(05-05-2014 03:42 PM)miko33 Wrote:  

(05-05-2014 03:06 PM)Frank the Tank Wrote:  

(05-05-2014 02:48 PM)miko33 Wrote:  I agree that athletics is seeing a boom at the moment, and that everything runs based on a boom/bust cycle. I also believe there will be some structural challenges that will be game changing for college athletics in the future that will be detrimental to most schools. We see the changing trends in lower participation rates for pop warner football, people starting to pass on attending live sporting events and even the explosion of competing activities that did not exist 10 years ago. There is more competition for your time now than ever before, and it appears that more people are choosing to not spend hours upon hours watching sports when they can be doing other things instead. I don't expect to see major changes in the near future, but I predict the next generation of sports fans will not be as rabid nor numerous than we've seen in the past. Also consider that people do not have the tight connection to their alma maters like they used to.

Actually, spectator sports haven't ever really been on a boom/bust cycle (at least since the 1980s). Sports revenue and team values (both college and pro) have been going up and up and up through both good economic times and bad for the past three decades with barely a speed bump. I recall a Deadspin article from a few months ago that pulled tons of quotes from industry experts in the late-1980s stating that it was "impossible" for TV sports rights to continue rising at the levels that they were at during that period... yet they've risen unhinged for 30 years straight. Note that these weren't quotes from a bunch of uninformed hacks, but they were taking the simplistic notion that rapidly rising costs must indicate a bubble (which is what I see a lot of people arguing today).

Now, that doesn't automatically mean that these rising revenues can continue to occur for the next 30 years. However, it would be every bit as much of a mistake to just automatically assume that the current high peak is a bubble. Sports have a different psychological hold on fans than normal consumer products. More importantly, the money at the gate for ticket sales is no longer as important as the money from the viewers sitting at home (which is a significantly larger audience). The loss of ticket sales may very well happen (or is already happening in many places). The key to success for sports teams going forward is still being able to maximize revenue from people that aren't actually in your stadium. To the extent that fans aren't as rabid for particular teams, it becomes more important to have a product that has much broader appeal. (Of course, this only exacerbates the focus on elite brand names in pro and college sports, for better or for worse.)

I think sports has been on an extended boom, but the bubble will pop sooner or later. Very bright people have figured out a way to continue to monetize enough facets of the sports industry in order to keep the bubble inflating. The industry matured from live entertainment venues only to network TV and advertising dollars to cable to pay per view to the internet - all along the way the industry execs have fortunately found ways to sell more advertising opportunities plus merchandising. Also, you can't discount how the NFL fortunately had a forward looking vision to introduce parity into the league so that more people became interested in the product.

I do not propose to be an expert on sports economics, but I do know that it is not a staple product like water, utilities, food, etc. If the product is not a staple, then it will run on a cycle - even if that cycle is extremely long.

Not every boom is a bubble.

Bubbles are the result of an "overheating" - when market values get ahead of the underlying fundamentals. For instance , the housing bubble was created by unrealistic borrowing rules and rates.

Sports have historically been tremendously undervalued due to their inability to monetize fan loyalty to the fullest extent. The recent boom in the cost of live entertainment and similar discretionary spending in all forms - gambling, fine dining, theme parks, concerts, etc., has benefited sports tremendously. The tremendous demographics of many sports - males 18-49 - and it's ability to deliver live audiences that are captive to ads have also provided huge opportunity for monetization.

Bottom line, I don't see sports revenues as a bubble. They may flatten, but won't decline.