Sporting events across all codes have been cancelled or suspended due to the novel coronavirus outbreak around the globe – and South Africa is no exception. All sporting associations have been negatively affected and the financial implications could be devastating.
The biggest sports news of the year is undoubtedly the recent announcement that the 2020 Olympic Games in Tokyo, due to have kicked off in July, has been postponed until 2021. This is a huge financial blow to the host country, which is estimated to have spent more than $12 billion on the event. The Olympics have only been cancelled three times before, in 1916, 1940 and 1944, during the first and second world wars.
The three major sports in South Africa – soccer, rugby and cricket – could also suffer from cancellations or postponements, although cricket will probably be less affected than soccer and rugby because the season is already over. In a recent interview with Craig Ray of Daily Maverick, acting CEO of Cricket SA, Jacques Faul said: “If it lasts 60 days then it will have almost no impact because we have just gone into our off-season anyway.” He indicated that if it went on longer, however, the picture would be different. “If we don’t play the three matches against India in August then we will lose R150 million from international broadcast fees.”
All three of South Africa’s major sports are heavily reliant on the hundreds of millions of Rand earned annually through broadcast rights sold to SuperSport for the domestic and international competitions that South African teams are involved in.
“Soccer and rugby could be the big losers,” writes Ray. “The Premier League (PSL) is currently in a five-year R2.5 billion deal with SuperSport. Technically, rugby and soccer are in breach of contracts because they are not producing content for the pay channel to broadcast.”
Matches applying to both these sporting codes have been suspended, Super Rugby “for the foreseeable future”, while PSL and African Cup games are suffering the same fate. The payment of broadcast rights by SuperSport is a major contribution to the financial coffers of these national bodies, but the gate monies, sponsorships and sale of replica merchandise provide an additional financial benefit to these unions.
These are losses that the unions need to bear, while still having to pay contracted players, plus the upkeep of the grounds and allied expenses. At the time of these suspensions, local teams Kaizer Chiefs in the Absa Premiership and the Sharks in Super Rugby headed their respective standings and could lose the potential prize money on offer in these competitions.
Globally, the situation is similar to that in South Africa, with several big events on the sporting calendar falling victim to the COVID-19 pandemic. Apart from the Olympic Games, these Include all American traditional sports, Formula 1, Six Nations and European football, to name but a few.
The English Premier League, one of the world’s most watched competitions, formulated a plan focused on completing the season, even if it meant playing matches to empty stadiums. This was an effort to protect its £29 billion domestic and international broadcasting rights. The plan fell apart after Arsenal manager, Mike Arteta and Chelsea player, Callum Hudson Odoi announced they had tested positive for COVID-19, leading to the team members having to self-isolate. In response, the English Premier League suspended the season, following similar suspensions in Italy’s Serie A and Spain’s La Liga.
The English Premier League faces similar problems to those encountered in South Africa, namely the ongoing fixed costs of running a club. The 20 Premier League clubs could face a shortfall of £750 million in television match day sponsorships. The collective wage bill of these 20 clubs is £2.9 billion, representing around 59% of normal revenue.
In an effort to reduce expenses, it has been proposed that players take a pay cut of 25% which the Professional Football Association (PFA), a trade body for players, is resisting. Manchester United goalkeeper, David de Gea, earns a wage of £375 000 a week and Arsenal midfielder, Marsut Ozil, earns £350 000 a week, both excluding personal sponsorships. A pay cut of 25% would reduce their weekly earnings to around £270 000 per week – the equivalent of roughly R6 million per week. Not bad for a pay cut!
The impact of COVID-19 in the sporting arena could have unprecedented consequences for the industry – and it is the smaller clubs that will battle to survive, in much the same way as it’s the small enterprises in the business world that will be hardest hit. We can only hope and pray that this disastrous pandemic will pass sooner rather than later.