BusinessDay
Nigeria's leading finance and market intelligence news report.

Sports and COVID-19: a global outlook (1)

COVID-19 has taken its toll on every aspect of life globally, forcing people to either adapt or stop most social or business activities with the sport industry not left out.

Sports encompasses business and social activities. It is recreation that generates huge resources – the global value of the sports industry is estimated at $756 billion annually.

In March 2020, sports activities were grounded to a halt as most countries restricted public gatherings and closed all non-essential industries indefinitely to prevent the spread of the coronavirus. Millions of jobs and source of livelihood attached to the sport industry such as athletes, coaches, instructors, administrators, sports officials; businesses producing sport wears, sports equipment or rendering sports related service; event organisers, marketing agencies, travel and tour companies, among others were all thrown into crisis as all sporting activities were put on hold.

Sport is a major contributor to economic and social development of several nations across the world, and its impact is well recognised by governments such that, it has been added to the United Nations’ Political Declaration of the 2030 Agenda, which reflects “the contribution Sports make to the empowerment of women, young people, individuals and communities, as well as to health, education and social inclusion objectives.”

Current outlook of sport activities

Sporting activities are gradually resuming around the world, with a revamped mode of operation that ensures social distancing and safety. For instance, games are played without fans watching live at the arena of action, while major events like the Olympics have been postponed.

The digital space is now used for sports analysis or commentary, fans engagement, and the likes; revenues have noticeably reduced. Sports that have resumed or planning to have similar safety measures like no fans in stadium or sport venues, testing of all officials, club members and everyone involved in the sport activity, in place.

Football is being played without fans, and only officials and club members who test negative to COVID-19 are allowed in the stadium.

The NBA for instance has put in place safety guidelines like: no fans in the stadium, self-isolation of officials and players in their hotel rooms for up 48 hours until they have two negative COVID-19 test results, only 37 people per team are allowed into the NBA campus, compulsory use of face mask by the audience and strict adherence to social distancing.

There are over 8,000 indigenous Sports and games around the world, with popular ones like, football, basketball, tennis, golf, volleyball, athletics, etc. The three most popular sports are football with an estimate of 3.5 billion fans, cricket 2.5 billion fans, and basketball 2.2 billion fans.

Revenue and other challenges

Businesses, whose sole activity is centered on the sport industry’s operations, including sport clubs and players (players in some sport represent their own brand) among others have had to lay off staff to cut down on expenditure.

Fans “in stadium” engagement has been halted in every sport, with revenue generation from ticketing and hospitality no longer available until it is safe enough to return to the stadium. This has affected the financial statistics of FIBA, FIFA, clubs and players, as little or no revenue is flowing in for sponsorship of sport leagues. Endorsement deals with players, before the pandemic was a leading marketing campaign strategy for major companies like Pepsi, Coca-Cola among others.

Liverpool, Tottenham and Bournemouth football clubs had plans to put their staffs on furlough but for intervention from players and another stakeholder. The management had to cancel such plans and continue payment of staff. Newcastle and Norwich football club, still in the English premier league, had their non-playing staff placed on leave of absence as players and managers from clubs in that football league voluntarily accepted pay cuts, an example is Bournemouth manager Eddie Howe and his assistant. Boston sport club had their training facility shut down and all their staff laid off due to COVID-19.

Upon recent resumption, these businesses are faced with novel challenges such as staff management – some staff are not ready to resume duty due to the fear of the virus. There is also the need for fresh revenue projection and analysis that will shape the taking of imminent business decisions.

The sport business has three main income avenues: Sales of media broadcasting rights; commercial sponsorship and advertising partnerships (this is the biggest revenue generating source); and match-day ticket sales and hospitality. In reality these three sources of income have been disrupted with ticketing totally closed. The other two avenues have been reduced but serves as the only functioning stream of income now.

The bid for media rights is in millions of dollars annually. For example, FIFA made about $1.4 billion from sponsorship deals with 20 major companies during the 2014 World Cup finals in Brazil. Also, during the suspension of the football league, each English Premier League game broadcast in Britain cost its host domestic network $16 million.

Dealing with stakeholders like their fans and sponsors was another major challenge for club owners as they had to manage and reassure sponsors as well as find ways to keep fans engaged and interested.

Get real time updates directly on you device, subscribe now.