Global sport suffers multibillion-dollar coronavirus hit
Some of the biggest events in the sporting calendar fell victim to the coronavirus this week, with organisers, clubs and broadcasters among those counting the multibillion-dollar cost of disruption after fixtures across the world were cancelled because of the global pandemic.
On Friday, the English Premier League, France’s Ligue 1 and Uefa, European football’s governing body which organises the Champions League, became the latest organisations in the sport to postpone matches after players and coaches contracted the virus and forced teammates into self-isolation.
The start of the Formula One motor racing series was delayed, with this week’s season-opening Australian Grand Prix cancelled. Many of North America’s biggest sports leagues, including the National Basketball Association, the National Hockey League, Major League Soccer and college tournaments, have also been postponed.
Leading professional tournaments in tennis, rugby, golf and upcoming World Cup football qualifiers in Asia have also either been halted or axed.
The swath of cancellations has left holes in broadcast schedules, while clubs are fearing a cash crunch that will make it harder to pay player salaries and some franchises are preparing for legal battles over the terms of calling off a season.
The impact goes further, with heavy losses expected for many businesses associated with the competitions.
“Everyone thinks immediately of lost revenues from matches that are cancelled,” said Fausto Zanetton, chief executive of Tifosy capital and advisory, a sports investment company. “But this is just the start of it — clubs have commercial contracts which are contingent on ‘brand exposure’, matches being broadcasted and/or dependent on spectators in the stadium.”
Lost ticket sales will hurt events and clubs, especially smaller ones, but the suspension of games is a big setback for broadcasters, which pay billions of dollars for the right to live sports to fill schedules, attract viewers and sell advertising.
One US broadcasting executive said sports networks could still emerge “reasonably well” as long as games are eventually played, even without spectators. “It’s hard to cope if 100 per cent of your live event channel has been cancelled,” he said. “But the flip side is that you don’t pay costs.”
Thomas Rabe, chief executive of the German media group Bertelsmann, said cancellations would ultimately mean sports rights-owners losing revenue. “If [the games] don’t take place then the payment will not be due, or will be reimbursed,” he told the FT.
The suspension of the NBA and NHL just as they were approaching high-stakes playoff games could mean hundreds of millions dollars are lost in advertising revenues for the largest media companies: Disney, which owns ESPN, and AT&T’s WarnerMedia, the owner of Turner.
These groups paid $24bn for the rights to air the NBA games through the 2024-25 season, and it unclear whether they will have to pay these fees in full with so many cancelled games. The loss of NBA fixtures leaves a big hole in their programming schedules, and if the season remains suspended through the playoffs next month, they would miss out on the bulk of the advertising revenues for this year.
Postseason games make up 62 per cent of total TV advertising spending for the NBA according to Kantar Media, as ratings soar during the higher-stakes contests. MoffettNathanson analysts estimated that Disney would lose $481m in NBA advertising sales, while Turner would miss out on $210m.
Analysts warned that the loss of live sports could accelerate the death of traditional television, expanding the ramifications of this outage well beyond lost advertising sales this year.
“Sports is the only thing holding up the [cable] bundle in 2020,” said Rich Greenfield, partner at Lightshed research group. “The only reason to have a [multichannel cable] video bundle is literally disappearing, at least temporarily.”
In the UK, the English Premier League, one of the world’s most watched competitions, had formulated a plan focused on completing the season, including playing matches in empty stadiums, in an effort to protect its £9.2bn domestic and international broadcasting contracts.
That plan fell apart after Arsenal manager Mikel Arteta and Chelsea player Callum Hudson Odoi announced they had tested positive for the disease, leading their teammates to self-isolate.
In response, the English Premier League held an emergency meeting on Friday where the 20 member clubs decided to suspend the season until April. It followed similar suspensions in Italy’s Serie A and Spain’s La Liga earlier in the week.
Formula One said with the Australian Grand Prix cancelled, and upcoming races in China, Bahrain and Vietnam postponed, they expected to resume the global racing series at the end of May.
There is pressure to fulfil upcoming races, as a third of F1s overall revenues come from promotion fees worth $30m-$70m an event. Race promoters recoup money through ticket sales, but the events are often run at a loss or subsided by governments.
The International Olympic Committee, remains insistent that the Summer games due to begin in Tokyo in July will continue as planned. Sponsors and sports executives say privately they expect a delay to the world’s biggest sporting event.
With the peak of the virus in Europe approaching in the coming weeks, many sports executives said seasons would have to be cancelled altogether.
Across Europe, football executives in top leagues have begun considering contingency plans in this unprecedented scenario, as it is unclear which teams would be allocated lucrative European places and face the financial penalty of relegation.
For example, in England, the top four clubs qualify for the next season’s Champions League, Europe’s top club competition where €2bn is shared between competing clubs. The bottom three teams are relegated, losing tens of millions of pounds. They are replaced by three sides from the Championship — the tier below the Premier League — which earn at least £170m from promotion.
One English club executive said there were “heads in the sand” at the Premier League about how these positions would be allocated in the event of the season’s being axed. Another said that their club’s “lawyers are watching closely” for any decision that would see them excluded from next season’s lucrative European competitions.
There remains hope that football seasons may simply be resumed and extended into the summer. Next week, Uefa, European football’s governing body, is holding talks where it will discuss a delay to the Euro 2020 championships, a national tournament set to take place across 12 cities starting in June.
“I am bemused of talk of leagues and competitions being suspended,” said one football club owner who expects the disruption to extend beyond the summer. “They are over.”