Sudden vanishing of sports due to coronavirus will cost at least $12 billion, analysis says

Discussion in 'Economics' started by wrbtrader, Sep 13, 2020.

  1. wrbtrader

    wrbtrader

    I've decided to keep all my posts about the Economic Costs of Coronavirus all in one thread here in the Economic section and away from other threads.

    Please post your news about the Economic impact on sports by this Pandemic
    • If you have a Political statement or none economic statement...please post it in the Political section or Chit Chat section of the forum.
    As a parent that typically spends about 5k per year in expenses associated with my kids (now teenagers) sports alone involving costs associated with joining a league, travel, restaurant gatherings, donations (sponsor) and so on. I then started thinking about the economic impact of lost revenue in sports because Parents and Fans are in the same boat as me during the Pandemic.

    I mention fans because I'm also a big fan of F1 Racing, Hockey, Tennis, Rowing and just about all Olympic Winter Sports and any College Sports. Yet, I wouldn't call myself a fanatic but I do travel around the world to big competitions...average yearly costs about 7k.
    • I do miss flying around the U.S. to some of the big hockey games for the Chicago Blackhawks or Montréal Canadians because sometimes its used to meet friends...more so not because of the Pandemic but recovery from a serious illness in 2016 and surgery in 2019.
    2020 was going to be my big breakout year on travelling to big sport events like the past until the Pandemic slapped that down.

    Fortunately, the biggest sports that rake in a lot of money from Fans and Advertisers can easily survive this Pandemic. They'll recover easily but its the smaller revenue sports that may not recover like College sports because so many of their sports are dependent upon the revenue of other sports like Football and Basketball.

    Unfortunately, a lot of jobs are lost because of the ban on large gatherings, lockdown on travel that requires you to be in quarantine for 14 days upon arrival and people's fear of being on an airplane, train, bus to travel to a sport event during this Pandemic.

    Then there's the domino impact on the financial markets that have stocks related to sports but they strangely recover great such as Nike...record highs. That's good because one would assume they will have the money to continue supporting all sports...professional and amateur.
    • Sudden vanishing of sports due to coronavirus will cost at least $12 billion, analysis says
    https://www.espn.com/espn/otl/story...ronavirus-cost-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.

    Totaling the Damage

    Not including the fate of the upcoming football season, Patrick Rishe of Washington University in St. Louis breaks down the revenue losses from the sports stoppage like this:

    Pro*: $5.5 billion

    College: $3.9 billion

    Youth sports tourism: $2.4 billion

    *Assumes NBA and NHL cancel the rest of their regular seasons and MLB and MLS miss 50% of their seasons.

    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?"

    Coronavirus-Sports-Little-League.png
    Tourism associated with young athletes such as these Hartford (Connecticut) Little Leaguers accounts for a big chunk of the revenue sidelined by the pandemic. Brad Horrigan/Tribune News Service/Getty Images
    AS WITH THE rest of the economy, job losses in sports are expected to be staggering. There are roughly 3 million jobs within 524 occupations that are dependent on sports, according to Emsi's analysis of data from the Bureau of Labor Statistics. That's everybody from athletic trainers to security guards, from umpires to public address announcers, from groundskeepers to dancers. Analysts say many of these workers are living paycheck to paycheck.

    For example, there are 278,932 Americans who earn an average of $45,649 annually from coaching and scouting. There are 371,607 fitness and aerobics instructors, with an average annual salary of $44,956 -- representing nearly $17 billion in total wages.

    How many of those people are out of work -- and when those jobs may return -- is not yet clear, but the effect on pro sports is already dramatic. It requires roughly 1,900 people to stage an NBA game, for example, according to league figures. Of the 52,450 workers the NBA supports, approximately 42,000 -- or 80% -- are ushers, security personnel, ticket takers and other service people working at arenas.

    Although teams and, in some cases, star athletes have pledged money to help those workers, the assistance will fall short of what's needed, especially if leagues such as the NBA and MLB return without fans. "My worst fear is the startup -- coming back if the people are not attending games," said Tawanda Murray, 45, who works concessions at Chicago's United Center.

    On March 11, Murray was working a Blackhawks game when she and her colleagues heard the NBA was shutting down. One day later, the NHL postponed its season. Murray immediately filed for unemployment.

