The COVID-19 pandemic has changed many aspects of our lives, and sport has been no exception, particularly in a time when people are desperate for the escape and stress relief that sport can provide. In order to limit the spread of the virus, countries across the globe enforced restrictions on public gatherings and suspended non-essential activities, including sport. These restrictions have not only inflicted a significant financial hit to the sports industry, but have changed the way we participate in and view sport for what could be a long time.
According to The World Economic Forum, the global value of the sports industry was estimated to be US$471 bn, a 45% increase from 2011. Sporting bodies’ main income streams are from broadcasting (sales of media rights), commercial (sponsorship and advertising partnerships) and match day revenue (ticketing and hospitality); all of which disappeared when games were suspended throughout months of lockdowns. According to a report by sports marketing agency, Two Circles, the estimated cumulative revenue loss for the global professional sports industry in 2020 due to missed event-day operations, broadcasting sales and sponsorship rights is US$61.6 bn.
Without spectators and viewership, advertisers and sponsors are reluctant to invest in sporting events, which ultimately puts financial pressure on broadcasters, with a knock-on effect on sporting federations, leagues, clubs, athletes and other aspects of the industry.
In South Africa, the “big three” sports, football, rugby and cricket, rely heavily on broadcast revenue and faced financial fallout during the early months of lockdown, although cricket to a lesser extent since the season was coming to an end before lockdown was implemented. A report by accounting firm PWC estimated the value of the South African sports industry at R15.285 bn in 2016, based on ticket revenue, broadcast rights, sponsorships, merchandising and sports betting. The effect of the lockdown had a bigger impact on smaller and lower level sports, as they have significantly smaller budgets and rely mainly on event earnings, affiliation fees and lottery grants as their main source of revenue.
“According to The World Economic Forum, the global value of the sports industry was estimated to be US$471 bn…“
According to Forbes Africa, some of the country’s top rugby players will lose up to 43% of their monthly earnings in 2020 after SA rugby announced plans to cut R1.2 bn from its budget for the year by cancelling junior competitions, and limiting operations such as training camps and coaching courses.
The Premier Soccer League (PSL) had cut players’ salaries, as well as laying off non-playing staff. The PSL is seen by many as the richest and most established football league in Africa and receives most of its revenue from SuperSport, which is then distributed to the clubs. The PSL is currently in a five-year R2 bn broadcasting deal with SuperSport. While Cricket South Africa also pays out local provincial franchises from a deal with SuperSport, its revenue is more reliant on international broadcast deal. This means tours in and out of the country are essential for the financial future South African cricket, pending approval from Sports Minister Nathi Mthetwa.
Now that more restrictions are being lifted, sporting events are gradually returning under strict guidelines; however, sports in the current COVID-19 climate have faced serious challenges. Although the reasons for the resumption of sports have been mostly commercial, protecting athletes’ health and reducing the risk of infection to their communities is a priority.
For example, in football, social distancing measures have been enforced in stadia for masked substitutes and non-playing staff, who are made to sit at least five seats apart. Actions such as customary pre-game handshakes have been done away with, and hugging and spitting discouraged. The numbers of journalists in stadia have also been restricted, and journalists are also required to wear masks and abide by social distancing rules.
Regular COVID-19 testing before training and matches for playing and non-playing staff has become standard practice. Some sports leagues have taken steps to ensure a bio-secure environment, or a “bubble”, such as selecting match venues that are closer to hotels to reduce possible exposure to infection for athletes.
“The Premier Soccer League (PSL) had cut players’ salaries, as well as laying off non-playing staff“
The biggest and most striking change to sports has been the absence of fans within venues. Fans add emotion and atmosphere to events, something broadcasters have found difficult to capture or recreate, despite the attempts at innovations like blasting EA Sports FIFA-like crowd noise, giant screens with at-home fan reactions and Spidercam or drone footage.
Beyond the atmosphere and emotion that fans bring to sporting events, the financial loss is from their absence is quite significant. For example, the English Premier League stands to lose an estimated £700 million (R15 million) if fans don’t return this year, as reported by the Financial Times. Some territories with low cases numbers are allowing a couple hundred spectators into stadia, however capacity crowds are only expected back by mid-2021.
While the return of sports has been welcomed, it isn’t financially sustainable in the long run without spectators, from grassroots level all the way up to the highest professional level. The need for sports as a business to thrive is essential not just for the industry itself, but also its beneficiaries like vendors, ground staff, security personnel, as well as the hospitality and transportation. It isn’t sustainable from a public health perspective either and a vaccine will need to be developed for the safety of the fans and the athletes.