Professional sports franchises around the world expect multi-million-dollar losses as they seek ways to re-start their seasons.
The coronavirus, which has infected more than 900,000 people so far, has forced the closure of events such as the 2020 European Cup of soccer.
With a net worth between US$480 billion and US$620 billion, the sports industry is one of the most powerful at the moment. And the unexpected suspension of sports can cause a big loss of money for member organizations, research done by management consulting company A.T. Kearney said.
Just the top four European leagues of soccer will have an expected loss of roughly four billion US dollars, research from the Spanish Sports Business Institute shows.
“As of now, all these leagues and associations are evaluating the loss of money that they are going to experience,” said David Baixauli, the Responsible for Corporative Projects for the Spanish Professional League of Soccer.
“Regardless of the sport, all leagues and organizations share the same three sources of income, which are TV rights, sponsorships and ticket sales,” Bailxauli said.
The lack of sporting events is causing fear among major sports clubs since they believe this pandemic can make TV companies and sponsors pull back from their agreements, which could cause a loss of up to a third of the total revenue from the clubs.
Regarding ticket sales, Baixauli said the reasonable option would be to give the money back to those that have bought a season ticket, but it is not likely for these organizations to do so, since at some point the leagues will resume, but games will be played closed gate.
Last year, sports spectators created half of the total revenue this industry makes. “I am lucky to not own a season ticket because that would be a huge loss of money,” said Steven Mirabal, a frequent Toronto FC spectator.
Although players like LeBron James have said that they would not play a game without fans, Baixauli believes that LeBron’s statement is a joke, since most of the player’s salaries come from sponsorships and TV rights, not fans.
“If we were to do a chart on the biggest contributors of revenue, ticket sales would be last,” Baixauli said.
After the suspension of professional leagues, Toronto teams TFC, Raptors, Blue Jays and Argos have created a common fund to pay the team and arena employees’ salaries, but they have not communicated any player’s salary cuts as other teams have announced previously.
As of now, all professional leagues have been suspended until further notice or cancelled, which will bring these association’s loss of money even higher.