    THE POTENTIAL IMPACT on the $19 billion youth sports industry is even more profound and far-reaching. A survey commissioned by the Sports Events & Tourism Association, which represents the sports travel industry, found that nearly 700,000 athletes were unable to participate in scheduled events in March alone, costing organizers more than $700 million.

    "Right now people are still in shock," said Al Kidd, the association's president and CEO.

    Hundreds of organizations, including travel sports companies, Pop Warner Little Scholars and US Lacrosse, have petitioned Congress to create an $8.5 billion "youth sports relief fund" to "stabilize the industry and invest in recovery."

    Many organizations may be fighting to remain solvent after their losses, and experts say everything from team travel to fan attendance will have to be reimagined when kids return to action

    "Youth sports will not be the same following this pandemic," the letter stated.

    In recent years, the youth market has emerged as the largest sports-revenue driver in the country.

    Municipalities all over the country have engaged in an arms race to create "megacilities" -- multipurpose complexes that attract travel tournaments and tax revenue. The facilities have been built "under the guise that this was for kids, but really the cities are after the tax money, let's be real about it," Kidd said. "It grew to the point where it was like weeds springing up across America."

    Now, those facilities are idle.

    In Westfield, Indiana, officials were forced to shut down the 400-acre Grand Park Sports Campus at the height of the spring season. The facility, about 30 miles north of Indianapolis, has 31 multi-purposes fields and hosts events year-round. Grand Park hopes to reopen June 1. Officials calculate that the central Indiana economy is losing more than $20 million per month while the facility is closed. Nearly a quarter of all hotel room reservations in Hamilton County are tied to the complex.

    "I wouldn't hesitate to say this is devastating," said Brenda Myers, president of the Hamilton County Tourism Board, which is financed almost entirely by a lodging tax. Myers has cut her 24-member staff in half through layoffs and furloughs.

    In Blaine, Minnesota, the $170 million, 660-acre National Sports Center lies dormant. Billed as "The World's Largest Amateur Sports Facility," the complex includes 50 multi-use athletic fields, an ice arena with eight rinks, a stadium that seats 5,500 people and a 58,000-square-foot indoor facility. The NSC has calculated its annual economic impact to the community at $89.1 million.

    In July, the NSC is scheduled to host the Target USA Cup, the largest amateur soccer tournament in the U.S. The tournament brings in 16,000 players from more than 20 countries, filling up almost every hotel room in the Twin Cities.

    "It's potentially pretty devastating if [the pandemic] keeps going on," said NSC executive director Todd Johnson, whose organization is asking for donations on its website to stay afloat. "My goal is to get us through the summer."

    SPORTS-RELATED TRAVEL -- to follow pro and college teams and to attend youth tournaments in communities such as Westfield and Blaine -- generated $32 billion in 2018, according to a study by Longwoods International, a market research company that specializes in travel and tourism.

    "We love it when visitors come into our communities and spend tourism dollars," said Amir Eylon, the president and CEO of Longwoods. "It helps broaden the tax base, it's helping to pay for my fire and police protection.

    "The exponential loss to the economy is just mind-boggling."

    In Cleveland, over a two-week period, the pandemic canceled the Mid-American Conference men's and women's basketball tournaments, the first and second rounds of the NCAA sub-regional, the NCAA Division II swimming and diving championships and the 2020 national title for the American Cornhole League, with 1,000 participants.

    David Gilbert, president and CEO of the Greater Cleveland Sports Commission, said the events were expected to bring in $12 million to $15 million in revenue for the city.

    "The people working downtown are a skeleton crew. I'm one of them that isn't there," Gilbert said in an interview from his home. He estimated that up to 2,000 hotel and restaurant jobs in downtown Cleveland have disappeared.

    "I would say a good portion of those are supported by those events," he said.

    Coronavirus-Sports-Alabama-Fishing.png
    In Alabama, the pandemic has crushed the state's $1.4 billion freshwater fishing industry, including the popular Tournament Series of the Alabama Bass Trail. AnglersChannel.com
    In Alabama, the pandemic has crushed the state's $1.4 billion freshwater fishing industry, which includes the popular Tournament Series of the Alabama Bass Trail, with anglers coming from around the country to participate in 10 events plus a championship.

    "Everything has fallen like dead leaves," said Kay Donaldson, director of the Alabama Bass Trail.

    The loss of four tournaments so far has canceled about 1,400 nights of hotel reservations.

