Sports leagues have come a long way to financial recovery
Large losses from pandemic may take time for leagues to recover, but there is some hope
As fans begin to regain seats at sporting events, some places are further away than others. For a variety of reasons, the return of fans in any capacity is something the team leaders loved to see.
After all sports were suspended on March 11, 2020 due to COVID-19, experts have projected losses of up to $ 12 billion across all sports. While the resumption of the leagues has reduced that cost by some margin, there is still a significant hole in the pockets of league owners. It remains to be seen how the various leagues recover over time, but it is clear that there will be a long way to go to return to the upward trajectory they had before the pandemic.
The National Basketball Association (NBA) was able to wrap up its season in the Orlando, Florida bubble, a campus that cost the league $ 180 million to operate. But it was a price the NBA was more than willing to pay, as their successful venture at Walt Disney World Resort avoided a loss of $ 1.5 billion.
Ticket revenues typically make up a significant portion of the NBA’s annual revenue, but the pandemic has forced them to rely primarily on television and sponsorship. Ultimately, their total revenue in the 2019-20 season was $ 8.3 billion, down 10% from the last full season.
As they entered the new 2020-21 season, much remained to be determined. With an indefinite start date and the absence of fans in most arenas, the NBA had decisions to make regarding the salary cap and how it would organize its finances. A start to the season in January would have cost the league up to $ 1 billion in revenue, so they decided to make a quick turnaround and start on December 22, 2020. Their salary cap remains the same as in 2019-2020. ($ 109.1 million), teams wouldn’t be hit as hard and wouldn’t have to drastically change their finances. In the agreement between the players’ association and the league, at least 10% of salaries would be held in escrow to allow the planned increase of 3 to 10% of the salary cap each year.
The revenue losses this current season remain to be seen, but after a year where the majority of games have failed to welcome fans, the losses may increase further from last year. While fans may start slowly making their way as the playoffs approach, it’s clear the pandemic has made a major dent in the NBA. future plans that signaled great financial prosperity.
As with the NBA, the National Hockey League (NHL) season has been derailed by the pandemic. When it all came to a halt in March, the league lost an estimated $ 150-200 million in playoff ticket sales and much more in additional income for television and sponsors. Although they also ended their season in an NBA-like bubble in Canada, the preparation for this season has been quite disappointing. The league has only played 56 games, but NHL commissioner Gary Bettman said it would have saved more money by not playing at all.
Like the NBA, the NHL salary cap has remained the same at $ 81.5 million. However, even after their lucrative new TV deal with ESPN, there remains the possibility that the salary cap will remain stable for up to five years. This can pose a danger to teams that relied on the salary cap hike and could lead to significant cuts in future earnings for players, especially those looking for a big payday later. Of all leagues, the NHL, which relies heavily on ticket revenue and has suffered billions in potential losses, is particularly keen on fans returning to the arenas.
Of all the leagues to play in 2020, the one that saw the most drastic change in its sport was Major League Baseball (MLB), which saw its usual 162-game season shortened to just 60. In grueling negotiation, the MLB and the players The association reached an agreement for their shortened season, and after many games postponed, the league finally welcomed returning supporters for the first time in the National League division, championship and series. global.
According to a Penn National Gaming study, MLB lost about $ 2.5 million in ticket revenue due to the shortened season with no fans. Since baseball has no salary cap, the amount of financial changes in salaries depends on the willingness – or rather reluctance – of owners to spend. Since there is no official figure on how much was lost, the answer changes depending on who you ask.
According to a statement from MLB commissioner Rob Manfred in October, the league lost at least $ 2.8 billion in 2020. But powerful baseball agent Scott Boras said no team has lost any. silver. Although the number varies by team, there has been even more reluctance to spend due to COVID-19. Whether it’s due to big losses or just MLB owners not wanting to spend a lot of money, this baseball season is one that the league and teams are hoping to recover somewhat as all stadiums host a certain percentage. of fans.
The National Football League’s (NFL) treatment of COVID-19 was very different from that of other leagues. During the March shutdown, the NFL was out of season and had no official in-person league activity that required drastic changes. Draft preparation aside, the NFL has had plenty of time to prepare for the season ahead. Still, they didn’t come to an agreement with the NFL Players Association until the end of July. Nonetheless, the league started its regular season without a preseason, and fans in attendance varied over the venue as teams like the Dallas Cowboys, Tampa Bay Buccaneers and many others greeted some fans. As the season progressed, many other teams managed to attract fans, but not enough to significantly curb the financial damage. After a headache season resuming games to avoid cancellations, the league was able to end the season with its annual Super Bowl in front of 25,000 socially estranged fans. Ultimately, the NFL profited from being the last league to start their season in the pandemic, which allowed them to learn from other leagues and find ways to accommodate fans in certain arenas across the country.
According to the New York Giants co-owner, the league has lost $ 3-4 billion in revenue. While this is a large number, they believe it is not something “catastrophic” because the NFL is the most profitable league in the world. Although the salary cap this year has been set at $ 182.5 million – $ 15 million less than last year – the new TV deal worth $ 10 billion a year from 2023 will help surely to give a salary cap major boost In the years to come. By agreement with CBS, FOX, NBC, ESPN / ABC and Amazon, the league has been able to recover a lot of money, and in the future, the NFL will be able to fully recover from losses due to the pandemic.
It is difficult to say whether these sports leagues could have survived the substantial financial losses without major television transactions. The sport has become lucrative over the years, and the television industry has certainly contributed to it. As supporters begin to take the seats, the road to recovery begins for the majority of sports leagues – but it will be one that will take time given the unprecedented nature of what has happened over the past 13 months. .
Written by: Omar Navarro – [email protected]