Ask PSR Anything - June 2009

Given the economy and its current condition, do you think there is any realistic possibility of contraction in any of the four major sports?

-- Chris Meier, San Francisco , CA .

By Brian Finkel
Horrow Sports Ventures

The country's in a recession, the stock market is in the gutter, and the Phoenix Coyotes are in bankruptcy court - seems like the perfect time for one of the four major sports to contract. However, despite all of the apocalyptic signs surrounding the sports industry, things like Texas Rangers owner Tom Hicks defaulting on a major loan and the New Jersey Nets announcing a $28 million operating loss, contraction will not happen.

As bad as steroids in baseball, gambling in basketball, and lockouts in hockey have all been, nothing would be more devastating to a league's image than contraction. No major professional franchise in the modern era has been contracted, and as bad as the economy is, there is no reason to think that a downsizing starts now. For most, owning a franchise is more of a status symbol than an investment. If a team becomes available, there will be no shortage of prospective buyers.

Rather than eliminating a team altogether, a much more likely scenario is relocation. In the last 20 years, nine different franchises have moved cities. Los Angeles wants the NFL, Kansas City and southern Ontario are craving the NHL, and Las Vegas will take whatever it can get. Three ownership groups vied for the Chicago Cubs, two have submitted bids for the Coyotes, and no less than 10 are looking at the Montreal Canadiens. As a positive sign that the credit market may be thawing, the "mid-tier" Orlando Magic just secured a $100 million loan to complete their stadium.

Things may look bad now, but like the U.S. economy, the sports industry has no place to go but up. While a team might move, you can rest assured that they won't disappear.