Major Sports and Entertainment Businesses Taking a Big COVID-19 Hit; How Soon Will They Recover?
By Keith Morelli
TAMPA (March 24, 2020) -- With the economy in a COVID-19 free fall, everyone is feeling the pinch. But among those hit hardest are sports – professional and collegiate – and entertainment. Cancellations and postponements of sporting events, tournaments and seasons mean immediate lost revenue and lots of it. In the short term, that can be devastating to sports teams and theme parks. But in the long term, the impact of the suspension of professional and collegiate sports reaches well beyond gate receipts.
“Consider the trickle-down effect,” said Michelle Harrolle, director of the USF Muma College of Business’ Vinik Sport & Entertainment Management Program, a graduate program that is ranked No. 4 in the world by SportBusiness International. Collegiate conferences cancelled their basketball championship tournaments. That’s a loss of television revenue to all the universities within those conferences.
“The NCAA Final Four, the championship tournament, represents the NCAA’s largest revenue stream and it’s gone,” she said. “Not only did the league not have the event, but all the involved universities will also be impacted by that lost revenue well into next year, maybe beyond. The NCAA and the colleges are dependent on this revenue.”
Harrolle said the shutdown has a real impact on professional sports, particularly those whose seasons are currently on hold, such as the NBA, NHL, the XFL and MLB.
“For the most part, this is the worst time of year (this could happen),” she said. The NFL, which concluded its season with the Super Bowl in February, escaped catastrophic loss of revenue.
“The NFL may have some issues with its draft and engagement with consumers, but it was able to finish its entire season and have its championship game before all this happened. The NFL is the least hit financially.”
In Spring, the Boys of Summer
In Florida, the financial loss of spring training games is staggering, she said.
“Spring training is one of the highest economic impacts sports has in Florida,” she said. “People from outside the region come here to visit and spend money. Just the New York Yankees spring training alone brings in people from all across the United States and some international travelers as well.
“And that didn’t happen this year.
“Those events have a huge economic impact,” she said. “And they’re something you just can’t reschedule.”
Spring training aside, the Tampa Bay region has suffered a direct sporting revenue hit, she said, with the postponing of the season for the Tampa Bay Lightning, which consistently sells out home games, and Tampa Bay Rays opening the 2020 season with high hopes and the fledgling XFL. The St. Petersburg Grand Prix, the Valspar Championship golf tournament, the first rounds of the NCAA March Madness tournament and even Wrestlemania all were Tampa Bay area events nixed to stem the spread of COVID-19.
Those events were expected to bring in millions, if not tens of millions of dollars to the Tampa Bay area, not only in gate revenue, but in restaurants, bars and hotels, which charge a bed tax, on which the Tampa Bay Sports Commission – which is the organization that stages these events – relies.
“People not only didn’t spend their money,” Harrolle said. “They didn’t even come.”
There is one bright spot for the region, she said. Next year’s Super Bowl will take place in Raymond James Stadium.
“Thankfully, we have the Super Bowl on the horizon,” she said. “What that will do is put Tampa as a destination. People will be able to travel again.”
During this forced hiatus, sports fans are among the top concerns of teams and leagues, Harrolle said. Keeping fans involved is a top priority and the secret is engagement.
“If anything, we are only going to see those relationships grow,” she said, “if the teams continue to communicate and empathize with their fans, they will gain more loyalty among those fans.”
People love their sports. They love going to games. They love watching them on television.
“It’s been one week, people are already losing it,” she said. “Sports provide such an outlet, they bring us together. Sports is a perishable item that provides drama, excitement and unpredictable endings. When this is all over, people will be more appreciative of attending games.”
Reducing Disruption in Employees Lives
Taking care of employees is also a top priority, she said.
Some organizations, like the Tampa Bay Lightning, have opted to keep paychecks rolling to their employees, others, such as Feld Entertainment, recently laid off a large percentage of its workforce.
Some organizations, like the Lightning, have the resources to continue to pay employees.
“If you can,” Harrolle said, “you should.”
Continuing to issue paychecks mostly depends on money already banked. Some corporations have it, some don’t.
“Feld Entertainment is 100 percent events driven,” Harrolle said. With all its events canceled, there is little revenue. “And they’re a global company,” she said. “It’s not just Tampa. This is affecting them in every country and they cannot afford it. It’s no fault of their own.
“If even you are slightly prepared with some reserves,” she said, “you can’t maintain a business without actually having a product to sell.”
Can these teams, leagues and corporations recover?
“Yes, they can make a full recovery, but it will take time,” Harrolle said. “There’s lots of time for the entire economy to recover. Sports and entertainment are a luxury that not everyone can afford to pay for when we are back into the swing of things; after the virus takes its toll on people and the economy.”