LOCKDOWN AND THE UPRISE IN THE USE OF TECH
The huge adjustments we have made for the coronavirus lockdown mean that some technologies have increased in importance.
Across Europe, bans on mass gatherings and public events have been extended into July and August. Even countries that are beginning to emerge from the strict lockdowns have continued to put sporting activities on hold. No sport has escaped the lockdown, with athletics, baseball, cycling, football, F1, rugby, skiing and tennis all affected. Even the 2020 Tokyo Olympics had to be postponed until next year.
All sports, competitions and teams are considering the implications of restarting live events. Fans are desperate to see competitions start again even if they are so-called “ghost matches” played in empty stadiums without a crowd. Ghost events are not so easy to stage for many reasons. It still requires a lot of people to put on an event without a crowd and they would still be considered a mass gathering by most governments.
The COVID-19 quarantine will hit all major competitions and sports tournaments but in different ways.
Football benefits from the fact that each club is rooted in its local community. Players and officials mainly live near their club and there is less need for international travel. Players are paid as employees of their club rather than self-employed and this makes it easier for clubs to decide which events to play and which to cancel. UEFA has postponed Euro2020 by 12 months and is examining possibilities for this season’s Champions League and Europa League competitions. The move sets a clear priority for clubs to complete domestic competitions.
Ghost matches will be possible as soon as teams and officials can be tested and proven to be free from infection. There is a lot of pressure to play at least the remaining fixtures to complete the season for domestic leagues. National TV rights deals make up an important percentage of most European clubs´ revenues, about 37% on average. Deals may implode due to breaches of contracts if the contracted games are not played.
Subscription sports channels also need to resume broadcasting. Consumers will cancel their subscriptions if there is nothing to watch. In some countries, consumers may have a claim for damages which could be even greater than the loss of subscription revenue.
Perhaps there are even opportunities to improve some aspects of the fan experience. Virtual stadiums are smartphone apps specifically designed for watching sports events remotely. With television coverage of matches, we are used to seeing the noise and reaction of the fans. Televising a match playing in an empty stadium loses a lot of the atmosphere but there are already technologies to replace the audience. Sport technology companies can insert virtual billboards and other graphics into the live video stream. The same technology can be used to introduce a simulated crowd complete with sound effects and even community singing!
Virtual billboard technology is already used to insert local adverts to replace the physical billboards at the stadium. Similar technology could be used to insert personalised advertising specific to each user in the same way that all internet advertising works. This could be a higher value source of advertising revenue.
In football, playing ghost matches will be better than doing nothing and we will soon be looking forward to the 2021 season. Other sports will still be in lockdown.
Apart from the very top players, who have lucrative sponsorship deals, most professional tennis players generate their income from prize money at tournaments. The prize money at grand slam events is about 12-15% of the revenue generated from ticket sales, TV rights merchandise and food concessions during the event.
Ghost tennis tournaments cannot generate the revenues to pay out prize money at the levels needed to attract professional players. Too much revenue comes from the four major Grand Slam events themselves. Nobody can compel professional players to take part in events where the only opportunity is to win much smaller prizes. The players make their own decisions.
The Australian Open took place before the COVID-19 quarantine. The French Open has been postponed until Autumn. Wimbledon 2020 has been cancelled to be resumed in 2021. The decision to cancel may have been driven by the fact that the Wimbledon Lawn Tennis club was almost fully insured for cancellation. The US Open continues to be scheduled for August 24th to September 13th but it remains to be seen how much attendance will fall. Flushing Meadows is in the Queens district of NYC which was badly hit by COVID-19. The USTA is probably judging that it’s better to run the tournament with the risk of financial losses rather than weaken the franchise by cancelling the event.
Even to stage a race without spectators would need people to fly from many different countries and at least two thousand people at the track. This is not likely to be possible until “social distancing” is less necessary and international travel is less restricted.
F1 teams make about one-third of their revenue from sponsorship, one third from drivers paying to drive and corporate owners contributing to the marketing exposure and one third from prize money. None of this revenue is certain if there are no races and it looks as though F1 Group has a lot of pressure to run as many races as possible to avoid breaches of TV rights contracts.
Ross Brawn indicated earlier this month that radical measures were under consideration.
“We’re looking at the logistics of a closed race, how would we get the people there, how would we protect them, how would we make it safe, who would we allow into the paddock,” he said. “Every permutation is being discussed.”
So far, the teams have agreed to extend the 2020 season into early 2021. To reduce the need for air travel, it is likely that a reduced series of events in the UK or Europe will form the core of a shortened 2020 season. We may even see a so-called “triple header” with racing on three consecutive weekends. Whether this is sustainable for the drivers in such a physically demanding sport, remains to be seen.
All sports have extreme pressure to deliver as many of their planned events as possible. For most sports, playing without an audience will not help the immediate economic pressures. They rely too much on revenues from the fans attending the events themselves.
Football is in a better position than many other sports. Clubs will soon be able to play some ghost matches to meet their contractual commitments even if the experience will be different for the fans. Technology provides some opportunities to replace the big match atmosphere for fans using smartphones at home.
Successful sports clubs may even discover new global audiences for what used to be purely local events.