Gaming The Odds Of The (Post Pandemic) Return Of Sports

The stands are almost empty. The die-hardest of the die-hard fans are sitting 12 feet apart, observing the mandatory three-chair spacing rule. The roar of the crowd piped in to amp up the players.

Nowhere can you get a beer or a hot dog. But at least the tickets are cheap.

Welcome, then, to the wide world of sports, circa post-pandemic. Coming to an arena near you. Maybe.

In an interview with Karen Webster, Gil Fried, professor and chair at the University of New Haven’s sport management program, said that now, more than ever, we need the escapism and joy that sports bring.

But just what escapism may look like — at least for stadium-focused events such as football, baseball, soccer, basketball and of course, concerts — will be an evolutionary process marked by “new normals” of social distancing and caution.

“It’s night and day from what we’re used to,” he told Webster, observing that with the exceptions of, say NACAR and horse-racing, in-person or televised sports have gone mostly dark.

The most immediately (and deeply) impacted stakeholders across the sports ecosystem include the stadiums and the entities, individuals and families that own them.

“While it is important to have fans in the stands, that’s only one of the revenue streams,” said Fried.  There exists, too, a widening ripple effect across even more significant sources of top lines, spanning broadcasting and naming rights, concessions, parking and ticketing and the list goes on.

There are a number of different variables at play in examining how sports might look on the other side of COVID-19.

He noted that the actual physical space of the grandstands remains a gating factor.

Consider the fact that the average width of a seat in an arena as about 18 to 21 inches. There are armrests, too.

So: Using those metrics, if social distancing is the rule, according to Fried, “it’s not you might need to have a seat on either side of you that’s free. It might be two seats on either side and then one in front, one behind.”

That translates into a stadium operator effectively choking off roughly 70 percent of the seating capacity.

Add that to the fact that the average fan may think twice or three times about rooting for the home team in person, fearful of microbes, and the revenues generated from on-site attendance may not recover for a long time.

Certain sports may feel the pinch more than others, Fried said, with a nod toward demographics.  Baseball has a demographic that skews considerably older than other sports, where the average age is over 50.

“That’s the demographic that’s being hit the most by the virus,” he said, “and if you are looking at fans that are in their 60s, 70s, and even 80s, they’re going to be the most scared.  So you have to overcome the mental side of this for fans. And that might be difficult.”

There’s another wrinkle here, too, said Fried.  The die-hard fans — the “nines and 10s” on the scale of 10 who will indeed attend when it’s safe — will not be able to bring their families along (the relative twos and threes in terms of fandom on that 10-scale) which means that attendance will remain depressed no matter what, at least for a while.

The Financial Considerations

Beyond the concerns over health — top of mind as they are, according to a PYMNTS survey that consumers are nearly eight times more concerned about dying from COVID-19 than losing their jobs or their personal fortunes as a result of the virus — there are financial considerations at play, too.

It’s no secret that a lot of people are hurting financially, as the economy sours and unemployment skyrockets.

The days of people not worrying too much about paying $150 a ticket for an NFL game, and spending more than $60 for parking are largely gone. And according to Fried, a repricing of the tickets will be in order — and we may see prices slashed by 15 percent to 20 percent. That may move the needle at least a bit to get people out of their dens and away from their big-screen TVs.

There will be additional costs baked into live sporting events moving forward, as Fried said, as owners need to demonstrate that new and effective safety measures are being embraced.

That may entail the creation of an organization that certifies public venues are safe for attendees — and which may take a cue from restaurant food ratings (with letter grades such as A/B/C).

“You’re going to have to have a lot of personnel there with wipes, cleaning off handrails and of escalator railings,” he said. “And then there’s the question of how people will want to buy food: Will they want it to be only packaged food?”

Amid the evolution of live sporting events, Fried said that sports franchises would tap into other ways to make money. He predicted that that eSports — that is, competitions conducted across video games — will continue to do well, geared as they are to the home environment.

It may be the case that teams play to empty seats — at least for a while — taking a cue from the Chinese Basketball Association, which has reportedly been planning a “round robin” schedule in empty arenas.

“People are starving for content,” said Fried. “Right now, you’re seeing professional athletes playing horse and you have viewers that are watching it.”

The Impact On The Athletes

The loss of seats, foot traffic and revenue streams means that team owners may have to recalibrate their payrolls accordingly.

And we might regress a few decades, where the Tom Bradys of the world may give way to a more modern-day version of Roger Staubach, holding secondary jobs in the off-season as salaries come down (and endorsements and ancillary revenue streams such as diet books become a bit harder to come by).

Players’ salaries might come down significantly in a post-COVID-19 world where the exorbitant gaps between, say, an NBA superstars earnings and a cop or nurse or teacher’s take-home pay stands out in stark relief. That could prompt social backlash, said Fried.

The Ripple Effect

The ripple effect of all of these top-line pressures will be significant, predicted Fried. He noted that most observers are overlooking financial risk baked into the stadium model — namely, in the form of bonds issued to finance those very stadiums. These bonds, he told Webster, sometimes mandate per-ticket taxes of, for example, $1 each. Every ticket goes to repay the bond — and with no games in sight, that repayment stream evaporates.

None of this is to suggest that sports will go away, just that the industry needs to evolve and adapt to new realities. There may even be tailwinds in the offing, as exercise (and thus sports), has been shown to be effective in warding off susceptibility to viruses. Physical education courses in school may enjoy a renaissance.

As Fried told Webster, “sports is a great way to entertain because it crosses so many different boundaries, whether it’s race, religion or gender. It’s going to come back.”