Home » News: Sudden disappearance of sports due to coronavirus will cost at least $12 billion, analysis says

News: Sudden disappearance of sports due to coronavirus will cost at least $12 billion, analysis says

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The sudden disappearance of sports will erase at least $12 billion in revenue and hundreds of thousands of jobs, an economic catastrophe that will more than double if the college football and NFL schedules are wiped out this fall by the coronavirus pandemic, an analysis conducted for ESPN shows.

The meltdown is a fraction of the crisis spreading across the country, but it is nonetheless historic, touching every sector of the $100 billion United States sports industry.

From stadium authorities to youth sports complexes, from rec centers to global TV networks such as ESPN, the scale of devastation is only now coming into view. Some organizations, especially at the lower levels of sports, say they’ll be lucky to survive. The pain is especially acute among the army of low-wage service workers who support pro and college sports and are now unemployed. The losses are draining tax revenue that helps support local services such as police and firefighters and contributes to the quality of everyday life in thousands of communities.

“As an economist, you stand back, you look at the carnage that’s taking place — dumbfounded, awestruck, mind-numbing,” said Patrick Rishe, who directs the sports business program at Washington University in St. Louis. “All of those phrases, they’re all relevant because we just have never seen anything on this scale.”

At ESPN’s request, Rishe examined publicly available data to estimate the potential impact of the shutdown on the major pro leagues, the NCAA and youth sports. Emsi, a labor market analytics firm, worked with ESPN to provide estimates on sports-related jobs. In addition, ESPN interviewed economists, public officials, sports executives, concession workers, travel team organizers and others to assess the economic impact of the coronavirus pandemic on sports at all levels.

Rishe’s analysis relies on assumptions that appear more remote with each passing day, such as the ability of Major League Baseball and Major League Soccer to salvage at least half their seasons with fans attending games. The analysis also assumes the NBA and NHL cancel the rest of their regular seasons and the playoffs are staged without fans. And that youth sports resume by July.

The numbers include everything from the price of a ticket and a hot dog to the money you spend taking your daughter to an out-of-state soccer tournament. For example, the crisis stands to wipe out more than $3.25 billion that fans would have spent on pro sports. It would erase nearly $371 million in wages — approximately 20 million hours — for ticket takers, beer vendors and other stadium and arena employees. At least $2.2 billion of national TV revenue would be lost, as well as up to $2.4 billion in tourism related to youth sports.

The analysis is conservative in a number of ways. It does not include projected losses from NASCAR, golf, tennis and several minor sports and gambling. The numbers also don’t account for losses in the outdoor recreation industry, including hunting, skiing, recreational golf and tennis and fishing. Outdoor recreation generated $427 billion in 2017, according to the Bureau of Economic Analysis. With sporting goods stores, golf courses and fishing tournaments shut down in parts of the country, those revenues and jobs have disappeared, too.

Complicating matters, insurance is unlikely to make up many of the losses. Although big events like Wimbledon and the Olympics held comprehensive insurance policies, the major U.S. sports leagues are not covered for the pandemic, in part because the loss of entire seasons was regarded as unthinkable, industry sources told ESPN.
“It’s like hell began freezing over,” one sports executive said.

The stakes for sports become higher if part or all of the NFL and college football seasons are lost. According to Rishe, each NFL regular-season game is worth nearly $24 million in revenue from TV rights alone — a figure larger than the budget for some Hollywood films. Collectively, the 65 college football programs in the Power 5 bring about $4 billion in revenue — money that makes up nearly half of all athletic department budgets.

“If [college] football goes down, that’s just a killer,” said Rick Gentile, a former CBS executive who still works in broadcasting and directs the Seton Hall University Sports Poll. “I don’t know how schools recover from that, God only knows. You could make a prediction, go crazy. The Pac-12 disbands? I’m making it up, but who knows?”

AS WITH THE rest of the economy, job losses in sports are expected to be staggering. There are roughly 3 million jobs within 524 occupations that are dependent on sports, according to Emsi’s analysis of data from the Bureau of Labor Statistics. That’s everybody from athletic trainers to security guards, from umpires to public address announcers, from groundskeepers to dancers. Analysts say many of these workers are living paycheck to paycheck.

For example, there are 278,932 Americans who earn an average of $45,649 annually from coaching and scouting. There are 371,607 fitness and aerobics instructors, with an average annual salary of $44,956 — representing nearly $17 billion in total wages.

