With no live audience, the sports biz is innovating

Sports is typically a lucrative business. But with fields, arenas and courts silent because of Covid-19, innovation will be the name of the game.

The pandemic has had a material impact on global sports sponsorship, which remains in decline, said Mary DePaoli, RBC EVP and chief marketing officer, in a podcast on Monday.

“Globally, sports sponsorship rights fees are projected to decline about 40% [and] major North American leagues are expected to lose close to $12 billion in revenue, not to mention the hundreds of thousands of jobs due to the stoppage of sport,” she said.

In the short term, sponsors will review contracts to ascertain if value has been received, if make-good assets can be delivered in the absence of live events and if terms can be extended to accommodate sporting delays, she said.

Longer term, sponsorship may evolve depending on how consumer behaviour toward live events changes.

“How eager will fans be to gather again in crowds?” DePaoli asked. “Are we okay being in a stadium in the next year, in the next 18 months, with 45,000 strangers — some of whom could even be super-spreaders?”

Based on research, fans say they’re reluctant to return to live events in the next year, she said, with respondents’ answers varying depending on if they’re parents or care for parents.

Without fans, leagues with broadcast deals are better positioned, compared to those that rely more heavily on ticket and merchandise sales.

Still, leagues that can put their product on air aren’t immune to the challenges of having no live audience, which dictates “the energy, sound and excitement of the content,” DePaoli said.

Some leagues, such as Germany’s Bundesliga, have tested canned cheers and cardboard cutouts of fans in seats.

Other innovation includes suiting up athletes with a new piece of equipment: microphones. “Fans can now hear the banter between players on field, and […] get glimpses into coaching and game management from coaches on the sidelines,” DePaoli said.

She expects viewership will surge, boosted by innovation, and travel and congregation restrictions. Early data are supportive. For example, The Match, a PGA tour preview with Tiger Woods, Phil Mickelson, Tom Brady and Peyton Manning, set a record for cable viewership.

As live venues eventually reopen, transmission rates will be a key factor.

“Leagues are going to have to work very closely with health officials and abide by local, regional, national laws when they think about coming back to any planned event,” DePaoli said.

A recent blog post by law firm Borden Ladner Gervais outlined the top risk management considerations for sports organizations to limit their exposure to lawsuits.

The considerations, which included policies and training to limit the spread of Covid-19, the use of waivers and notices, and hiring medical professionals, give rise to an additional consideration: increased costs.

For more details, listen to the RBC audio post and read the BLG blog post.