Understanding the Financial Blow of the COVID-19 Pandemic to Sports

While many sports fans are understandably missing watching live sporting events, there's one thing that not many of us realized: sports is an industry.

And just like any other business, the world of sports has been impacted by the lockdown around the world which is brought about by the 2019 Novel Coronavirus Disease (COVID-19) pandemic. Every sporting league has been on an indefinite hiatus since late February of this year and while some are looking to resume next month, assessing and understanding the damage the pandemic has caused, is one tough job for anyone to begin with. For one, we are talking about billions of dollars in losses.  And for a 160-billion US Dollar industry, that is incredibly big.

The fact that it has been three months since the pandemic has gone full-blast with the number of confirmed cases continuously on the rise, has the sports world struggling to regain control of the financial damage. With games not happening worldwide, no ticket sales. No food sold on the food stalls inside the stadiums. No income for those who rely on the games themselves. In a sense, the absence of games costs people not just their livelihood but also, their lives.  

While big shots like LeBron James of the Los Angeles who could lose 400,000 Dollars for every game that the Lakers don't play, the ones who are being hit hard by the pandemic are the athletes from low-paid minor leagues such as baseball players who are relying on their games to be able to pay for their rents as well as buy food. Even collegiate teams in the US National Collegiate Athletic Association (NCAA) are heavily relying on the money that they are earning from the tournament to be able to fund their own seasons. 

The effect: it's either a sports team will have to cut down on expenses to be able to weather the pandemic or, disband entirely. 

In Formula One, McLaren, whose personnel were among the first teams who have been hit by the virus last March, is now being forced to let go of 1,200 workers with the vast majority of the said number coming from the United Kingdom. McLaren currently employs 4,000 employees. In the local scene, the Technological Institute of the Philippines (TIP) has disbanded its basketball varsity team due to the uncertainty in these trying times while Letran has already withdrawn from nine NCAA events this year. 

Perhaps, painting a clearer picture of how big the financial blow that this pandemic has brought upon the sports world is the revenue loss that the National Basketball Association (NBA) will be hit as the NBA is earning 9 billion US Dollars a year with roughly half of the said amount coming from media fees which are considered as important to every major league in the world. If the NBA doesn't return this July, they could lose more. Not to mention the revenue from ticket sales.

In the United States alone,  the sports industry is a major contributor to the US economy as a report states that the industry is accounting for 14.3 billion US Dollars in direct earnings per year. More importantly, this industry provides 450,000 jobs which pay around 39,000 US Dollars per job on average.  

If the industry doesn't return to action soon, the numbers could soar even higher with more people could lose their jobs. 

Photo is from Forbes