How many of those people are out of work — and when those jobs may return — is not yet clear, but the effect on pro sports is already dramatic. It requires roughly 1,900 people to stage an NBA game, for example, according to league figures. Of the 52,450 workers the NBA supports, approximately 42,000 — or 80% — are ushers, security personnel, ticket takers and other service people working at arenas.

Although teams and, in some cases, star athletes have pledged money to help those workers, the assistance will fall short of what’s needed, especially if leagues such as the NBA and MLB return without fans. “My worst fear is the startup — coming back if the people are not attending games,” said Tawanda Murray, 45, who works concessions at Chicago’s United Center.

On March 11, Murray was working a Blackhawks game when she and her colleagues heard the NBA was shutting down. One day later, the NHL postponed its season. Murray immediately filed for unemployment.
THE POTENTIAL IMPACT on the $19 billion youth sports industry is even more profound and far-reaching. A survey commissioned by the Sports Events & Tourism Association, which represents the sports travel industry, found that nearly 700,000 athletes were unable to participate in scheduled events in March alone, costing organizers more than $700 million.

“Right now people are still in shock,” said Al Kidd, the association’s president and CEO.

Hundreds of organizations, including travel sports companies, Pop Warner Little Scholars and US Lacrosse, have petitioned Congress to create an $8.5 billion “youth sports relief fund” to “stabilize the industry and invest in recovery.”

Many organizations may be fighting to remain solvent after their losses, and experts say everything from team travel to fan attendance will have to be reimagined when kids return to action
“Youth sports will not be the same following this pandemic,” the letter stated.

In recent years, the youth market has emerged as the largest sports-revenue driver in the country.

Municipalities all over the country have engaged in an arms race to create “megacilities” — multipurpose complexes that attract travel tournaments and tax revenue. The facilities have been built “under the guise that this was for kids, but really the cities are after the tax money, let’s be real about it,” Kidd said. “It grew to the point where it was like weeds springing up across America.”

Now, those facilities are idle.

In Westfield, Indiana, officials were forced to shut down the 400-acre Grand Park Sports Campus at the height of the spring season. The facility, about 30 miles north of Indianapolis, has 31 multi-purposes fields and hosts events year-round. Grand Park hopes to reopen June 1. Officials calculate that the central Indiana economy is losing more than $20 million per month while the facility is closed. Nearly a quarter of all hotel room reservations in Hamilton County are tied to the complex.

“I wouldn’t hesitate to say this is devastating,” said Brenda Myers, president of the Hamilton County Tourism Board, which is financed almost entirely by a lodging tax. Myers has cut her 24-member staff in half through layoffs and furloughs.

In Blaine, Minnesota, the $170 million, 660-acre National Sports Center lies dormant. Billed as “The World’s Largest Amateur Sports Facility,” the complex includes 50 multi-use athletic fields, an ice arena with eight rinks, a stadium that seats 5,500 people and a 58,000-square-foot indoor facility. The NSC has calculated its annual economic impact to the community at $89.1 million.

In July, the NSC is scheduled to host the Target USA Cup, the largest amateur soccer tournament in the U.S. The tournament brings in 16,000 players from more than 20 countries, filling up almost every hotel room in the Twin Cities.

“It’s potentially pretty devastating if [the pandemic] keeps going on,” said NSC executive director Todd Johnson, whose organization is asking for donations on its website to stay afloat. “My goal is to get us through the summer.”

SPORTS-RELATED TRAVEL — to follow pro and college teams and to attend youth tournaments in communities such as Westfield and Blaine — generated $32 billion in 2018, according to a study by Longwoods International, a market research company that specializes in travel and tourism.

“We love it when visitors come into our communities and spend tourism dollars,” said Amir Eylon, the president and CEO of Longwoods. “It helps broaden the tax base, it’s helping to pay for my fire and police protection.

“The exponential loss to the economy is just mind-boggling.”
In Cleveland, over a two-week period, the pandemic canceled the Mid-American Conference men’s and women’s basketball tournaments, the first and second rounds of the NCAA sub-regional, the NCAA Division II swimming and diving championships and the 2020 national title for the American Cornhole League, with 1,000 participants.
David Gilbert, president and CEO of the Greater Cleveland Sports Commission, said the events were expected to bring in $12 million to $15 million in revenue for the city.

“The people working downtown are a skeleton crew. I’m one of them that isn’t there,” Gilbert said in an interview from his home. He estimated that up to 2,000 hotel and restaurant jobs in downtown Cleveland have disappeared.

“I would say a good portion of those are supported by those events,” he said.