    "So, those people aren't staying in those hotel rooms, eating at restaurants, driving over to the local pub," Donaldson said. "They're not putting gas in their truck, they're not putting gas in their boat, so there's a big trickle down.

    "Bass fishing to several of our communities is a really big deal."

    UNTIL NOW, SPORTS were thought by many to be recession-proof. A 2019 report by PwC predicted robust annual growth through at least 2023 and gushed: "The love affair with sports in the United States is a perpetual and immersive force."

    But the pandemic has undermined the most basic assumptions about sports economics.

    Many economists believe that sports has little impact on the overall economy because of a "substitution effect." The theory is that fans seek out alternate forms of entertainment if, for example, a league goes on strike or a team moves to another city.

    "In COVID-19, that issue is turned on its head," said Victor Matheson, a professor at College of the Holy Cross in Worcester, Massachusetts. "The money that is not being spent on the NBA, that's true loss, because it's not being made up anywhere else."

    The sports betting market is one of many examples. Since 2018, when the Supreme Court struck down a law that limited sports betting primarily to Nevada, more than $20.5 billion has been wagered in the 16 states that were taking bets prior to the pandemic, generating $180 million in tax revenue, according to legalsportsreport.com, which tracks the industry. PwC called gambling "the most significant catalyst shaping today's sports market."

    Sports began to disappear on the eve of the NCAA tournament, an event that gaming officials estimate generated a record $400 million in wagers last year for Nevada sportsbooks. On March 12, as conference tournaments shut down, the odds provider Don Best Sports issued a series of "critical alerts" to its bookmaker clients that signaled the industry's imminent collapse. When March was over, approximately $141.2 million had been bet at Nevada books -- a 76% year-over-year decrease and the lowest amount bet in the month of March since 1993.

    These days, hours sometimes pass without sportsbooks taking a single bet. Russian table tennis -- one of a handful of niche events still standing -- has emerged as one of the most popular betting markets at William Hill U.S. Sportsbook.

    "We went from one of our busiest times to basically nothing," said Alan Berg, a senior oddsmaker for Caesars Sportsbook in Las Vegas.

    ESTIMATES FOR HOW much of the sports economy ultimately will disappear are as elusive as mapping out the trajectory of the disease. The NBA, MLB, the NFL and other leagues are developing contingency plans to salvage what they can, including locking down players in a kind of sterilized biosphere. That strategy would not only bring back sports but also would help leagues capture billions of dollars in TV rights fees, the largest driver of sports revenue.

    But at this point, no one has any idea what will work. And even if the leagues and colleges find ways to resume, the losses will be massive without fans spending on everything from parking to garlic fries to their favorite player's jersey.

    To calculate the financial impact of the pandemic, Rishe examined publicly available data from several sources. That included Team Marketing Report's Fan Cost Index, which measures fan spending; a study on the youth sports market developed by WinterGreen Research, an international forecasting company; pro sports media data from Sports Business Journal's "Resource Guide Live;" and others.

    Rishe acknowledged several caveats to his calculations, but most suggested the numbers were conservative. If Major League Baseball plays without fans for even half the season, for example, more than $2 billion in fan game-day spending -- tickets, food, merchandise and other items -- will be lost.

    The absence of fans also means most of the workforce that supports the major sports will be unemployed.

    To calculate the impact on labor in pro sports, Rishe took the average number of temporary service employees required to staff NBA, NHL and MLB games. Because some employees work for multiple teams -- the Lakers and Clippers, for example -- and even at multiple venues, it was impossible to estimate the number of workers actually unemployed.

    Rishe instead examined lost wages. He calculated that workers will lose 19.5 million hours totaling more than $370 million. Those wages were based on both part-time workers employed by the teams and contract workers employed by food-service companies such as Aramark and Levy, which, according to their union representatives, average roughly $14 per hour. Rishe estimates each MLB team employs nearly 2,300 temp workers per game.

    "Some people think this is like pocket change or work for folks in high school or college. It's not," said Rosslyn Wuchinich, president of UNITE HERE Local 274, which represents 2,500 concession workers at 76ers, Flyers and Eagles games in Philadelphia. "These are people supporting families on this income. This crisis is a deep, deep financial crisis for low-wage workers."

    This story was reported and written by ESPN's Steve Fainaru, Mark Fainaru-Wada, David Purdum and John Barr, and researched by John Mastroberardino.

