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Economic Woes Filter into Sports World

Undoubtedly the tough economic times will put a dent in the disposable income of many Americans, who may attend fewer sporting events during the current recession. Team owners may be a fraternity of millionaires, but their businesses are likely to feel the pinch if fans aren’t keeping seats warm when games are played.

MLB owners appear to be anticipating a downturn in their fortunes. By Monday, teams had to decide whether to offer salary arbitration to their free agents, and plenty of high-salaried players didn’t get offers. In recent years, many general managers have been more likely to offer arbitration to their stars, even if they had no intention of re-signing them. The draft-pick compensation for losing a player has become increasingly important in today’s game.

There was a shift in that approach Monday, as a number of front offices apparently were concerned that a pricey player might accept arbitration and stay. The World Series champion Phillies, Arizona and the Yankees cut strings with their Type A free agents, meaning Adam Dunn, Pat Burrell and Bobby Abreu may wear different uniforms in 2009.

It must be tough times: the cash-rich Yankees were one of a dozen clubs who didn’t offer arbitration to a single player. They joined the Rays, Cubs, Cardinals, Phillies, Astros, Braves, Orioles, Marlins, Nationals, Giants and A’s in excluding all of their free agents from the arbitration process, according to Mike Scarr of MLB.com.

Arbitration offers were limited primarily to premier free agents, such as CC Sabathia, Mark Teixeira, Manny Ramirez, Francisco Rodriguez and A.J. Burnett. They will get their eight- and nine-digit contracts, but free agency may not be as lucrative as in the past for many others on the open market.

Last week, one assistant GM speculated that teams in the middle of the country are likely to suffer from the recession more than the big-market teams on the coasts. Where the big-name free agents land this winter may be revealing.

Even those sports with a salary cap have to be concerned about the economic outlook. That’s especially true of the NHL. Attendance was up in October, but there may be little reason for optimism in a league that lacks hefty television revenue and survives by filling seats. The blue-collar fan base is significant in a number of cities, and those fans have limited disposable income. Walkup sales may take a big hit as the season wears on.

Reportedly 8-10 teams are struggling financially and two franchises -- the New York Islanders and Phoenix Coyotes -- are losing millions of dollars annually. Franchises have teetered on the brink of economic collapse on occasion, and the current recession may force the issue in a few NHL cities.

Much like MLB, the NHL has always had a group of franchises lacking the resources of the bigger markets. The poor are likely to get poorer. Buffalo managing partner Larry Quinn told Business Sports Daily that “increasing the size of the revenue-sharing pool -- to approach the NFL model -- would create a better overall distribution of wealth from top to bottom.”

Such a change would require reopening the collective bargaining agreement that was reached in July 2005, following the player lockout that cancelled the 2004-05 season. That’s a decision the NHL Players' Association would have to make, and they have that option in September 2009.

The Players' Association may have a much greater say in league matters than they did when the owners closed training camps to players in the fall of 2004. Luckily for the owners, the leadership of the PA has turned over since the bitter CBA dispute, and the new head, Paul Kelly, works well with both sides.

Otherwise, where would owners be if NHL players were inclined to stick it to them after they were locked out and had numerous changes forced on them during negotiations? Even if that was the prevailing sentiment, the NHLPA would have to weigh telling the owners to fend for themselves with having franchises fold and dozens of union members losing jobs.

The owners-NHLPA scenario is speculation at this point, but the poor economic forecast is all too real. Eventually the downturn is likely to take its toll on many professional teams. We may already be seeing it with fewer offers of salary arbitration in baseball, and we’ll see it play out in other ways in 2009.

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