In Alabama, the pandemic has crushed the state’s $1.4 billion freshwater fishing industry, which includes the popular Tournament Series of the Alabama Bass Trail, with anglers coming from around the country to participate in 10 events plus a championship.

“Everything has fallen like dead leaves,” said Kay Donaldson, director of the Alabama Bass Trail.
The loss of four tournaments so far has canceled about 1,400 nights of hotel reservations.

“So, those people aren’t staying in those hotel rooms, eating at restaurants, driving over to the local pub,” Donaldson said. “They’re not putting gas in their truck, they’re not putting gas in their boat, so there’s a big trickle down.

“Bass fishing to several of our communities is a really big deal.”
UNTIL NOW, SPORTS were thought by many to be recession-proof. A 2019 report by PwC predicted robust annual growth through at least 2023 and gushed: “The love affair with sports in the United States is a perpetual and immersive force.”

But the pandemic has undermined the most basic assumptions about sports economics.

Many economists believe that sports has little impact on the overall economy because of a “substitution effect.” The theory is that fans seek out alternate forms of entertainment if, for example, a league goes on strike or a team moves to another city.

“In COVID-19, that issue is turned on its head,” said Victor Matheson, a professor at College of the Holy Cross in Worcester, Massachusetts. “The money that is not being spent on the NBA, that’s true loss, because it’s not being made up anywhere else.”

The sports betting market is one of many examples. Since 2018, when the Supreme Court struck down a law that limited sports betting primarily to Nevada, more than $20.5 billion has been wagered in the 16 states that were taking bets prior to the pandemic, generating $180 million in tax revenue, according to legalsportsreport.com, which tracks the industry. PwC called gambling “the most significant catalyst shaping today’s sports market.”

Sports began to disappear on the eve of the NCAA tournament, an event that gaming officials estimate generated a record $400 million in wagers last year for Nevada sportsbooks. On March 12, as conference tournaments shut down, the odds provider Don Best Sports issued a series of “critical alerts” to its bookmaker clients that signaled the industry’s imminent collapse. When March was over, approximately $141.2 million had been bet at Nevada books — a 76% year-over-year decrease and the lowest amount bet in the month of March since 1993.

These days, hours sometimes pass without sportsbooks taking a single bet. Russian table tennis — one of a handful of niche events still standing — has emerged as one of the most popular betting markets at William Hill U.S. Sportsbook.

“We went from one of our busiest times to basically nothing,” said Alan Berg, a senior oddsmaker for Caesars Sportsbook in Las Vegas.

ESTIMATES FOR HOW much of the sports economy ultimately will disappear are as elusive as mapping out the trajectory of the disease. The NBA, MLB, the NFL and other leagues are developing contingency plans to salvage what they can, including locking down players in a kind of sterilized biosphere. That strategy would not only bring back sports but also would help leagues capture billions of dollars in TV rights fees, the largest driver of sports revenue.

But at this point, no one has any idea what will work. And even if the leagues and colleges find ways to resume, the losses will be massive without fans spending on everything from parking to garlic fries to their favorite player’s jersey.

To calculate the financial impact of the pandemic, Rishe examined publicly available data from several sources. That included Team Marketing Report’s Fan Cost Index, which measures fan spending; a study on the youth sports market developed by WinterGreen Research, an international forecasting company; pro sports media data from Sports Business Journal’s “Resource Guide Live;” and others.

Rishe acknowledged several caveats to his calculations, but most suggested the numbers were conservative. If Major League Baseball plays without fans for even half the season, for example, more than $2 billion in fan game-day spending — tickets, food, merchandise and other items — will be lost.

The absence of fans also means most of the workforce that supports the major sports will be unemployed.

To calculate the impact on labor in pro sports, Rishe took the average number of temporary service employees required to staff NBA, NHL and MLB games. Because some employees work for multiple teams — the Lakers and Clippers, for example — and even at multiple venues, it was impossible to estimate the number of workers actually unemployed.

Rishe instead examined lost wages. He calculated that workers will lose 19.5 million hours totaling more than $370 million. Those wages were based on both part-time workers employed by the teams and contract workers employed by food-service companies such as Aramark and Levy, which, according to their union representatives, average roughly $14 per hour. Rishe estimates each MLB team employs nearly 2,300 temp workers per game.

“Some people think this is like pocket change or work for folks in high school or college. It’s not,” said Rosslyn Wuchinich, president of UNITE HERE Local 274, which represents 2,500 concession workers at 76ers, Flyers and Eagles games in Philadelphia. “These are people supporting families on this income. This crisis is a deep, deep financial crisis for low-wage workers.”

Source: africa.espn.com

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