Baseball Strike Could Foul Up Businesses

NEW YORK – In baseball, timing is everything, whether it's in hitting a fastball or surviving another players strike.

So while businesses that rely on the "Boys of Summer" for income could be hurt if major league ballplayers strike Friday, the impact could be kept in check because it comes so late in the season. But that is only if it is a short strike.

"As far as we're concerned, this is a very opportune time to have one," said William Lacey, vice president and chief operating officer of Rawlings Sporting Goods Co. (RAWL), which makes baseballs and most of the gloves used in the major leagues. "We haven't brought in inventory for next year, nor are we sitting on very much inventory to speak of for baseball products."

If baseball shuts down for the ninth time in 30 years on Friday, vendors could feel some of the worst direct impact.

Aramark Worldwide Corp. (RMK) has deals with 13 of the 30 Major League Baseball teams, ranging from bleacher concessions to suite-catering in VIP sky boxes.

Last week, Lehman Brothers modestly reduced its revenue and earnings forecasts for Aramark's fourth quarter, ending September 30, saying lost revenue for Aramark could be about $90 million.

But Lehman analyst Adam Waldo said the lower revenue was a "relatively immaterial percentage of Aramark's total sales. Most investors view a 4-5 percent reduction in earnings as relatively modest."

A spokesman for Aramark declined to speculate on the impact of a strike.

Smaller mom-and-pop vendors could be hurt worse, Tony Krautmann, professor of economics at DePaul University in Chicago, said.

"It's obviously very important to those owners of those small firms and those firms don't have very deep pockets," He said. "There will be employment effects and perhaps some businesses going under."

BEER SALES MOVE TO FOOTBALL

The timing of the strike also means the impact for brewery companies could be minimal, Carlos Laboy, Bear Stearns beverage analyst, said earlier this week.

"The return of college and pro football as well as the new TV season should create enough 'beer occasions' to offset a baseball strike," Laboy said in a news release.

Even assuming aggressive estimates, the amount of beer that would have been consumed from Friday through the end of the season would have been about 157,000 barrels, or only $2.4 million, he said. To put that in perspective, top brewer Anheuser-Busch Cos Inc. (BUD), maker of Budweiser, sold 26.7 million barrels of beer in the United States in April, May, and June.

On the other hand, a prolonged strike could hurt several businesses. A strike in 1994 caused the cancellation of the World Series and spread into 1995, with ill will lingering for several years after.

Sales of non-wooden baseball bats, those predominantly used outside the major leagues, fell to $78.4 million in 1995 from $96.6 million in 1993, with sales of baseball gloves and mitts plunging to $120.4 million in 1995 from $171.3 million in 1993, according to trade group National Sporting Goods Association.

Sports apparel company Russell Corp. (RML) could be hurt by a strike that cancels the playoffs, since the company makes t-shirts celebrating the winning teams that are on the shelves the day after a series ends, Nancy Young, a spokeswoman for Russell, said.

THE LONGER IT GOES, THE WORSE IT GETS

Another business that could be hurt is the baseball card business, which including companies like Topps Co. (TOPP). But, like apparel, that would be more of an issue if the strike lasted into 2003, because most baseball items that will be sold this year already have been, analysts said.

"The sports card business is in pretty bad shape to begin with," analyst Dennis McAlpine of McAlpine Associates LLC, said. "A lot of collector/hobbyists have gone away. Cards have gotten expensive. Kids have gone on to other things."

Kids could go away from baseball more if there is a long strike, leaving the future of the game in doubt, Marc Drizin, an analyst at Walker Information, which studies consumer and employee loyalty, said. "If you start to lose that emotional bond ... that is going to impact parents wanting to put their kids into Little League."