Panel: Sports will endure, but 'we haven't seen the worst yet'

MIAMI -- Lower salaries for athletes and delayed construction of new arenas could be among the changes in the next phase of how the recession impacts the sports world, a panel of industry experts cautioned Wednesday.

Speaking at the IMG World Congress of Sports, the group agreed that even in these times, well-managed companies should thrive. Still, they warned the impact of the global financial crunch might not be apparent in sports for some time -- perhaps another year or more.

"We're facing the greatest economic challenge of all of our lifetimes," said Tim Leiweke, president and CEO of Anschutz Entertainment Group, which oversees arenas including the Staples Center in Los Angeles. "We have never seen anything like this and I pray that we never see anything like this again. And if you look at our industry, sports in particular ... we have to reinvent ourselves."

The panel -- which also included NHL commissioner Gary Bettman, NASCAR CEO Brian France, retired basketball star Alonzo Mourning, Under Armour CEO Kevin Plank and IMG president George Pyne -- offered a sobering forecast of how that reinvention may happen.

"It's so difficult out there. They just took the double cheeseburger off the Dollar Menu at McDonald's," Plank said. "That'll give you a sense of what the economy is like."

While seeming optimistic for an eventual turnaround and insisting they believe that sports and the economy will provide "therapy" for a financially ailing public, the panel also warned that the worst might still be ahead.

At the same time, not all is bad with sports -- not even close, Pyne said.

"The sports industry is going to do just fine," Pyne said. "Everybody would love to have sports' problems. The pie might be shrinking, but we're going to maintain our size of the pie. We may grow our size of the pie. ... If you're over-leveraged, you're in trouble, but that's not just in sports."

Many big-money deals that shape the sports world, like collective bargaining agreements between leagues and their various player unions, were made long before the recession gripped the world's marketplace.

And since many CBAs will need to be renegotiated in the next one to two years, sports could be on the cusp of some major change.

"We're going to have inflation, it's going to be bad and we're going to have to deal with that at some point or another," Leiweke said. "We're going to pay a price for what we're going through right now and bailing everyone out. So I think long-term, there's going to need to be adjustments based the amount of money earned compared to the amount of money paid."

The five biggest pro sports in North America -- baseball, football, basketball, hockey and NASCAR -- have taken at least some sort of hit from the economic downturn in recent months. The NFL reduced its work force by 169 people, the U.S. Olympic Committee recently lost 54 employees, the NBA and Major League Baseball's Internet division needed to go the layoff route last year. By some estimates, as many as 600 people who worked on NASCAR teams last year aren't trackside in 2009.

Some hockey teams are struggling as well, but Bettman said the overall picture for the NHL is strong.

The NHL, Bettman said, will see record revenues and attendance for the fourth straight year since the league resumed play following the lockout -- which, he suggested, made the league stronger before the economy soured.

"We were used to operating in adverse times," Bettman said.

Some of the other topics discussed during the 55-minute panel session that began the two-day event, organized by SportsBusiness Journal and SportsBusiness Daily, included:

• Player salaries: Mourning signed the first contract in pro sports known to be guaranteed for more than $100 million when he got a $105 million, seven-year pact from the Miami Heat in 1996.

He's concerned, though, that the next generation of athletes might not be ready for a dip in their income.

"I don't think enough of them have thought about it, to tell you the truth," Mourning said. "That is one of the things I'm afraid of, that a lot of these guys are going to be affected tremendously by it because they haven't prepared for it. But I do know this: It needs to happen. It really does, simply because we need to fill the stands."

• State of the NHL: Bettman pointed to the revenue and attendance numbers happily, and reiterated that there is investor curiosity to help the cash-strapped Phoenix Coyotes.

"There are a number of people who are expressing interest," Bettman said. "I think you're going to see some capital adjustments. Financing is more difficult than it's been, but it's there."

• Will it get worse? Leiweke suggested that the full impact of the recession could present itself in the next 12 months.

"For our industry, there will be a weeding out and the strong will survive and get better," Leiweke said. "But we also have to understand, I think, in the next 12 months, we haven't seen the worst yet in sports."

When moderator Abraham Madkour asked "Who gets weeded out?" in response to that statement, no one from the panel rushed to make a prediction.

"People that don't run their individual businesses as well as they should, and aren't recognizing getting cost out of their system as fast as possible," NASCAR's France said. "You've got to reprice things for the various companies in our industry. Everybody is spending less ... or not spending at all. So you've got to reprice it and that says something.

"No one's having a good moment in this economy," France added. "The question is, how do you come out of the other side?"