Will Sports Recover From the Coronavirus Pandemic?
The outbreak of COVID-19 took the world by storm in early 2020, affecting all areas of life. Heavily reliant on human contact, the sports industry took a significant blow as well, as many sporting events were cancelled or postponed.
However, as national lockdowns across the globe started coming into effect, it was clear that the new circumstances would have a much broader impact. From athletes, clubs, organisations, and leagues to sponsors, media, sporting goods industry, and hospitality, no one was immune to the ensuing financial downfall.
Impact of the Coronavirus on Major Sporting Events
One of the biggest shocks to the world of sports came in late March 2020 when the Olympic Committee announced that they would be postponing the 2020 Olympic Games due to the pandemic. The event, which was supposed to start on July 24, 2020, in Tokyo, was worth more than $26 billion.
Another sporting event with a long-standing tradition that was severely hit was the Boston Marathon. The race that had been held annually since 1897 was first postponed from April to September 2020, before being officially cancelled in late May 2020. The participants were given a chance to complete the race virtually, with a system designed to verify that they have run their 42km in one go.
The list goes on with the UEFA EURO Championship that was supposed to be held in summer 2020 across Europe. All fixtures have been postponed until 2021, without the qualification process being completed. The magnitude of the setback is probably best illustrated by the fact that this championship brings UEFA around €2 billion from broadcasters and sponsors.
The International Tennis Federation had seen a rise in scheduled tournaments for the first quarter of 2020, compared to the same period the year before. Unfortunately, most of them had to be suspended until late July 2020.
The new development incurred a considerable cost to the industry, except for one particular case. Namely, after the outbreak of SARS in 2003, the Wimbledon tennis tournament had the foresight to start paying pandemic insurance premiums. With $141 million in insurance payout this year, their investment of nearly $31.7 million has paid off manifold.
Basketball was hit hard when the NBA had to suspend its season in March 2020, due to the outbreak of the virus. The news that Utah Jazz centre Rudy Gobert had tested positive for the disease came minutes before the game against Oklahoma City Thunder. Though the season was resumed in early June 2020, the suspension is estimated to have had hundreds of millions of dollars worth of impact on the league.
The economic consequences of these covid-induced suspensions and delays become even more apparent when we consider the fact that the global sports industry grosses around $756 billion annually.
Although the bulk of this sum comes from major sporting events, we must not forget about the other elements of the industry either. Namely, the sports goods industry, infrastructure, sports betting, hospitality, clubs, and gyms are believed to have been affected just as much.
Considering the fact that the modern sports industry is facing an unprecedented situation, it is difficult to say what the post-COVID sporting landscape may look like. Furthermore, we are yet to see the end of the pandemic, so the full magnitude of the impact and the possible courses of action are still to be determined.
Nevertheless, there could be some solutions that may help the sports ecosystem get back on its feet. Namely, since fans have not been able to enjoy watching live games, and many have had more free time on their hands due to the restrictions and lockdowns, the consumption of sports-related digital content has been at an all-time high in 2020.
The newfangled reality has also forced clubs and leagues in all sports to adapt their content to the virtual environment, opening more channels for contact with the public. As a result, the interaction with fans has been moved to the virtual world, on social media and streaming platforms.
What’s more, athletes, coaches and trainers have been creating tutorials, workout videos, and other related content readily received by the public.
Therefore, the switch has brought new possibilities for the development of sports. Memberships, subscriptions, affiliate marketing, and advertising have turned out to have a lot of potential to generate some of the income lost during the pandemic.
While the recovery process requires some strategic thinking and adaptation, some outside help seems to be paramount as well. Since sports are one of the most significant single generators of income, governments could do a lot to support the recovery of the industry. Tax exemptions, facilitated credit, subsidies, and liquidity injections are some of the ways to contribute.
Another comforting thought is that the current situation is unlikely to influence sports’ mass consumption in the future. Therefore, the industry is expected to see a steady rise in revenue as soon as spectators are allowed back.
However, when this happens, the clubs need to make sure the fans feel safe. That means implementing and securing the prevention protocols such as social distancing, wearing protective gear, and taking care of good hygiene on the premises.
We’ve seen that the outbreak of COVID-19 has had some unprecedented implications on the sports industry. We’re still in the midst of the pandemic, and it’s hard to see what the future holds. Nevertheless, with the increased consumption of digital content related to sports, the fast adaptation of the industry, and the unwavering popularity of sports activities, we can be optimistic about what is to come.