The impact of the Covid-19 on the management of sport organizations

March 27, 2020

The impact of the Covid-19 on the management of sport organizations

Jordi Viñas, professor at Johan Cruyff Institute in the modules on Strategic Management of Sport Organizations and Sport Facilities Management analizes how Covid-19 is affecting the management of sport organizations

The impact of the coronavirus crisis is diverse depending on the area that we analyze in the sports world. In professional sports, where we talk about large stadiums, television rights, sponsors and where there really is a significant volume of business in terms of income and a diversification of this income by different agents, the impact is going to be important, but it may be bearable up to a certain point.

The main source of income for professional sports is usually from television rights, which are based on a contract with strong legal conditions carefully reviewed by specialists. Therefore, an insurance clause covering a force majeure, such as the coronavirus, is included in this contract and may possibly safeguard a good part of the forecast or estimate of income that the clubs have had, in this case. Surely, the final impact cannot be foreseen right now because, logically, it is still unsure if sports competitions, both in Spain and in the rest of the world, are going to take place and fin with the structure and forecast that existed when the calendar was prepared at the beginning of the season. But, if they can be carried out, the impact is obviously going to be, from the point of view of what is, I insist, professional sport, and in this economic aspect, the impact would be almost zero. In the end, the preparation, execution and broadcasting of these matches will end up happening. Therefore, in professional sports, the economic impact, for the moment, is expected to be limited. We will see for how long these strict measures we have today that prohibit any type of event or sporting event will be prolonged.

“In professional sports, the economic impact, for the moment, is expected to be limited”

If we go to another sub-division in the world of sport, such as, for example, fitness centers, wellness centers, businesses focused on physical activity and health, the overview is quite different. The final customers are the citizens who are enrolled in a fitness center or a sports club and today, in many of European countries, they are closed. Therefore, for the moment, it is a service that is not being fulfilled and, according to the provisions of the law, this service should not be charged. Here, it is interesting to see some strategies that some of the clubs and fitness centers have been developing and launching on social networks in the last few days. They guarantee that the staff will keep their jobs, they are guaranteeing some of the activities or services online, with all the limitations that this entails, but at least they are trying to minimize as much as possible the impact that they will surely have due to income reduction. They are also playing, and in a completely legal way, with slogans like #yonomeborrodelgym as we can see on Twitter or Instagram. It is interesting to see how there are a series of strategies that try to guarantee, from the perspective of income, stability, or to minimize the impact that it will have in this regard.

“It is interesting to see the strategies that some clubs and fitness centers are developing and sharing on social networks to minimize to the maximum the impact that they will surely have due to a reduction of incomes”

Another area is the sport and physical activity offered by public entities. Here the impact is different. These municipal facilities paid for by everyone’s taxes, obviously, are also closed today, but there are many more guarantees that jobs will be maintained and very possibly the membership fees will be returned and will be borne by the public administration.

Within the world of sport, being such a large area and industry, totally different strategies are observed, depending on whether we are in a professional field or in a physical activity and health field. And it will be interesting to see how this level of uncertainty is managed by the different operators and agents.

Measures to take in the different business areas

Measures may be of different kinds. From the public administration, for the physical activity and health centers, the fitness and wellness centers, it would be interesting to establish fiscal measures. For example, temporarily, they could apply a reduced VAT or a zero VAT for a few months, in order to guarantee that for all these companies that are now closed and that are likely to have a revenue debacle, the part of their revenue that is now VAT, and therefore is not part of the company’s income, can be converted into income for a few months. I think it is an initiative that is already being demanded in the cultural field and that has many parallels with the field of physical activity and health. It could be a low impact measure for the public administration and very appreciated, as well as have a big impact on all these centers of physical activity and health that are providing a service to improve the quality of life or maintain the level of health among the population.

Other measures that could be taken, more so at the local level, are awareness campaigns or promotion campaigns, so that people resume the levels of physical activity that existed prior to this time of confinement and drastic reduction in activity. Therefore, campaigns aimed at the general population that enhance and motivate a return to activity could also be interesting.

From the point of view of professional sport, some measures could be studied such as planning events, or rebroadcasts of matches open to the general public, that are not pay-per-view, and that are also funded by the government. This would allow the different television operators to try to have a little more than the expected income that most probably, due to these days and with the stoppage of all competitions, will be greatly affected. Because if the season, instead of running for 9 months, runs for 6 months, many people, during the months when there is no football, will decide to change their TV packages so that they do not have to pay for a service that is not being provided.

