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A Bad Day for Barbie

2009 February 4
by Victor Matheson

On Monday, Mattel, the toy maker who brings us Barbie and Hot Wheels, reported that its 4th quarter profits fell 46%. What does this have to do with sports? The toy industry, like the sports industry, is another area that is supposedly “recession-proof.” The story goes, while we make stop giving expensive toys to our spouses, the gifts from Santa are the last thing to go.

Just like the old adage that states, “If you make something idiot-proof, someone will invent a bigger idiot,” the magnitude of this recession is likely to expose just how recession-proof some things like professional sports really are.

Of course, in an industry characterized by price discrimination and low marginal costs, any attempt to identify a drop in demand solely by looking at quantity (that is, attendance) are almost certainly doomed to failure. Look for full stadiums and arenas but lower ticket prices and a huge increase in the number and variety of promotions in the coming months.

The silver lining for the big leagues in the Mattel profit report? American Girl dolls, the company’s top-of-the-line, ultra-expensive model was one big seller this holiday while sales of $7.99 Barbies and $0.99 die-cast Hot Wheels cars fell. If the ultimate luxury is the last thing to go, that’s good news for the NFL but not so good news for minor league baseball or the dear, departed Arena Football League.

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