Article:

A wake up call: the effects of Coronavirus on the sports industry

30 March 2020

William Tuffley , Associate Director, Business Services |

The AFL, NRL and other sports have been suspended after watching players compete in empty stadiums, the 2020 Olympics are now deferred to 2021. For the first time in history, the world’s billion dollar sports industry is coming to a halt.

The business of sport has previously proven to be recession proof. In fact, in times of turmoil, sport has helped to bring communities together, whether it be as a form of escapism from your couch, a social outing on the weekend or playing with your mates for a local club. However, with the global economic effects of the Coronavirus (COVID-19) pandemic wreaking havoc on all levels of the industry, this is no longer the case.

Over the past few weeks, sports across the world have been suspended, delayed or cancelled. The final nail in the coffin was the International Olympic Committee’s decision to postpone the Olympic Games – that once in every four years sporting event where society forgets about the troubles of the world, as we come together to celebrate sport by people across society, regardless of gender, age, social background or economic status.

For professional athletes, the financial ramifications of cancellation or postponing play are wide-ranging and serious. Professional athletes are set to lose a significant percentage of their earnings for missed match payments, reductions in contracts, and money in lost sponsorship opportunities.

Unfortunately, clubs are not immune - without monthly grants, gate receipts and annual memberships, many will not survive. The AFL Players Association and players agreed to reduce player’s pay to 50%, with 80% of staff stood down and 20% pay cuts to executives. The NRL is likely to follow suit, with predictions that dozens of NRL clubs will not survive the year without any play.

If the professional sports industry survives this pandemic, executives will be forced to re-think their business models, which may result in athletes being paid substantially less and clubs retaining fewer support staff in order to stay profitable.

Even before this catastrophic event, we continually heard about Australian sporting teams and clubs running at a loss, yet players are being paid in excess and well above the Australian average income. If any other business was run like this, it would be insolvent. There is no other job where you get paid a full time set wage and then get paid an extra amount for turning up to work each week. This is a reality check for all sporting professionals.

Considering opportunities in the present

The COVID-19 pandemic highlights the pressing need for all sporting professionals to think ahead and plan for their future. Although sport is an opportunity to get ahead of the game financially, it is by no means a guarantee. It is essential that athletes look beyond their sporting career to identify what they want to pursue when they are no longer able to play.

Many professional athletes may now be forced, or encouraged, to take up part-time employment outside of the sporting arena. To the majority of male athletes, this may be a foreign concept, but for most female athletes, given historical and ongoing pay gaps, this is often the norm, with most female athletes maintaining part-time work whilst competing at a high level. It might come as a surprise that part-time employment can have a positive impact on a player’s performance and mental wellbeing, by creating an additional dimension to their life.

With games on hold, it’s now an opportune time for professional athletes to consider their off-field position while they have the time to do so. Athletes should be reviewing how and where their money is being invested, their spending to savings ratio, and tapping into additional education, business or employment opportunities.

Looking to the future

When the lights are eventually turned back on and lines marked, the athletes’ sporting arena may look the same, but the landscape supporting it may be very different. Sporting clubs are likely to be financially assessed more rigorously, with salaries slashed and the number of support staff and coaches streamlined.

There is no doubt that once the world recovers from COVID-19, professional sport will be welcomed back with open arms. One only has to look at the success of Queensland’s local teams following the 2011 South East Queensland floods. The Queensland Reds, Queensland Bulls, Queensland Maroons, Brisbane Roar and Queensland Firebirds all won their respective competitions the following year. Remember, sport has a remarkable ability to bring communities together.

Until then, one can only hope that sporting organisations and athletes have the revenue sources and are agile enough to survive the future challenges that lie ahead.
 

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