The dramatic collapse of Lehman Brothers ahead of the 127th Varsity match threatened to shake the Cambridge sports scene to its core. As the University lost money in the Icelandic banks, and students were hit by higher room rates and food prices, the credit crisis suddenly came uncomfortably close to crunching arguably the main event in the sporting calendar.

The Lehman’s fiasco had far-reaching consequences in the wider sporting world. The Royal Bank of Scotland, whose sponsorship portfolio extends from individual stars such as Andy Murray and Zara Phillips to a £4 million per annum investment in Six Nations rugby and support for the AT&T Williams F1 racing team, was caught up in the bankruptcy, and in August unveiled the first loss of its forty years as a public company. But sport remains important. After all, the global exposure of the Formula One Championship, which takes place in sixteen countries over four continents, and the growing television audiences for the Six Nations, which peaked at 8 million for Ireland versus England in 2007, is crucial for any bank, and especially one facing tough times ahead. But the uncertainty of the situation will make new deals harder to come by and existing ones tricky to maintain. A spokesperson for RBS emphasised the number of successful sponsorships they have across the globe which “meet very specific business objectives such as raising brand awareness as we enter new markets, and these are naturally reviewed on a regular basis”. As markets contract, the objectives will undoubtedly change, and the reviews may just get a little bit tougher. The onus will fall heavily on the sporting individual, team, or federation to prove their worth to a more exacting and selective group of sponsors.

Motorsports munched

Sports which rely on actual industries for more than just sponsorship will be particularly vulnerable. The withdrawal of Honda from the F1 circuit came as a shock, despite the rumbling warnings of Max Moseley that all was not well. With the motor industry in crisis around the globe, it is perhaps unsurprising that a venture costing up to £200 million a year to run and employing around 1000 people just to put a car on the grid eighteen times a year would be one of the first to suffer. Moreover, the withdrawal of Silverstone, Montreal, and Magny-Cours as venues in the racing calendar suggest that hosting can be equally crippling. This sport, once so intimately linked with luxury and excess, will have to tighten its belt if it wants to survive. When Subaru pulled out of the World Rally Championships at the end of last year, a visibly shaken Chief Executive Ikuo Mori told a press conference, “our business environment has changed dramatically due to the rapid deterioration of the global economy”. The sporting environment of these motoring giants is changing too, as it must if it is not to suffer the same fate.

Football fucked

Football is another traditionally excessive game which is beginning to feel the pinch. News last year of a ‘home grown’ players quota to be introduced into the Championship and Leagues One and Two was the first sign of a change to patient nurture rather than rash purchase as a managerial mindset. At the other end of the scale, even leviathans such as Chelsea are seeming to adopt more of a ‘make do and mend’ policy in an attempt to break even. Manager Luiz Filipe Scolari has apparently been told in no uncertain terms that there will not be any money for new players in the January transfer window, despite his professed desire for another striker. Abramovich, speculatively reeling from losses on the Russian stock market, has asked his team to look at controlled salaries with the potential addition of a performance-related component. For example, when Michael Ballack’s £121,000 a week contract expires at the end of the season, any renewal looks likely to include a bonus system for appearances or goals scored in order to protect the club from huge liabilities through injury or lack of form. Premiership footballers should sit up and take notice: the days of wanton excess and grossly inflated salaries are over. In today’s climate, they simply cannot be justified.

Rugby ruined

And rugby players will soon be facing a similar situation, albeit on a different scale. Premier Rugby chief executive Mark McCafferty confirmed last autumn that a reduced salary cap might be introduced to Premiership clubs in time for next season. Bad news for Danny Cipriani: the 21-year-old is reportedly seeking £350,000 a year when his current Wasps contract runs out in the summer, which would account for a tenth of the capped salary allowance for a club. English rugby has to be careful. Only three clubs remained in the black last year, Leicester, Gloucester, and Northampton, whilst Bristol and Newcastle in particular struggled with enormous losses. The former, already operating at a £1 million deficit, fears for its Premiership position: if a club goes into administration it suffers a fifteen point deduction, which would almost certainly relegate them into National Division 1. To rub salt into the wound, they would then miss out on the expected £1.5 million injection into each Premiership club thanks to a £54 million TV deal with Sky and Setanta Sports which is set to increase the live coverage of matches from the current 33 per year to 69 in 2010. The wage cap would level the playing field for these lower table teams, though it might give European clubs something of an edge. The French in particular keep pouring money into the game: Perpignan are paying Dan Carter £30,000 a match in his six-month sabbatical at the club, with their sights set firmly on the Heineken Cup title. What England saves at home it might just lose abroad. Simon Lewis of Premier Rugby remains optimistic: “The clubs are conscious that in tough economic times, we need to be prudent as a set of businesses. If that did result in a loss of competitiveness in Europe for a couple of seasons until we have ridden the recession out, I believe the clubs would accept that.”

So sport is far from immune to the current economic conditions. Sponsorship might be tighter, salaries lower, and some big names may struggle or crash out completely in the race for top performance. But there is always a silver lining. With falling ticket and transport prices it is perhaps no surprise that the stands and terraces were jam-packed over Christmas. And with the home player initiatives and controlled purchases, some real British talent might just rise from the ashes. 2009 will be a tough year for British sport, but the initiatives designed to control expenditure and focus support for the home scene ought, if put in place soon enough, to ensure its survival.

By Jenny Morgan