Sudden vanishing of sports due to coronavirus will cost at least $12 billion, analysis says
The sudden disappearance of sports will erase at least $12 billion in revenue and hundreds of thousands of jobs, an economic catastrophe that will more than double if the college football and NFL schedules are wiped out this fall by the coronavirus pandemic, an analysis conducted for ESPN shows.
The meltdown is a fraction of the crisis spreading across the country, but it is nonetheless historic, touching every sector of the $100 billion United States sports industry.
From stadium authorities to youth sports complexes, from rec centers to global TV networks such as ESPN, the scale of devastation is only now coming into view. Some organizations, especially at the lower levels of sports, say they'll be lucky to survive. The pain is especially acute among the army of low-wage service workers who support pro and college sports and are now unemployed. The losses are draining tax revenue that helps support local services such as police and firefighters and contributes to the quality of everyday life in thousands of communities.
"As an economist, you stand back, you look at the carnage that's taking place -- dumbfounded, awestruck, mind-numbing," said Patrick Rishe, who directs the sports business program at Washington University in St. Louis. "All of those phrases, they're all relevant because we just have never seen anything on this scale."
At ESPN's request, Rishe examined publicly available data to estimate the potential impact of the shutdown on the major pro leagues, the NCAA and youth sports. Emsi, a labor market analytics firm, worked with ESPN to provide estimates on sports-related jobs. In addition, ESPN interviewed economists, public officials, sports executives, concession workers, travel team organizers and others to assess the economic impact of the coronavirus pandemic on sports at all levels.
Rishe's analysis relies on assumptions that appear more remote with each passing day, such as the ability of Major League Baseball and Major League Soccer to salvage at least half their seasons with fans attending games. The analysis also assumes the NBA and NHL cancel the rest of their regular seasons and the playoffs are staged without fans. And that youth sports resume by July.
The numbers include everything from the price of a ticket and a hot dog to the money you spend taking your daughter to an out-of-state soccer tournament. For example, the crisis stands to wipe out more than $3.25 billion that fans would have spent on pro sports. It would erase nearly $371 million in wages -- approximately 20 million hours -- for ticket takers, beer vendors and other stadium and arena employees. At least $2.2 billion of national TV revenue would be lost, as well as up to $2.4 billion in tourism related to youth sports.
The analysis is conservative in a number of ways. It does not include projected losses from NASCAR, golf, tennis and several minor sports and gambling. The numbers also don't account for losses in the outdoor recreation industry, including hunting, skiing, recreational golf and tennis and fishing. Outdoor recreation generated $427 billion in 2017, according to the Bureau of Economic Analysis. With sporting goods stores, golf courses and fishing tournaments shut down in parts of the country, those revenues and jobs have disappeared, too.
Complicating matters, insurance is unlikely to make up many of the losses. Although big events like Wimbledon and the Olympics held comprehensive insurance policies, the major U.S. sports leagues are not covered for the pandemic, in part because the loss of entire seasons was regarded as unthinkable, industry sources told ESPN.
"It's like hell began freezing over," one sports executive said.
The stakes for sports become higher if part or all of the NFL and college football seasons are lost. According to Rishe, each NFL regular-season game is worth nearly $24 million in revenue from TV rights alone -- a figure larger than the budget for some Hollywood films. Collectively, the 65 college football programs in the Power 5 bring about $4 billion in revenue -- money that makes up nearly half of all athletic department budgets.
"If [college] football goes down, that's just a killer," said Rick Gentile, a former CBS executive who still works in broadcasting and directs the Seton Hall University Sports Poll. "I don't know how schools recover from that, God only knows. You could make a prediction, go crazy. The Pac-12 disbands? I'm making it up, but who knows?"
