The sports industry's global worth is roughly pegged at US$756 billion each year. According to the European Platform for Sport Innovation (EPSI),
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How COVID-19 scored a financial crisis in the sports industry?

COVID-19 hit sports, and events paused. The Olympics, FIFA, and EURO were impacted. How has the $756B/year global sports industry been affected by COVID-19?

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The sports industry’s global worth is roughly US$756 billion annually. According to the European Platform for Sport Innovation (EPSI), the sports sector generates every 47th euro, and every 37th employee works in sports in some capacity. The onset of the COVID-19 pandemic in early 2020 profoundly affected the global sports industry, like other sectors. Around the world, professional sports leagues hit the pause button on their seasons, jeopardizing thousands of jobs tied to hosting sporting events. This includes professional athletes and individuals working in related retail sectors and services associated with sports leagues and events.

Our study delves into the repercussions of COVID-19 on major sporting events such as the 2020 Olympics, the 2022 FIFA World Cup, the UEFA European Football Championship, key basketball events, and other entertainment industries.

Olympic Games 2020

The decision to postpone the Olympic Games due to the COVID-19 pandemic could hurt the Japanese economy. Goldman Sachs anticipated that inbound and residential utilisation would be the keys to development and earn the country around $5 billion from the Olympics.

FIFA World Cup 2022

In the event that COVID-19 restrictions extend beyond 2022, FIFA could be facing a severe financial setback, potentially suffering as much as an 83% dip in revenue. Based on the revenue from the 2018 World Cup in Russia, FIFA had projected for its 2019-2022 budget to increase its income from broadcasting and marketing by more than $400 million.

It’s noted that over half of FIFA’s revenue would come from media rights, “86% of which is already signed”. If the pandemic endures, this number could be reduced by over half. FIFA has planned to invest $6.46 billion from 2019-2022, with an average increase of $250,000 for each member organisation, which would thereby each gain $1.5 million annually. FIFA aimed to conclude the 2022 World Cup with $1.9 billion in reserves, but this goal might not be achievable if the COVID-19 pandemic is uncontrolled.

UEFA European Football Championship (EURO) 2020

Delaying the UEFA European Football Championship (EURO) 2020, as a result of the outbreak of COVID-19, could have cost around $327 million while cancelling the event completely would cost nearly $436 million. The competition may generate some $2.5 billion if held the following summer. Subtracting $300 million from $2.1 billion, there will be $1.8 billion left. This will be the ripple effect of declining finances on clubs and players participating in these tournaments. FIFA and UEFA have huge decisions to make, including whether to spend their cash reserves or loosen up the Financial Fair Play guidelines.

The sports industry's global worth is roughly pegged at US$756 billion each year. According to the European Platform for Sport Innovation (EPSI),
Credit. Midjourney

Major basketball events

Annually, the NBA generates about $8 billion. A significant majority of it comes from television rights, marketing, sponsorships, and entry-level tickets. The non-generation of revenue in each of these areas shows how much COVID-19 impacted the business aspect of professional basketball. Notably, entry income would be missed if games were cancelled or played in empty arenas.

Tickets are not the primary source of income for those who work in this sport. This is shown by Forbes data obtained by sports researcher Rodney Fort, and tickets accounted for around 20–25% of leagues revenues in 2018–19. This amounts to around $2 billion over a year, suggesting a 21% reduction in games could cost between $350 million and $450 million preceding the end of the season.

Sports budget and related livelihood

Delayed or cancelled activities due to COVID-19 may contribute to reduced income for event organisers and broadcasters. Cable television providers are largely advertising-dependent, implying that any reduction in sales would affect profitability. The National Basketball Association (NBA) and the NHL have indefinitely delayed their US competitions. Major League Baseball (MLB) and Major League Soccer (MLS) delayed or scrapped their campaigns for four weeks, and matches were discontinued on the Professional Golfers’ Association Tour.

Other entertainment industries

The COVID-19 outbreak has adversely impacted other entertainment industries. Entertainment is an industry that also depends on various money-making outlets. As COVID-19 spreads, more people are asked to remain at home and practice “social distancing.” From February 23 to March 1, 2020, it was calculated that media organisations in Italy reported a decline in the film industry of about $26.3 million. This was in comparison to the estimates for the same time in 2019. The film business’s measured loss added up to about $8.3 million.

Conclusions

The outbreak of the COVID-19 pandemic has, in many ways, severely affected the world’s sports industry, which is critical for all developed and still developing countries. The results have been huge revenue declines for many sports played worldwide. Also affected are the careers and livelihoods of millions of people in terms of lost employment, wages or salaries being cut, rising living costs, loss of fitness and general well-being, etc. Based on these findings, we proposed budgetary suggestions and policy recommendations in the full article, which would help policymakers and stakeholders recover the sports sector from the COVID-19 financial crisis.

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Journal reference
Alam, M. M., & Abdurraheem, I. I. (2023). COVID-19 and the financial crisis in the sports sector around the world. Sport in Society26(1), 154-167. https://doi.org/10.1080/17430437.2021.1979964

Dr. Md. Mahmudul Alam is an Associate Professor of Finance and a Senior Research Fellow at Universiti Utara Malaysia. He also holds the position of Associate Fellow at University Technology MARA, Malaysia. Dr. Alam is a certified Financial Planner and an accredited Expert in Climate Adaptation Finance. He was bestowed with the AFFP Research Fellowship from Frankfurt School (Germany) & TDRI (Thailand) and was also honoured by the BDRC (USA) as one of the "Top Bangladesh Development Researchers of the Millennium". He boasts a readership of over one million across various online repository platforms. His research focal points encompass financial markets, financial literacy, Islamic finance, sustainable finance, and sustainable development.

Ishola Abdurraheem is affiliated with KPMG Professional Services Nigeria. He holds membership in the Institute of Chartered Accountants of Nigeria (ICAN). He earned his Master's degree in Finance from Universiti Utara Malaysia, Malaysia, and his Bachelor's degree in Economics from the University of Ilorin, Nigeria. His primary research interests encompass Finance, Banking, and Economics.