Most international sport events have been cancelled or postponed around the world amid an outbreak of a new type of coronavirus. The pathogen’s effect has been felt across a range of sports – from athletics, rugby and golf to football, tennis and motorsports.
The epidemic, which began in China in late December, has plunged the global sporting calendar into disarray and cast a shadow over preparations for the 2020 Tokyo Olympic Games. Qualifiers for the Summer Games in Japan are among a growing list of competitions either pushed back or relocated because of the virus.
“In the modern era, this virus has created what is fast becoming an unprecedented situation,” said Simon Chadwick, director of the Centre for the Eurasian Sport Industry.
“Sport has been beset over the last three or four decades by drug bans and boycotts, though nothing matches the scale of the coronavirus … With every match or event cancelled, the industry’s economic impact is undermined; revenues from ticket sales being hit; apparel and sportswear sales are down. For modern commercial sport, there has never been anything like this,” he noted.
“It is a test for leaders and managers working in the industry, but also for athletes and participants.”
The virus has now infected more than 90,000 people and killed 3,000, the vast majority in China. These numbers are expected to climb, perhaps dramatically, as the number of infected persons increase and as more people are tested.
While scientists are still learning about COVID-19, the Nigeria Center for Disease Control (NCDC) warns it “spreads easily.” People being physically near an infected person (within about six feet) face a heightened risk. When an infected person coughs or sneezes, a healthy person who is seated or standing nearby might inhale droplets of saliva or mucus that contain the virus. The risk of infection also arises when touching a surface that has the virus on it—the virus is thought to live for at least several hours—and then touching one’s own mouth, nose or eyes. Those infected also don’t show symptoms immediately. It can take up to two weeks for symptoms, including a dry cough and shortness of breath, to appear, during which time a seemingly healthy person afflicted with COVID-19 could inadvertently infect others. The elderly and those with compromised immune systems are among the most vulnerable to COVID-19.
Let’s play the devil’s advocate here, if most sport events had gone ahead with the plan to play their games in empty stadias, it would have triggered a bevy of economic consequences;
Ticket holders may be left at the mercy of ticket sellers and resellers. Presumably a game that excludes the entry of fans would count as “cancelled” for purposes of a ticket refund. If a ticket holder encounters difficulty in obtaining a refund, he or she should review the ticket’s refund policy and determine which circumstances permit a refund. It would behoove ticket companies and sellers to be reasonable with customers, particularly since aggrieved customers could make their grievances known online.
Arena workers probably wouldn’t fare as well. Security officers, janitors, ushers, box office staff, lightening and production technicians, cashiers, cooks, concession stand workers and parking garage attendants are among those who are integral to the production of sport events such as football and NBA games. For most, their employment is often classified as part-time and seasonal. They would all stand to lose wages if they are no longer needed for games.
The same could prove true for those who are paid to keep fans entertained during the games, including halftime and other stoppages of play. Dance teams, mascots and contest providers all fall into the category of in-game entertainers. If there are no fans to entertain, it’s unclear why entertainers would be needed.
Workers whose businesses are located in, or near, arenas are also vulnerable to a loss of earnings. Sports bars, restaurants, apparel stores and parking garages are among the types of businesses that pay for geographic proximity to sport events. A steep reduction in game-related foot traffic would likely diminish these businesses’ revenue. Such diminishment could spawn layoffs and other staff reductions as well as the inability to pay rent.
Taxi and ridesharing drivers who generate wages by driving fans in and out of games face the same basic predicament. The fact that many conferences and entertainment events held at arenas are being cancelled due to COVID-19 only exacerbates the underlying problem of weakened revenue for businesses and service providers that are dependent on highly attended events.
Games without fans could pose still other economic disruptions. Corporate sponsors pay millions of dollars to advertise during sport events, including through arena signage and print advertisements on materials distributed to fans. Some of the signage would still be displayed on game broadcasts. Yet other signage is located off-camera and is only valuable if people in the arena see it.
Depending on language in the sponsorship contracts, there may be opportunities for sponsors to invoke what are sometimes called “force majeure” (French for “superior force”) clauses. These clauses allow one side in a contract to suspend or end its obligations on account of an extraordinary and uncontrollable circumstance. Force majeure clauses can often be invoked when “acts of God”, including earthquakes, hurricanes and other natural disasters, strike and make it impossible or inadvisable for one side (or both sides) to continue in a deal.
Here, a corporate sponsor might argue that the absence of fans in the arena substantially downgrades the value of a sponsorship. Likewise, the sponsor might contend that it shouldn’t have to pay the price for an act of God that is extraordinary, unforeseeable and beyond anyone’s control. The sport team might respond that the games are still being played and thus the sponsor is still obligated to pay. Given that sponsors and teams typically have long and close business relationships, they would probably reach arrangements before going to court, arbitration or mediation. Still, the possibility of a contract dispute exists.
Television networks in contract with the leagues or leagues’ franchises are also likely to take an interest in how an absence of fans during games might impact TV ratings. To give an instance, The NBA is in the middle of nine-year deals with ESPN and TNT that pay the NBA (and, in turn, teams and players) NGN8.6tn ($24bn). Regional sports networks have separate deals with individual franchises for regionally broadcast games. Games played in empty arenas could have positive and negative impacts on TV ratings.
Some, perhaps most, NBA ticket holders who are denied a chance to attend games would probably watch those games on TV instead. Broadcasts would look and sound very different. The voices of players and coaches, as well as the sounds of sneakers squeaking and basketballs dribbled, would become much more pronounced. At the same time, the lack of cheering fans would be noticeable both visually and audibly. Whether these changes would overall help or hurt broadcast ratings is unknown.