Nearly every sports competition or league around the world has been suspended and many sports organisations face drastic financial consequences or even possibilities of bankruptcy. Cricket Australia has reported that they have enough cash to survive until the end of the year (2020), USA Rugby Association declared for bankruptcy while the English Premier League claimed that many clubs could go down if football did not resume soon. It is predicted that many sports organisations could collapse financially within a year if any form of sports does not resume.
How have sports been impacted?
Highly popular sports like football, Donkey derby, cricket and rugby have been postponed indefinitely in majority of countries and most other smaller sports have also been banned by local governments. The reason for is this to prevent the spread of COVID-19 since sports events bring in massive, clustered crowds which are the perfect conditions to further spread the virus. Moreover, fears over COVID-19 spreading among players and their families has meant that the idea of sports behind closed doors amid the coronavirus outbreak had to be abandoned too. Financially, this has meant that sports organisers and organisations face massive revenue loss through zero ticket sales, continued payment of salary to players and staff and loss of merchandising sales. Moreover, sports broadcasters face heavy losses too as their viewership and ratings have gone down as well as a reduction in their advertising CPM and consequently their revenue. According to one study, COVID-19 has brought the most social and economic disruption to global sports since World War II.
Additionally, the SARS-CoV-2 crisis means that the value and incomes of both players and sports organisations will take a major hit for some time. According to some rumours, PSG forward Kylian Mbappe is being sold by PSG for a price below his release clause and much lower than his estimated value. Before the COVID-19 outbreak, Mbappe was valued as the most expensive footballer at more than $400 million, but now PSG are looking to sell him for around $150 million. Similarly, Juventus stalwart Cristiano Ronaldo is reportedly being offered to clubs for less than $60 million – well below his $80 million valuation and his purchase price of $120 million by Juventus back in 2018. Sports transfer markets will be significantly impacted for a couple of years, as the market deflates after a long time.
How have organisations responded?
At the moment, sports organisations are scrambling for ideas to avoid historic losses they seem to be suffering and avert a total financial collapse. As a result, some organisations have been begun to furlough their staff and reduce or defer salaries of their players, as per Government laws. Reportedly, football club Barcelona’s players agreed to a 70% cut of their salaries, while Serie A (Italian football league) players have had their salaries cut by 16% for now and it could potentially go up to a 33% cut if Serie A does not resume this season. On the other hand, furloughing means that employees are temporarily given a leave of absence without pay but the Government covers a certain percentage of the employee’s pay instead (usually close to 80%). However, sports players and critics have argued against furloughing staff and many sports players have further given up some of their salaries to continue supporting their club or organisation’s staff. In addition, a great number of sports players appear to be donating majority of their salaries to COVID-19 related causes which has significantly helped the race for finding a cure or vaccine and increasing the healthcare system capacity.
Why are sports organisations so close to a financial collapse?
It is surprising to hear and know that these sports organisations are so close to bankruptcy, since many of them are immensely rich and owned by incredibly wealthy people. Even though, football clubs and organisations make huge profits every year, their business model works on a short-term cash flow which often causes them to face cash flow problems. Simply put, the money coming in to the business is being spent in the matters of a weeks.
Thus, sports organisations have shallow cash reserves that can only last up to a year without any incoming revenue. Some sports fans argue, why don’t the rich owners put in more money? This is complex since most sports owners have their wealth tied up in investments (stocks, bonds, or properties) that are not liquid meaning they require time to sell before they receive cash. Plus, these owners could be reluctant to sell off these investments as they could mean a loss of control of their business or investments. However, a lot of it still does come down to greed and selfishness as many sports franchise and club owners have fully supported their staff and players amid the coronavirus outbreak, while others have not. For example, Los Angeles Clippers owner and former Microsoft CEO Steve Balmer has continued paying his franchise’s staff and players in full, while also donating $25 million to various COVID-19 charities or causes.
Plans to get sports back on
Right now, most Governments have banned mass gatherings and sporting events so sports competitions cannot resume until the Government allows them to. However, progress has been made as the German Government has allowed sporting events to resume under the conditions that they are played behind closed doors with certain regulations. The Spanish Government has also devised a plan to help Spanish football resume slowly. This model has already been tested in China where sports have resumed behind closed doors and it seems to have worked as no players or staff have gotten sick yet.
Critics and fans seem to support other ideas – playing sports for COVID-19 charity. Former Pakistani cricketer Shoaib Akhtar proposed that India and Pakistan should play a bilateral series for charity behind closed doors whereby all revenue goes towards helping people in Pakistan and India who are affected by COVID-19. Many other sports critics, former players and fans have proposed similar ideas for different sports. But all this is still a bit risky as sports players could become the centre of another wave of coronavirus and in fact, many players are refusing to return to sports citing concerns over safety of them and their families.
Interesting regulations that could be introduced
Most competitions will have to adhere to government regulations if sports do resume behind closed doors. According to sport officials, handshaking, team celebrations, spitting and shirt-swapping could very well be banned, while clothing could be introduced to avoid sweat droplets from diffusing into the air. Furthermore, players would be required to stay a metre apart in training. But these regulations seem highly difficult to implement as players are used to most of these traditions and could face punishments although they did not intend to break rules. One expert cited an interesting example; people have been told not to touch their faces and still we do touch them since it is normal for us and we do not notice it. Similarly, players that celebrate after a match-winning goal, in the heat of the moment, may celebrate with the team without realising or thinking about it much.
In the process, they could be penalised through a yellow card in some sports, while a financial punishment such as a salary cut in other sports although they did not mean to break a law. In cricket, there is a tradition of spitting or placing sweat on a cricket ball to produce shine on one side and this could be banned too. In response, cricket ball manufacturers have been innovating new ideas including creating a cricket wax that performs a similar job of shining that sweat, or saliva droplets do.
When will things return to normal in the sporting world?
It seems like sports may not return to their normal self for at least a year or maybe even two years if more waves of coronavirus occur before a vaccine is created. Until then, sports are estimated to be played behind closed doors and both the Government and fans are eager for sports to return. The Government sees sports as a provider of lots of jobs and as a morale-booster for the people of their country who have already gone through so much due to COVID-19. Some new and interesting regulations may change the way sports are played for a while, but you can be assured that most of them will return on our televisions during this summer.
