The world of sports has never been rocked harder. There has been postponements and cancellations of almost all sporting events ranging from the Olympics to your child’s football game all in the face of the coronavirus pandemic. Although the responses from most sports organisations have been swift and decisive, there are a few who fail to recognise the severity of the situation and hence were delayed in their decision-making to postpone or cancel games.
The reasons for the delayed responses are simple – economic profits. No doubt the economic impact of the suspension of these sports and events are massive. Potential loss of revenue for suspension of NBA season from gate revenues is $450 million and a further $200 million for non-tickets revenues where else F1 is estimating a $680 million from hosting fee loss for the season. But perhaps the biggest hit will be the Tokyo 2020 Olympics with the postponement expected to add $2.7 billion to the cost for Japan.
The intricacy of the sporting industry is largely tied to event organizing and has traditionally been used as a way to spur economic growth to the hospitality and entertainment space. For example, TV broadcast rights are largely tied into the sporting industry. NBC paid $12 billion for Olympic TV rights through to the 2032 Games. This then continues to sponsorship deals and players contracts which feeds off the popularity of the media in showcasing the sport. In turn, we have seen players from FC Barcelona, Bayern Munich and Juventus taking pay cuts to ease the burdens of their clubs and allowing non-playing staff to collect 100% of their salaries.
However, it’s not all doom and gloom, F1 have launched Project Pitlane in conjunction with the UK government to leverage on their expertise in engineering and rapid innovation to help produce ventilators. Stadiums have been repurposed as storage and distribution centres for medical materials and as field hospitals.
Perhaps a silent winner amidst the coronavirus pandemic is the e-sports industry, solidifying e-sports as an alternative to the traditional physical sporting industry. In the recent, SEA Games 2019, we have seen the addition of e-sports in its medal tally. The NBA has announced an NBA2K competition featuring some of the biggest stars such as Kevin Durant and Trae Young. F1 created a virtual GP that includes current drivers, streamers and celebrities, garnering 1 million views on YouTube alone so far. We anticipate a further acceleration of investments in the gaming and online sports entertainment industry arising from the crisis.
The coronavirus pandemic will be one of the biggest challenges that the sports world has ever faced, but isn’t that what sports is all about – overcoming challenges, never giving up and bringing everyone together.
About RHL Ventures
Founded in 2016, RHL Ventures a multi-family private investment firm headquartered in Malaysia that champions growth for the best businesses in Southeast Asia. Currently led by Rachel Lau, Raja Hamzah Abidin, and Jo Jo Kong, the firm pools its extensive regional experience in investments, corporate advisory, and capital markets to drive transformative growth for ASEAN-linked start-ups as well as small and medium-sized enterprises.
For more insights by RHL Ventures on COVID-19’s impact on the sports industry and various other sectors, please visit: https://rhl.ventures/insights/