The luxury box bubble bursts

The Wall Street Journal reports that the economic downturn is hurting corporate sources of revenue for sports teams and venues, including luxury boxes, club seats, naming rights, and other forms of sponsorship:

In a case of monumentally bad timing, this year three of the biggest names in pro sports -- the Yankees, New York Mets and Dallas Cowboys -- are opening three of the most expensive stadiums ever built, filled with premium-priced seats and luxury amenities. At a combined cost of more than $3.5 billion, the stadiums were conceived and financed in a vastly different environment, a time when corporations and municipalities were flush with cash. Now they're opening just as corporate America is going through a massive belt-tightening -- and trying to avoid the appearance of extravagance at all costs.

"Let's face it, if you're taking TARP funds, it's really hard to justify getting a [luxury] box," says Neal Sroka, a luxury real estate agent hired by the Yankees to help sell the team's premium seats, referring to the funds distributed to banks under the Troubled Asset Relief Program.

With just weeks before their new $1.1 billion stadium opens, the Cowboys still have 2,000 premium seats and about 50 of their 300 luxury suites left to sell. The Yankees have hired Mr. Sroka to drum up buyers for the hundreds of premium seats still in their inventory. The Mets, who once had deals for all 49 of their luxury suites, say they've had to go back to the market after one customer, whom they declined to name, backed out.

(Via Field of Schemes.)

We've already seen an aspect of this here in Tulsa: Before SemGroup went bankrupt, the company was expected to be a $7.5 million donor to the new downtown Tulsa Drillers ballpark. It's worse for the Mets: They sold their naming rights to a company that's getting billions in federal aid.

Citigroup, which has received billions of dollars of federal aid, has been forced to defend its $400 million marketing deal with the Mets that includes the right to name the park Citi Field. The Mets have endured weeks of jokes about renaming their field "Taxpayer Stadium" or "Bailout Park," but the deal with Citigroup looks safe for now. A Citigroup spokesman says no taxpayer money will be used for the marketing deal.

You'd think a bank spokesman would be aware of the fungibility of money.