The basketball arenas have gone dark, baseball stadiums are empty, football and soccer fields are deserted, and even hockey rings have no spotlights turned on. Sports, as we know it, has come to a sudden halt. The COVID-19 pandemic has literally put sports events at peril, putting the players and coaching teams at high risk for viral infections. The pandemic has also devastated broadcasting revenues of the leagues and teams of the world’s most beloved and most-watched sports: basketball, football, hockey, soccer, and baseball. How will these global sports leagues survive if live games are not allowed?
With government restrictions still in place, team sports cannot be played since that would violate physical distancing rules related to the COVID-19 pandemic. Some individual participative sports like golf were also put on hold in some areas since it would also involve the gathering of people. Since the games are not allowed and live sporting events have been suspended, how can these teams and individual players earn an income? The team’s owners also cannot actively pursue advertising and endorsement contracts given the lack of game broadcasts. With the prospects still unsure while COVID-19 remains a public health concern, new ways of running the sports industry had to be developed and tested.
How the Sports Leagues Are Coping and Innovating
At the start of the quarantine-related lockdowns, the various leagues quickly worked with broadcasters including cable companies and internet-based video streaming companies to feature old game videos, behind-the-scenes footage, and sports specials. The goal was to keep the fans connected and engaged with the sports content on television and other viewing platforms. The leagues also saw the rise of video consumption using smartphones and that is why their sales and marketing campaigns for sports events, both live and recorded, have been leaning toward a younger market that did not watch t.v. anymore but were hooked on smart phones, tablets, and other portable devices. As people got glued on their laptops, smartphones, and tablets, restaurant I.T. support services also enabled these fans to order food for delivery in their homes. The thrill of live stadium events was replaced by the fun of enjoying the games at home while savoring food that was ordered online.
Sports as a Business
The leagues had no other option but to adapt and innovate, changing business models in midstream while they wait for things to get better in terms of the economy and public health. There is so much at stake in the sports industry that they had to think quick, like a fastbreak in basketball, to make sure they stay in the game of business.
At the global scale, the sports industry was worth at least $488.5 Billion in 2018 and was in a steady incline until the novel coronavirus hit many countries across continents. Sports as a business is expected to peak in market value of at least $614 Billion by 2022.
The entire industry is actually divided into two categories: spectator sports and participatory sports. The participatory sports are those that actually involve practitioners and fans of a particular sports discipline or event in the actual game or play. Some examples of participatory sports are golf, skiing, and bowling which generate income from sales of supplies and equipment, membership golf clubs, bowling alleys, and skating rinks. The global spectator sports include team sports like basketball and individual sports like boxing which draws millions of fans to live events and pay-per-views. While both categories have practitioners and spectators, the line that distinguishes the two is the source of revenue. One category earns more when people directly participate in it, while the other generates income when more and more people just watch the games.
The sports industry generally has three ways of generating revenue: matchday revenue through ticket sales and hospitality-related income; commercial revenue through advertising and sponsorships; and broadcasting which is the sale of media rights to the events. The largest pie of the industry income actually comes from broadcasting. For example, a report from the World Economic Forum states that the NBA is expected to generate an income of $24 Billion over the next few years from television deals alone. The English Premiere League, on the other hand, is projected to earn at least $12 Billion in the next three years. The income for each league is divided among the teams that play in that organization.
The Sports Must Go On
Increasingly, the sports leagues are utilizing various information technologies to reach out to as many online fans and customers as possible. Even sports merchandising, formerly a strong product in live events especially during championships was now gaining traction in e-commerce sites. As people got stuck in their homes during the lock down, many online forms of entertainment including sports experienced a spike in growth, and it may continue to do so in the months and years ahead.
It can be expected that people, even the most hardcore of fans, would be taking precautions and will hesitate to go back to mass gatherings and crowded sports events. It might take a minimum of a year to two years before things settle down. One way or another, people will accept the New Normal of daily life and how they play and enjoy sports.