    #coronavirus #sports
     
    Last edited: Sep 13, 2020
    dealmaker likes this.
  2. Turveyd

    Turveyd

    Even the dumbest muppet on the planet, is starting to see the damage being done is 1000xs that of the virus, slowly.
     
    Ayn Rand, Real Money and athlonmank8 like this.
  3. I can't see them keeping up the restrictions for too much longer. Also shouldn't there be a vaccine soon? Won't that give people the justification to get out again?
     
    athlonmank8 and murray t turtle like this.
  4. wrbtrader

    wrbtrader

    Professional sports can survive a few years of this Pandemic by just eliminating the fat in the sports but college sports can not.

    The good thing is that all universities doing such will still honor their scholarships because that's contractual and could leave them in million dollar lawsuits if they did not.

    Yet, I'm a little surprise considering the elite schools have billion dollar endowment funds that most likely made them 100s of million dollars more in the stock market recovery.

    Something I've talked about a few times long before the Pandemic during the global financial crisis that did hit the endowment funds of Universities although briefly the economic costs was discussed early in the Pandemic in someone's thread about Covid-19 in which some idiots here at ET were bragging that Covid-19 was a hoax, did not hit their area and they were anti-mask.

    The latter only encourages further economic damage that may not impact them but it will impact an economic cost on someone else.

    Stanford cuts 11 varsity sports programs as the pandemic worsens finances

    https://www.cnn.com/2020/07/08/us/stanford-varsity-spt-trnd/index.html

    (CNN) A gap in resources widened by the coronavirus pandemic is leading Stanford University to cut 11 varsity sports from the school's athletics program in 2021, the school announced Wednesday.

    The school says because of the costs associated with running 36 varsity sports teams, the athletics program has been carrying an economic deficit for years -- and the pandemic exacerbated the financial burden.

    The Cardinal sports teams to be eliminated are men's and women's fencing, field hockey, lightweight rowing, men's rowing, co-ed and women's sailing, squash, synchronized swimming, men's volleyball and wrestling.

    [​IMG]
    Minor League Baseball 2020 season canceled


    "Still processing, but we will keep our heads on a swivel and fight this," associate head wrestling coach Ray Blake wrote on Twitter. "Stanford has made this decision with wrestling in the past and each time, the program has come back stronger."

    In an open letter, school leaders said the Covid-19 impact could equal a $70 million shortfall over the next three years if changes aren't made.

    "This is heartbreaking news to share," the open letter said. "These 11 programs consist of more than 240 incredible student-athletes and 22 dedicated coaches. They were built by more than 4,000 alumni whose contributions led to 20 national championships, 27 Olympic medals, and an untold number of academic and professional achievements."

    All the teams set to be eliminated in 2021 will compete in the 2020-2021 academic year if the pandemic circumstances allow, the school said, and the programs will be able to transition to club sports after 2020-2021.

    Stanford alum and 2016 Olympic bronze and silver fencing medalist Alexander Massialas wrote on Instagram that he was "disappointed and furious" at the decision.

    "My heart goes out to all the student-athletes who not only had their seasons cut short by the global pandemic, but are now being abruptly told they won't be competing anymore," he wrote. "I'm going to fight with you to keep these programs alive and give young people the opportunity to pursue their athletic and academic goals like I was able to."

    Twenty support staff positions will also be eliminated. The school said it will honor any athletic scholarships, and contracts of affected coaches, and the affected support staff will be given severance pay.

    #coronavirus #sports
     
    Last edited: Sep 13, 2020
  5. Drazek

    Drazek

    Im new here. Hi all.

    Re: sports and market, how do fellow traders feel about sport betting/gambling stocks? I heard it’s a tidal wave of a trend.

    Are they overvalued already? Prime to buy/sell?

    Hoping this reply is on the subject. Let me know if it warrants a new thread.
     
  6. wrbtrader

    wrbtrader

    Iowa University Drops 4 Sports Amid Financial Crisis Tied to Coronavirus
    The University of Iowa will drop four sports programs as part of the athletic department's response to a projected loss of $100 million in revenue because of the coronavirus pandemic.

    School president Bruce Harreld and athletic director Gary Barta said Friday that men's gymnastics, men's tennis and men's and women's swimming and diving will be discontinued after the 2020-21 academic year.

    Barta said the Big Ten's decision to postpone football and other fall sports until the spring will create an overall budget deficit between $60 million and $75 million this year.

