A look at the long-term effects as the industry works to recover
Posted on: March 22, 2021; Updated on: March 22, 2021
By Allen Wallace, wallacj@mailbox.sc.edu, 803-777-5667
A year into the COVID-19 pandemic, we asked members of the university community to share their expertise about how the coronavirus has affected all facets of life and offer insights on ways to move forward.
Tom Regan and Nick Watanabe are associate professors of sport and entertainment management in the College of Hospitality, Retail and Sport Management. We talked to them last year about the pandemic’s potential economic impact on the sport and entertainment industry. We caught up with them this spring to find out how things are going and what it will take for the industry to bounce back./p>
Which parts of the sport and entertainment industry have been hit hardest by the pandemic?
Watanabe: Professional, collegiate and amateur sport have all been hit hard, especially in terms of being able to train and participate in sport, as well as the inability and generate revenue that is important for many organizations to maintain their operations. I would say that those hit hardest are the professional and collegiate leagues that do not have good television contracts, because their main source of income — revenue from tickets — is pretty much nonexistent.
Regan: You can include all minor league sports in this category. They are completely shut down — no activity until this summer. Overall, the hardest hit is the concert industry. They have no activity. During the Department of Sport and Entertainment Management Lecture series, the panel indicated concerts may not be back until 100 percent capacity is allowed because they need large crowds to cover the cost of setting up shows and logistics.
Which sports have handled the pandemic best?
Regan: As nontraditional sport, E-Sport handled the pandemic best. We have seen viewership top out around 400 million worldwide. Gaming has exploded and the stocks for devices have shown significant gains. NASCAR has been the leader in getting fans in the stands. Daytona had around 30,000 fans in attendance for the Great American Race. PGA golf ratings have been great and golf courses worldwide are exploding with players.
Watanabe: I think we have seen a mixed response to the handling of COVID. I am not sure we can say any sport handled it the best, but strategies such as “the bubble” used by the NBA stand out as rather effective ways to try to continue operations during the pandemic.
The sociological impact has been significant and no price tag can be put on the social lack of people gathering to cheer on their teams.
Tom Regan, professor of sport and entertianment management
How big has the economic impact been on sport and entertainment?
Regan: I have seen studies showing $6 billion to $12 billion in losses to U.S. sports. I believe the losses are closer to $100 billion. You have to remember, they get Paycheck Program Protection money like other industries and we haven’t seen what the PPP payments were to the teams and leagues and billionaire owners. Minor league sport and entertainment organizations need the PPP money, as it has been a lifeline for these small businesses to maintain some staff.
I believe the sociological impact has been significant and no price tag can be put on the social lack of people gathering to cheer on their teams.
What are the long-term effects of that lost revenue?
Regan: The long-term impact will be decreased salary caps for major league sports, and that is already happening. We will also probably see season ticket decreases in fan base and we are starting to see season ticket plans devised to bring season ticket holders back to teams. There is a reorganization of minor league baseball teams all around the country. College athletic budgets will be tight for years and more schools will drop sports to balance budgets. “Normal” may not occur for a decade.
Watanabe: We will likely see long-term effects where many sport organizations will seek cost-cutting measures in the future in order to make up for lost revenue during the pandemic. In some cases, we might see teams have financial troubles, especially smaller operations such a lower division soccer (football) clubs in Europe and minor league baseball teams. In these instances, there is the potential that some teams will go out of business.
No one can be certain what will happen to any industry at this point, but can you provide some possible scenarios in terms of a recovery timeline?
Watanabe: I think we will see a gradual recovery through the summer and into next year. There will be limitations imposed on spectators and athletes. For example, the plan for the Tokyo Olympics is to go ahead this summer, but Japan will not allow spectators who live outside the country.
On the other hand, we do have some teams that plan to go back to full operations, such as the Texas Rangers, who have been approved to have full capacity when the baseball season starts in a few weeks. I am not sure this is the smartest move considering we are not fully out of the pandemic yet, but I expect more teams may likely follow suit as they weigh the consequences of the health of their fans versus their own financial health.
Regan: NCAA football in many states will be at 100 percent capacity in the fall. Indoor sports may be an issue until total vaccinations occur. MLB will start to increase attendance over the summer with potential full capacity for playoffs and the World Series.
Concerts will be the last to see full capacity. The key to getting fans back is Congress passing liability protection for the venues that host these events. That has been dropped in the initial two stimulus bills in Congress. If you can limit liability and show proper medical and security protection, the venues will promote events and we will have sports and entertainment again. I know millions of fans look forward to that day. I do.
Though no one can predict the future, the arrival of the vaccine and adjustments to make events like the Super Bowl and March Madness happen have brought hope for a return to cheering crowds in the stands.
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