In the fall of 1982, as in every fall during the late 1970s and early 1980s, there was talk in New York soccer circles about international stars the New York Cosmos might sign for the following year's NASL season. In October and November 1982, that talk centered around Brazilian midfielder Falcao, who had been one of the stars of the 1982 World Cup. On Dec. 9, the talk stopped, with the exception of some occasional pipe dreaming. The Cosmos played for another two-and-a-half years, but after Dec. 9, 1982, things were never the same.
On the afternoon of Dec. 8, Atari, the video-games maker that was the cash cow of Warner Communications, which owned the Cosmos, had announced a downward adjustment to its expected earnings for the fourth quarter of 1982. In 1981, Atari had made a profit of $287 million, and by the middle of 1982, that one division of Warner was bringing in more than half of Warner's total revenues. During the fourth quarter of 1982, Atari saw a major reversal of its fortunes, on several fronts. The most important contributor to that downturn was the fact that a game based on the smash-hit movie "E.T." was proving to be a sales dud, after Atari had paid an astronomical rights fee to the makers of the movie. Atari's gloomy announcement on Dec. 8 was its second such within a few weeks. On Nov. 17, Atari had issued a statement reducing its projected earnings for the fourth quarter of 1982 by $81 million. In its announcement on Dec. 8, it reduced the projection by an additional $53 million, forcing Warner to issue a statement of concern about the overall corporation's profits.
Those Dec. 8 statements by Atari and Warner were issued after the New York Stock Exchange had closed for the day, but the stock market, which had already been growing worried about Warner, reacted on Dec. 9. That day, Warner's stock price dropped from 51-7/8 per share to 35-1/8, a brutal one-day plunge of more than 32 percent. Any hopes that the Cosmos might have had for a return to their greatest days of the 1970s ended on Dec. 9, 1982.
The Cosmos had become used to bringing in new foreign stars by the boatload each year, but when they took the field for their opening game of the 1983 NASL season, all 11 players in their lineup were ones who had been with them in 1982, with no additions.
Warner Communications bled money throughout 1983, losing $417 million and seeing its ability to fight off a takeover bid grow weaker. Such a bid appeared in early 1984 as Australian media tycoon Rupert Murdoch bought up shares of the company at bargain prices. To battle Murdoch, Warner arranged a merger with Chris-Craft Industries, which owned several television stations. The merger made Warner a part owner of those stations. Murdoch, who was not yet an American citizen, thus was blocked by federal law from taking over Warner. However, the merger also put Herb Siegel, Chris-Craft's president, in a position to initiate major cost-cutting moves at Warner. The Cosmos were exactly the sort of frill that attracted Siegel's unwanted attention. There is disagreement over whether Warner did or didn't sell the Cosmos in 1984, but one thing is certain. By 1984, Warner was no longer spending piles of money on the Cosmos, whether it sold them that year or not.
The Cosmos, who had won the NASL title in four of the previous six seasons before 1983, were eliminated in the first round of the playoffs that year and then failed to make the playoffs in 1984. The fading of the Cosmos during those last two NASL seasons seems not at all surprising considering the way that Warner's troubles dried up the flood of money that had sustained the team in previous years. The Cosmos are a perfect example of the way that professional soccer teams, which don't exist in a vacuum, can be very heavily affected by off-the-field events such as the financial ups and downs of their owners.