    "A loss of this magnitude will take years to overcome. We have a plan to recover, but the journey will be challenging," Harreld and Barta said.

    Iowa is the second school in a Power Five conference to drop sports. Stanford University announced last month that it would eliminate 11 sports. More than 200 sports programs have been cut across the NCAA's three divisions and NAIA since March. The total is 73 in Division I and includes 11 men's tennis teams.

    Athletic departments across the country are facing financial hardships because of the cancellation of the NCAA men's basketball tournament and shortened or canceled football seasons. The Big Ten and Pac-12 aren't playing football this fall, and teams in the three other Power Five conferences are planning to play fewer games.

    Iowa said its four programs targeted for elimination will compete in 2020-21 if circumstances surrounding COVID-19 permit. Existing scholarships will be honored through graduation for athletes who remain at Iowa. The contracts of affected coaches will be honored.

    Among factors considered for which sports to cut were number of schools sponsoring teams at the Division I level, impact on gender equity and Title IX compliance, expense savings, history of the sport at Iowa and engagement level.

    The school said it would not consider seeking private funds to sustain the sports.

    The university announced budget cuts in July, including an initial $15 million reduction for athletics through pay cuts and furloughs.

    #coronavirus #sports

    wrbtrader
     
  7. wrbtrader

    wrbtrader

    Yeah...you're in the wrong thread and not on topic.

    Use the forum search function (above right) to find the appropriate threads for talking about sport betting/gambling stocks or you can start your own thread if you don't want to look for those threads.

    wrbtrader
     
    Last edited: Sep 13, 2020
  8. wrbtrader

    wrbtrader

    This will be a bigger economic cost than just sports...some universities without deep endowment funds to get them thru difficult financial times...they will permanently close the university while others will merge with other universities for survival.

    Yet, we are talking about young bright minds on the planet. Innovative ways to educate will develop at many Universities from the cost cutting measures.
    [​IMG]

    Like most institutions, the University of Oxford has been unusually quiet since the pandemic spread around the world.Credit: Christopher Furlong/Getty

    ...One of the biggest problems will be the drop in revenue from international students. Australian universities, which rely heavily on tuition fees paid by students from China, expect to lose Aus$3 billion to $5 billion (US$2 billion to $3 billion), mainly in fees from international students, says Andrew Norton, who studies higher-education policy at the Australian National University in Canberra. The losses will be concentrated at research-intensive universities such as the University of Sydney, he says, because income from international students often subsidizes research.

    The financial shortfall faced by universities around the world might mean that some, especially the smaller ones, will close permanently, says Jenny J. Lee, a higher-education researcher at the University of Arizona in Tucson. Others might merge. And some could develop innovative approaches, such as Arizona’s ‘microcampus’ network. The programme, which has been developed and expanded over the past few years, pairs the university with an institution abroad so that students can take online classes from Arizona and have a local faculty mentor to meet with in-person. “With COVID-19 we’re suddenly realizing what happens when we are physically shut-off from other countries,” Lee says...


    #coronavirus #sports

    wrbtrader
     
    Last edited: Sep 13, 2020
  9. %%
    Dont know;
    Dr/Senator R Paul said the flue was worse than the virus in KY.
    GS said wearing a mask is worth billions or trillions?? So no, I never let fake news run my life; back to my long + short charts...……………………………………………………………………………………………….
    Flu vaccine is 20 effective; means 80% FAILS. Thanks
     
    vanzandt likes this.
  10. wrbtrader

    wrbtrader

    Most sports are open again and the only restrictions is the fans at the stadiums (restriction on large gatherings and they must wear a mask...several empty seats between each fan).

    The other 1/2 of the revenue equation are the TV fans...networks pay a top dollar not by the year but by multiple years. Thus, a bad year in revenue out of 10 is still a great overall financial.

    Also, many people forget that there's been seasons cancel before in sports...it took the networks only one month to recover those economic losses. Thus, networks have the experience and know how to manage their finances during this Pandemic.

    In addition, some sports have brought back limited number of fans although I'm unsure how they decided whom those fans will be...

    Relatives, associates of the teams / players, friends like girlfriend or boyfriend. Sports I've notice that are doing such has been Tennis and F1 racing.

    In contrast, not the same for University sports. Many will not recover because they've been completely shut down except for some of the big revenue sports.

    #coronavirus #sports

    wrbtrader
     
    #10     Sep 13, 2020