How will the competition be reoriented? If it will be completed eventually, 2 or 3 weekly football matches will be necessary, in a shorter period of time. The same can happen with events, such as the Giro d’Italia, the Tour de France, Roland Garros, the Barcelona Open, etc. Any type of sport linked to specific sporting events will again have to study how to enhance or guarantee the competition, both at the level of television rights and as sponsors. Both are linked because a sponsor is looking for exposure, especially in the media. They must assess how they can reach the maximum possible audience.

What management problems do you anticipate during and after Covid-19?

In this period of confinement and health emergency, it is difficult to answer how to manage this, and I am also not an expert in this matter, but I identify a couple of elements that could be considered as possible elements for reflection. On the one hand, in the sports sector, whether it’s professional sport, but, above all, with regard to the world of fitness and wellness, there is a lack of networking. That is, even if there are competitors, as in any other sub-sector, or in any other industry, it would be interesting if there was more of a networking mentality, to reduce this impact together. For example, in the culture sector, they have it much clearer. Through networking, a certain lobby group could be created to put pressure on the public administration or to raise public awareness. I think it would be interesting to take it into account and promote it through groups, employers, unions, etc., that are linked in the fitness and wellness industry.

Secondly, and oriented more so toward professional sport, surely the concept of uncertainty needs to be worked on a little more. It is impossible right now to know, for example, if the professional leagues are going to finish, but there are a series of elements that can give clues as to whether this will happen or not. If the football league resumes and wants to finish, it has to be before June 30th because that is when many contracts that players have with the clubs end and, therefore, it would be unthinkable to carry out a part of LaLiga, for example, during the month of July when there may be some players who have already signed another contract with a different club.

Therefore, if it is completed, it must be before June 30th and depending on how long this health emergency that we have today lasts, we can start to anticipate whether we will reach June 30th or not. Taking into account the remaining games and the maximum number of games per week that can be played (I insist that it is easy to speak seating here) we will have time to develop a tight but feasible schedule to carry out all the remaining games. There should be meetings with the Footballers’ Association, with the Federation, etc., and a series of agents who must be counted on to make decisions. In this management of uncertainty, it would be interesting to adopt a higher level of transparency and greater communication with fans.

“In this period of uncertainty, it would be also interesting for professional sports to adopt greater transparency and a better communication with fans”

I took football as an example, but we could talk about any other sport, professional or not, and any competitive sporting activity at the adult or school-age level, because obviously, at school level they have less media impact, but there are still championships in Spain, in Europe, U21, U18, U16 and even younger. Therefore, it would be interesting to clear this uncertainty a bit from concrete data, and to be able to schedule the activities that are pending between now and the end of the season. In the case of Europe, almost everything ends, from a team sport point of view, at the end of June and, therefore, to see what can happen until this moment.

To summarize, networking and collaboration between the different agents in the world of fitness and wellness, and in professional sports, better management of uncertainty.

The impact of Covid-19 is temporary. With what forecast is the sports industry working?

Indeed, the impact of this global health emergency is already anticipated to be temporary. We saw how in China it lasted between 2 and 3 months, and now with lesser effects and the restart of the manufacturing and industrial production industry, it is anticipated that the same could happen in Europe and later in some countries in the rest of the world, both in America and in Africa.

This temporality for some industries simply means a stoppage of industrial production and they will return to activity the moment their employees return to their jobs. In the case of other industries such as the sports industry, this break delays a schedule of activities, competitions and goals of people who had signed up for a fitness center to prepare for a marathon, for example. There is a certain pending debt, of lost time. In this sense, it exceeds the economic impact that we have discussed so far. Therefore, it will be interesting to see how the sports industry strengthens its resources (human resources, technological resources and all kinds—) to guarantee that the adequate means are available to correct this deviation, from the calendar of activities to that of sports competitions, and develop match calendar that, in the case of football, will allow the season to end on June 30th as scheduled.

Obviously, it will require a lot of coordination, because from the point of view of sporting events, it is unthinkable that for the purposes of sports broadcasting, the Tour de France, Roland Garros and the Olympic Games, for example, could take place at the same time. Not only does each sport, each competition, have to be restructured by itself, it also has to be coordinated with the other events worldwide. Therefore, this temporary impact of Covid-19, in the case of sport, has a greater impact, not only economically but also for logistical and operational purposes, and it will require people, logistical, economic and human resources to be able to get back to normal as soon as possible.

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The impact of the Covid-19 on the management of sport organizations

  1. Very interesting article. In my opinion athletes are the sector that is the most affected about the situation. All f their training process will go back, the will lose their fitness and athletes are crucial for sports. Because without them there is no sports management, marketing and teams. Finally a other bad result is the fans interest which with the current situation is limited because all the people are focused to their health. So in my opinion teams, athletes and all of the sport organizations must keep the interest warm for the fans using social media.
    Thank you,
    Charalampos Kourlos

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