The Coronavirus and the Financial Impact on Sports

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The Coronavirus and the Financial Impact on Sports
A general view of empty seats prior to the quarterfinals round of the 2020 Men's ACC Basketball Tournament at Greensboro Coliseum on March 12, 2020 in Greensboro, North Carolina.. Jared C. Tilton/Getty Images/AFP

The sports world is worth $160 billion a year. Now it’s gone dark. I’m about to be 25 years old and I’ve never seen anything like this. Outside of baseball going dark in 2001 in September, my parents haven’t seen anything like this either. The ramifications of canceling all of these sports, including the NBA, MLB, NHL, soccer, college basketball, and other sports are pretty serious financially. Every athlete could be slated to lose money for every game they don’t play. For stars in the league, it won’t be terrible but for rookies and prospects, they’re going to struggle during the time being. These low-paid minor league players need money for food and rent. Currently, sports can not go on due to events of 50 people or more being shut down by the CDC. Sports as we know it has vanished. The impacts on the sports industry are ridiculous.

“These are significant impacts,” said Michael Lynch, the former director of sports marketing for Visa and a longtime consultant to the sports industry. “They are both economic hits and the loss of the opportunity.” Some teams and leagues have insurance policies that would cover lost revenues. Here is a look at how coronavirus will affect some of the major sports organizations.

NBA

Utah Jazz center Rudy Gobert tested positive for the Coronavirus. That resulted in a nationwide shutdown. The NBA league is hoping to resume action but was the first league to ultimately shut down in America. The NBA has plenty of television contracts that they’ll lose with no games being played. It’s estimated that about half of the league’s $9 billion in revenue comes from media fees. It’s also unknown if teams will refund tickets or just give credit toward future ticket purchases. But there will absolutely be losses from ticket sales, especially if the NBA forgoes the rest of the season and goes straight into the postseason. That’s an option along with plenty of other ideas the NBA has discussed.

Many owners and their players have agreed to pay arena workers their salaries during this time. Players, including Kevin Love and Giannis Antetokounmpo, have pledged $100,000 to help workers while Rudy Gobert pledged $500,000.

NCAA

The NCAA has canceled the entire NCAA Tournament. Not only that but plenty of the power 5 conferences couldn’t even start their conference tournaments. The NCAA lost out on over $1 billion but had to sacrifice the money to make sure the world was safe.

The NCAA will also miss out on tens of millions of dollars in ticket sales. However, insurance policies could help ease the losses. It’s known that the NCAA was really trying to play the tournaments but once Rudy Gobert tested positive and the NBA suspended play, the association knew their time was up.

Schools would earn around $282,100 each as they advance in the NCAA tournament. The money doesn’t go straight to the team but instead goes to the conference where the proceeds are shared with their conference rivals. Who knows how these conferences are going to make their money now.

NHL

Of course, when the NHL heard the news of Rudy Gobert, they tried to hold out as long as possible to see if games could still go on. However, NBA and NHL teams use the same arenas to play games so the NHL had to make a decision the following day to postpone their games. The NHL has had two different lockouts in 2004-2005 and only played 48 games in their season in 2012-2013. The NHL has stopped completely at times but we’ve never had a moment where all sports are stopped.

However, during those lockouts, the NHL didn’t have to pay its players, and its labor agreement does not include the provision that the NBA has to reduce salaries. This means the NHL will have to pay their players during this time.

Also, during the lockouts, some teams could make up for lost revenues by scheduling concerts or other sports events. This time, that’s impossible to do.

Hockey is also the least watched sport of the four major sports and because of that, the NHL really relies on their ticket sales for revenue.

MLB

The MLB was supposed to start their season in late March. Now they’ve pushed back into April and some believe the MLB won’t start until May or even June. It looks as though the MLB is prepared with plenty of different models in place depending on the outcome of the CDC’s requirements. The Mariners, for example, are in Seattle and have been one of the largest spots hit with the CoronaVirus. Plus, there are still restrictions on gatherings of 50 people or more. As long as those restrictions are in play, MLB will not be in play. It’s also very possible that MLB players won’t be paid. They’ve all left Spring Training and the commissioner could look to suspend contracts during this national emergency.

Read also: What Baseball Might Look Like When It Returns

NFL

The NFL is in the best shape currently. The regular season for the NFL doesn’t start until after the summer. We’re just in mid-March. However, the free agency just started and teams are already making trades and releasing players. This could be hard on all players and staff members. Facetime will be the only way for these new players to communicate with their new coaching staff. Some players on the cusp can’t hold workouts to show their talent or even have in-person interviews. Borderline players could lose out on jobs. The NFL Draft is also scheduled for the end of April but will not be allowing any fans at the event at this time. Fans miss out on an exciting draft class and the NFL misses out of more revenue.