Spectator Sport Franchises Face Grim Financial Future

Spectator Sport
TORONTO, ON - APRIL 21: Toronto Maple Leafs fans wave towels before Game 6 of the First Round Stanley Cup Playoffs series between the Boston Bruins and the Toronto Maple Leafs on April 21, 2019, at Scotiabank Arena in Toronto, ON. (Photo by Julian Avram/Icon Sportswire via Getty Images)

The world we once knew may never return to normal when the Coronavirus pandemic evolves into a new reality for planet earth. One industry where extreme changes may be necessary is that of spectator sport franchises.

Protective measures such as social distancing which recommends maintaining two meters (six feet) between yourself and other people in public spaces have already been implemented across most big cities worldwide.

Spectator Sport Franchises After Covid-19

It’s reasonable to expect that government health officials will eventually recommend permanent laws to ensure social distancing becomes the new norm complete with watchdogs and big fines. This one measure will have an enormous financial impact on the survival of spectator sport franchises.

The seating arrangements and capacity of baseball, hockey, football, soccer and all major and minor league sports venues will look drastically different in the future.

Using simple mathematics for a 20,000 seat arena or stadium whether closed in or open-air means that a full house will be at best about 17 percent (3,400) of the currently available seats.

To maintain social distancing standards in row A, if seat one is occupied, seats two and three must be vacant, if seat four is occupied, seats five and six must be vacant, and so on. But, to keep a safe social distance all of row B would also have to be empty. These measures would, of course, apply to every seat and row that people pay money to sit in to watch sports live while eating hotdogs and drinking beer.

Keeping row B and every second row vacant all the way to the nose-bleeds would reduce attendance by 50 percent while keeping two out of three seats vacant in row A and every other row beyond would mean an additional reduction of about 33 percent for bums in the seats.

Even worse, it’s plausible that ticket holders may no longer be interested in attending live matches if they can’t sit beside their buddies, their children or their spouses. Everyone would feel alone at the game. The shared excitement and intimacy of sitting together would no longer exist when you turn and say “did you see that,” to your girlfriend sitting three seats over. You can also forget about watching couples kissing on the big screen over centre ice or mid-field at the game.

Even more bad news. Gate receipts are the largest percentage of revenue for all spectator sports franchises, more than media rights, merchandising and sponsorships.  On average, gate receipts generate about one-third of the total revenue for big-league teams. If ticket sales decrease to 17 percent of previous levels, there would be a negative impact on revenue from media rights, merchandising and sponsorships.

If total revenue from all sources dropped as much as 50 percent, then player salaries could be expected to drop by the same percent. That means that a sporting hero currently making $10 million a year would only make $5 million a year.  Taken one step further, for owners (fans) to pay that world-class athlete you could expect the number of games per year to be half of what they are now.

Ripple Effects

The ripple effect reaches ushers, security staff, concessions stands, parking lots, sports bars, restaurants, hotels, and more.

You could also expect more players including the stars to miss more games since they spend so much off-field or off-ice time exposed to coronavirus in airplanes, hotel rooms, team buses and dressing rooms.

Team celebrations during and after the game would look much different. Forget about team hugs, or shaking hands with the opposition, or doing a post-game press conference in confined quarters.

On the positive side, because of all these changes to spectator sports, brought on by social distancing, we may never have to experience the fear and suffering of another Coronavirus pandemic.

 

Main Photo: TORONTO, ON – APRIL 21: Toronto Maple Leafs fans wave towels before Game 6 of the First Round Stanley Cup Playoffs series between the Boston Bruins and the Toronto Maple Leafs on April 21, 2019, at Scotiabank Arena in Toronto, ON. (Photo by Julian Avram/Icon Sportswire via Getty Images)

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