SPORTS | Don’t Call It A Comeback
With a vaccine on the horizon, the sports industry is hoping for a rebound
Chris Price is an award-winning journalist and public relations principal. When he’s not writing, he’s avid about music, the outdoors, and Saints, Ole Miss and Chelsea football. Price also authors the Friday Sports Column at BizNewOrleans.com.
As the calendar changes, sports-related businesses are hoping the New Year will bring a change in their fortunes.
While some leagues and events have returned with limited fan capacity, there is hope that the vaccines in production will wrangle the pandemic’s spread and return society to normal interactions. Meanwhile, the full economic impact of the disease and related safety protocols on the business of sports is unknown.
Upriver in Baton Rouge, LSU’s athletic department says it expects to lose $80 million in revenue due to the impact of COVID-19. The Tigers lost home games when the SEC went to a 10-game, league-only schedule and have had limited fan capacity in place, too. The program has laid off some employees, eliminated bonuses and reduced salaries for staff who earn more than $80,000 by 5%, including football coach Ed Orgeron, men’s basketball coach Will Wade, and athletic director Scott Woodward. The move cost “Coach O” $300,000 of his $6 million annual salary.
Closer to home, the New Orleans Saints saw their preseason eliminated. When the season did start, their “Domefield Advantage” was eliminated as fans weren’t allowed in the Mercedes-Benz Superdome. Forbes’ Darren Heitner has estimated that the Saints could lose up to $161 million in direct stadium revenue, and more than $44o million if the entire 2020 season be played without fans in attendance. As the season continued, limited capacity was ramped up to fewer than 15,000 — a far cry from the Dome’s more than 72,000-person capacity.
Still unquantifiable are how athletic programs — not to mention their local communities’ economies — will be affected long-term. Most of the operating revenue at athletic departments at state schools in the Power 5 conferences is generated from football-related sales, with 14% coming from ticket sales, according to ESPN. With those revenues gone, many schools have or are exploring eliminating low-revenue-generating sports.
For local communities, businesses are not seeing the influx of fans spending money to attend games, eat and drink at local venues, stay in hotel rooms for the weekend, or purchase their favorite team’s gear. Those losses create a domino effect of lower revenues, fewer jobs and reduced tax revenue.
According to an analysis by Sports Value — a Brazil-based sports marketing, branding, sponsorships, activations, brand and sports properties valuation firm — the global sports market generates an estimated $756 billion annually, with $420 billion — or nearly 56% — generated in the United States. When sports began shutting down in March to protect the health of participants and spectators, stadiums and arenas were left empty, impacting approximately 1.3 million sports jobs that were furloughed, reduced or erased.
Set to be the biggest sporting event of 2020 — the Summer Olympics in Tokyo, which was expected to draw 600,000 foreign visitors and their money to Japan — was rescheduled to July 2021. The one-year delay for everything from coaches’ salaries to venue maintenance is expected to cost between $2.7 billion to $6 billion worldwide.
Domestically, the “Big 4” professional sports leagues — the NFL, MLB, NBA and NHL — combined are expected to lose more than $6.8 billion in ticket sales due to the virus.
In March, the NBA suspended its season after a player tested positive for COVID-19. The league didn’t return until August, when 22 teams played in an “isolation bubble” at Walt Disney World’s ESPN Wide World of Sports Complex in Orlando, Florida. The NBA 2020-2021 season tipped off on Dec. 22, about two months later than normal due to the delay of the ’19-’20 season. It will be interesting to see how holiday travel impacts COVID-19 numbers and affects the league, mainly the rejuvenated New Orleans Pelicans.
MLB started, stopped and restarted its season, choosing to play home games without spectators and then using two cities as a bubble during the playoffs and a single site for the World Series. It’s likely the start of the 2021 season will be impacted with a delayed start and/or limited fan capacity.
There will be debates about how the pandemic was handled, but thank goodness there appear to be vaccines on the way to stop the spread. The world is a little bit under the weather, but soon, hopefully, we will be back safely and can have a ball once again.