sports committee of the New York State Society of Certified Public Accountants. ‘There’s a perception that you’re throwing your money away. Politically, it’s like car company executives taking private jets from Michigan to Washington.’”

With the managed depression/recession still going strong, the simple economic pressures are leaving many premium seats/boxes are major sporting events unsold. Companies are having trouble justifying the expense. As ad sales push broadcast television revenues down, as ad budgets reduce venue billboards, and as athletes demand increasing salary increases, clearly something has got to give.

The Times: “Baseball was the first major sport to begin a full season in this more spartan environment. Yet with new seasons approaching, basketball and hockey teams are trying to find takers for suites that were not renewed by financial firms. Many corporate hospitality tents sat unused at the United States Open at Bethpage this June, one reason annual revenue at the United States Golf Association is expected to be about 20 percent below the projections made before the economic collapse… Ticket brokers are also scrambling.

“‘The bankers we did business with in the past have eliminated purchases or scaled back to minimal amounts,’ said Jason Berger, the managing partner of AllShows.com, one of the largest ticket brokers in New York. ‘A few years ago, they were focused on the best, best seats. Now they’re under a tremendous amount of scrutiny, especially under TARP, so we’re seeing almost no spending.’”

If they way American sports are funded and paid for is changing in these hard economic times, the overall metaphor for permanent changes foisted on society as a whole cannot be lost. America and its way of life are being seriously downsized. And perhaps, some of this “stop wasting money” can’t be all bad!

I’m Peter Dekom, and I approve this message.