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November 4th, 2008
An Obama Presidency would be transformational at all levels, including potential impacts on the business of sport in the US
If all of the major polls are correct, Democrat Barack Obama will become the first African-American President-elect tonight and will be inaugurated as the 44th President of the United States in January.
According to Tom Mayenknecht, host of The Sport Market on TEAM 1040, that would be transformational at many levels.
"It will have a substantive impact on the world view of the United States and would positively transform the country's international reputation and image," said Mayenknecht, a brand management specialist and former marketing communications executive in professional tennis, the NBA, Olympic sport and the NLL.
"Hype aside, it's history in the making and the most important US Presidential election in my lifetime," said Mayenknecht, who holds a Master of Arts in Public Policy and Comparative Politics from McMaster University and taught Government Relations at Seneca College and Canadian Politics at the University of Toronto.
"The challenges he would inherit are huge in terms of the US domestic economy, the federal debt and foreign policy related most notably to the wars in Iraq and Afghanistan, but I believe Obama will win a strong mandate," said Mayenknecht, predicting that Obama's popular vote will translate into a resounding Electoral College victory.
Beyond its impact on the country's global reputation and position in international relations, Mayenknecht pointed to potential implications for Canada today on Pratt & Taylor on TEAM 1040 with Don Taylor and guest host Rick Ball.
"Although Democrat administrations and Democrat Congresses tend to be more protectionist, I do not buy the notion that an Obama Presidency will make a big difference to free trade and NAFTA, even though he raised that prospect during his campaign," said Mayenknecht. "Regardless, Canada holds more cards in terms of energy and water and has more bargaining power on the issue now than it did in the 1980s."
He admitted the fundamental concern -- how the US economy reacts to this year's credit and financial crisis and looming recession and how that in turn affects Canada -- may be largely beyond the control of the new President.
Mayenknecht, whose show rates and debates the Bulls and Bears of sport business, pointed to a series of potential implications for the business of sport in the US and by extension in Canada.
"Obviously changes in US fiscal policy have the potential to affect key economic indicators such as interest rates, employment and currency in both countries because of how interconnected we are," said Mayenknecht, noting those fluctuations directly influence consumer confidence and discretionary spending on items such as sports event tickets.
He outlined other potential changes in the business of sport and the sport industry, including:
- Stadium financing, which ironically in recent years has tended to be embraced more by state Republicans than state Democrats: "The tone set by Washington will likely see less funding rather than more funding for stadium projects at the state, county and municipal levels."
- Capital gains taxes related to franchise sales, which will almost certainly be higher under Obama: "If the Pittsburgh Steelers had sold under the Bush Presidency, the Rooney family would likely have been subject to more favourable terms on their capital gains. They've missed that window but the nice twist is the Rooneys are Obama supporters. On the other hand, you now have Miami Dolphins owner Wayne Huizenga publicly talking about wanting to sell the NFL club before January 1st, 2009. It could have a huge impact in this area."
- Income tax policy and brackets, which are expected to rise for the wealthiest 5% of Americans: "Those high earners make up the corporate core of many US pro sports franchises in the NFL, NBA, MLB and NHL and depending on the extent of the changes, it could have an impact on premium items such as suite sales and season tickets. I would suggest the NHL would be the most vulnerable in most US markets. This could result in ticket price decreases over the short term but whether that leads to the 'de-corporatization' of professional sport is another question."
- Stock market performance: "Although Republicans are typically seen as the pro-business party, it is interesting to note some of the best bull markets in US history have come under Democratic administrations. Rebounding stock values typically outpace tax increases for wealthy Americans in bull markets so a resurgent Wall Street could neutralize the impact of those hikes."
- Internet marketing: "Obama's Internet campaign has revolutionized politics and political fund-raising. But his example is bound to spill over to the most progressive sports franchises and leagues in terms of how they communicate and do business. It should also rub off on sport philanthropy and cause fund-raising."
Mayenknecht mused that Obama's personal preference on an NCAA college football eight-team playoff format could create a more progressive attitude to Bowl system reform over the mid or long term: "But the US President will have less direct influence on that kind of sport policy than on what Senator John McCain raised in his own Monday Night Football interview - As Don (Taylor) pointed out, McCain brought up the more important issue of reform with respect to performance-enhancing drugs at all levels of sport."
- Obama's cultural/inspirational impact on many US athletes and African-American athletes playing in Canada: "The ceiling he has the potential to break through tonight in turn has the potential to affect generations of Americans and inspire more African-Americans in leadership roles in professional and Olympic sport in the US".
Mayenknecht is a principal in Emblematica Brand Builders, a Vancouver-based brand management firm. He hosts The Sport Market on TEAM 1040 Saturdays from 9 am to 12 noon PT.
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