(05-05-2014 04:33 PM)Frank the Tank Wrote:  

(05-05-2014 03:42 PM)miko33 Wrote:  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.

Well, your last statement is interesting. Sports might act more like a utility from an economic perspective than you're giving them credit for (hence, they might act more like "staples" than discretionary goods when looking purely at their valuations and revenue streams). Utilities are generally regional monopolies that receive protections and even subsidies from the government that make them much more immune to the broader economy than other industries. Well, aren't sports teams the same thing? Pro sports teams are granted regional monopolies (with a small handful of historic duopolies a la Yankees/Mets, Cubs/White Sox, etc.) and, in many instances, are the recipients of substantial government support in the form of stadium deals (and more often than not, pro sports teams are the winners in any showdown between them and local governments). Meanwhile, the power conference schools are generally large public institutions that are all members of one of 5 exclusionary clubs (and even the private institutions are tax-exempt entities). All of these teams (college and pro) have protected territories with a whole lot of government support.

So, sports revenue streams don't go up and down like typical widgets in a pure free market. Instead, they look a lot more like utilities that are generally hedged against economic downturns. They only gain legitimate competitors to the extent that they voluntarily allow them into the club (i.e. pro leagues granting new franchises and power conferences inviting new members). Not too many industries have that type of gatekeeping power.

I agree with you that sports teams are like the regional monopolies enjoyed by utilities. However, I would argue that sports still are not staples like water, electricity, fuel, etc. There are substitutes for watching sports on TV. You can watch movies, play video games, go outside, etc. You have no real substitute for electricity. You may purchase a small windmill or solar panels to augment the electricity you take from the grid, but that's about it.

IMHO, I believe the costs for sports are overheating. Like education, costs are outpacing inflation. Granted, it's quite possible that people are monetizing fandom and there is no bubble.