Image: Phoenix Suns Arena sports stadium Courtesy of Fansided
Sports is one of America’s greatest pastimes. Fall is packed with Sunday night football games. Winter weekends are filled with basketball games. Spring nights are spent at lacrosse tournaments. Summer days consist of baseball games, and before we know it, football season has rolled around once again. Behind these games, though, is one of the most profitable economic industries in the country. Like other aspects of normal life, the industry is taking a hit from Covid-19.
The sports industry is worth about 73.5 billion dollars, according to Forbes, standing as one of the largest industries in America and one expected to grow exponentially. Unfortunately, though, “every part of the sporting value chain has been affected, from athletes, teams and leagues, to the media that broadcast and cover games,” Stefan Hall wrote in the World Economic Forum.
Explained simply, the sports league’s income derives from three different origins: broadcasting, hospitality and commercial and ticketing. With the cancellations and postponements due to the quarantine, each of these avenues have declined.
The World Economic Forum reported, “The global value of sports media rights is around $50 billion.” About 60% of this income is pulled from 10 major sports leagues, including the NFL, NBA and MLB.
This money comes from the most obvious translation of sports: television, radio and other forms of media. However, broadcasting is not possible when no sports competitions are happening.
The commercial stream is a form of income which stems off of broadcasting and includes sponsorship and advertising. But again, when no sports are playing, no teams can be sponsored and no advertisements can be shown.
The third stream derives from ticketing and hospitality, the income coming from filling up stadiums with people to watch games. But when everyone must stay six to ten feet apart, stadiums cannot be filled.
These forms of income have suffered while the sports industry has been put on hold, which for some will last until 2021. The first sport to make its return, baseball, is said not to happen until July and much of the normal season has already passed.
The first sport to suspend the season was the National Basketball Association (NBA) along with their March Madness Tournament. Online statistics portal Statista suggested that each of the participating schools lost $17 million, still only a fraction of the $867.5 million lost from NBA marketing. CNBC reported that the Major League Baseball (MLB) would have generated about $60 million had the season proceeded as normal.
Another major sports economic hit took place in Augusta, Georgia, where the Masters Tournament was set to take place starting April 9. Each year, this invitational golf tournament generates about $100 million within the event itself, not to mention the increase in local economy.
The Savannah Morning News reported, “The tournament is hands-down the region’s largest economic event.” Although the tournament has been rescheduled to November of this year, the struggling local economy has a long road to recovery.
Although the sports industry is clearly suffering, it has not remained passive during the current crisis. The World Economic Forum reported, “The industry is trying to capitalize on the spike in media consumption by finding new ways to engage consumers.”
The sports industry is expanding its place within the pool of entertainment in the absence of live broadcasting. This projection is why you might have noticed collegiate cornhole and table tennis on the TV lately.
ESPN and Fox Sports are also striving to show iconic games and tournaments from 2009 to the present and sports documentaries in order to keep viewers entertained.
Although everyone may be tired of re-watching championship games from 2011 and miss seeing their favorite players score epic wins, the sports industry will recover in the coming months and long-awaited Sunday night football will be more exciting than ever.