Patrick Rishe of Washington University in St Louis comes out with an analysis to predict potential impacts of sports shutting down.
For my next trick, we will be performing a financial analysis of how much a ‘Disappearing Act’ from sports would cost. The outbreak of the Coronavirus or COVID-19 pandemic has taken a toll on sports all over the world, and with cases rapidly increasing every day, it is hard to tell when sports will be back in action. According to an analysis conducted by ESPN, sports disappearing would erase up to $12 Billion in revenue, with at least hundreds of thousands of people losing their jobs. This could be termed a catastrophe in the financial world, which is most likely to double if the league’s schedules and college football is wiped out entirely by the coronavirus this fall.
“As an economist, you stand back, and you look at the carnage that’s taking place, Dumbfounded, awestruck, mind-numbing.”
This historic crisis has managed to hit every sector of the $100 billion sports industry in the U.S after spreading across the country. It did not spare the youth sports complexes or the stadium authorities, or global TV networks like Fox Sports, ESPN, etc. The virus certainly did not spare Rec centers either; it is so devastating because fans are starting to lose interest in sports as they focus on other things. Sports organizations, especially the ones struggling to make the headlines say they will be fortunate to survive this being that they already at the lower levels of sports.
Low-wage service workers that support college and pro sports will feel the pain, especially as they are all now unemployed. Tax revenue that supports local services like firefighters and the police and also helps better the lives of thousands of communities every day is gradually being drained as a result of these losses. “As an economist, you stand back, you look at the carnage that’s taking place — dumbfounded, awestruck, mind-numbing,” said Patrick Rishe. He directs the sports business program at Washington University in St. Louis. “All of those phrases, they’re all relevant because we just have never seen anything on this scale.”
Sports Business Program director and writer for Forbes.com performed a public examination following ESPN’s request for available data to predict the potential impact that will come from shutting down the major pro leagues, youth sports, and the NCAA. Labor Market analytics firm EMSI worked together with ESPN to come up with estimates on sports-related jobs. They also interviewed public officials, economists, concession works, sports executives, travel team organizers, and many others to uncover the impact of the COVID-19 outbreak economic-wise on sports at all levels. An analysis made by Patrick Rishe proved to be based on assumptions that seem to have no or little connection with the subject matter gradually every day.
Revenue losses in Patrick Rishe’s analysis
The ability of Major League Soccer and Major League Baseball to salvage half of their seasons, at least with the fans attending games and In the analysis, there were also assumptions that the NHL and NBA had canceled the rest of their regular seasons with their playoffs also being staged without their fans. And also the youth sports resume by July. Everything adds up, starting from the price of tickets to soccer tournaments in and out of state to the whopping $3.5 billion that the fans would be spending on pro sports. This erases almost $371 million in wages. Washington University Patrick Rishe broke down the revenue losses in his sports analysis from stoppage this way;
- Pro Sports*: $5.5 billion
- College sports*: $3.9 billion
- Youth sports tourism*: $2.4 billion.
This is a typical middle-of-the-road analysis for so many reasons, one of which includes; it not including protected losses from golf, tennis, NASCAR, and some other minor sports and gambling. These figures also omitted losses in the outdoor recreational industry like skiing, hunting, recreational golf and tennis, and fishing. Records from the Bureau of Economic Analysis states that $427 billion was generated in revenue in 2017. Let’s not forget golf courses, fishing tournaments, and sports goods stores are also being shut down in most parts of the country, and the revenues and jobs that came from are wiped out as well.
To make matters worse, insurance is also unlikely to cover many of the losses. Since top-notch events like the Olympics and the Wimbledon held comprehensive insurance policies, U.S sports leagues, especially the major ones, are not covered for this pandemic. One sports executive said, “It’s like hell began freezing over.”