Chapter 5 Blog - MLB feeling the effects of the recession

http://www.nationalpost.com/sports/story.html?id=1462391

Summary

There are 4 major sports leagues in North America: the NFL, NBA, NHL, and MLB. Most of these leagues are feeling the effects of the recession. Player salaries are being cut, admission prices are increasing, and there are all sorts of advertising strategies being used to get more people at games. Of those four leagues however, there is one that was thought to be immune to the effects of the recession, the MLB (Major League Baseball). Since the recession hit however, baseball teams have been forced to pay their players less than they would expect. This is a major sign of the effect the economy is having on baseball because the MLB does not even have a salary cap that teams must comply with. Baseball teams no longer have the financial freedom to sign players that they want, when they want like they were able to in the past.

Connections

Chapter 5 tells us about the cash flow statement and its parts (financing activities, operating activities, and investing activities), and shows us how to take information from the past and present to try to improve the fiscal future of a company. Major League Baseball is feeling the effects of the weak economy, which means that there might be more cash flowing out of teams than into them during the upcoming season. Fans of teams may not be able to go to as many games as they would like to, seeing as they may not have the money. So, this means that the MLB and the teams themselves are going to have to see where their money is going now and try to send it somewhere that will get people into the stadium.

Reflection

When everything is said and done, baseball will survive. America’s pastime is not going anywhere any time soon. Until then, teams will have to reassess their investing and operating activities. Better players will always demand higher salaries, so teams will have to start looking for players that will play for less money, but will still contribute to the team. My assumption for lower profile teams is that they will see less revenue than before. Why? It is because people don’t have the money to go to games, and the teams don’t have the money to sign a superstar that everyone will want to go and see. Activities in the field of operations and investing will definitely be difficult ones seeing as baseball players are a spoiled bunch, and do not take too kindly to pay cuts.

C. Tut
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