During Major League Baseball's General Managers Meetings last week, player agent Scott Boras called this year's free agent market very aggressive despite the troubles in the country's economy.
"In our myopic world, there's a lot of fixed elements that frankly are not as applicable to the outside world," Boras said to the Associated Press.
Friday night, Pittsburgh Pirates team president Frank Coonelly and Chief Financial Officer Jim Plake held a discussion on economic downturn's impact on professional baseball. Both executives are Penn State alums, and came back to talk with students in the new Center for Sports Business and Research and anyone interested in the subject. The two spoke in front of about 70 people.
Coonelly, who spoke first, was quick to disagree with Boras' assessment of the shortsighted baseball industry.
"We are not insulated from the general economy, in fact we are in the crosshairs of the type of economic downturn that we're feeling right now," Coonelly said.
The entertainment industry, including professional sports, is in the middle of the downturn because of the way people will spend their discretionary dollars, Coonelly said. He said the corporate sponsors are the biggest concern, as they tend to cut their entertainment budgets in times of economic stress.
Coonelly said it generally takes a year for teams to see the impact of the economy on their revenue, but this year would be very different.
"I think that we're in such an obvious period of downturn, the signs and signals are so obvious and they hit prior to the time the free agent market opened, that we will see this have an immediate effect on player salaries," Coonelly said.
While players like Manny Ramirez and CC Sabathia will still get large contracts, even the largest teams will see the effects of the downturn, Coonelly said.
Plake spoke about Commisioner Bud Selig's response to the economic crisis and how baseball has kept small market teams afloat.
"He was very concerned about what was going to happen in 2009," Platt said of the commissioner's outlook.
Plake then discussed how the Pirates are dealing with the downturn.
"We are the value proposition in professional sports," Plake said. "We are the most affordable family entertainment so we need to continue to emphasize that."
The Pirates will not increase their season ticket prices, Plake said, and are currently looking over individual games to determine pricing.
Plake said the Pirates will be watching their revenue sources and expenses. Coonelly said payroll is the biggest expense of any team, and the Pirates had addressed this area.
"We have a payroll that is not locked into long, multi-year contracts, so we have what is understood to be payroll flexibility," Coonelly said. "So we can make moves that will allow us to weather the storm."