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Sports Franchises Use Squeeze Play on Fans


Economic downturn? Try multiplying ticket prices by ten.

William C. Rhoden, of the New York Times, wrote last week that "the Yankees, who had a major-league-high $209.1 million payroll this year, offered pitcher CC Sabathia a 6-year deal worth at least $140 million, which would make him the highest-paid pitcher in baseball history."

He went on to ask: "How can this be? Global markets stagger, but baseball rolls on," and speculates on the "attraction of sport as an escape hatch, a 2- to 3-hour refuge."

Similarly, Andrew Zimbalist, a sports economist at Smith College, told Sean Gregory of Time magazine: "Historically, revenues in the sports industry don't dip along with the economy." But Gregory then quoted Stanford University economist Roger Noll as saying, "Player salaries are extremely sensitive to market conditions."

The New York Yankees declined their 2009 options on first baseman Jason Giambi and pitcher Carl Pavano. "Given the…money involved, I don't think they were surprises to anybody," general manager Brian Cashman told the Associated Press.

Giambi will receive a $5 million buyout rather than his $22 million salary. Pavano will be taking a $1.95 million buyout instead of the $13 million he would have earned.

If baseball is really rolling on, NASCAR isn't.

General Motors (GM), Chrysler, Sears (SHLD) and Chevron (CVX) will cut or drop sponsorships next season.

The LPGA Tour will be cutting its tournament schedule by 3 in '09, due to sponsorship loss. Gone are the ADT Championship, the Fields Open in Hawaii and the Ginn Tribute in South Carolina. Prize money also will drop by $5 million.
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