The Impact of Covid-19 on the American Sports Industry

The United States of America remains the country with the highest number of Covid- 19 deaths to date (29th May 2020). The rapid spread of the coronavirus has led to sporting events being canceled or postponed. Stadium workers have been affected by the virus financially, players revenue and schedules have been shifted and fans lose a form of entertainment with leagues and tournaments being suspended.

The lack of live sports being aired has heavily impacted sports broadcasting channels such as Entertainment and Sports Programming Network (ESPN), the highest rated cable channel with approximately 200 million views per month.

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They generate income from subscription fees, advertising and streaming online. ESPN has a streaming service (ESPN+) which has 7.9 million paying USA subscribers. With the absence of sports, ESPN and other sport networks have been forced to shift their content to combat the lack of live sporting events being broadcasted. 

ESPN is a Disney-owned sports broadcaster whose viewership is dropping a significant amount due to the coronavirus pandemic. According to Nielsen data, the last week of live sports broadcasted in March on ESPN, brought in over 1.04 million viewers during prime time.

The top 3 highest grossing sports leagues in America are the National Football League (NFL) bringing in $13 Billion per annum, Major League Baseball (MLB) with $10 Billion and National Basketball Association (NBA) with $7.4 Billion a year. 

ESPN received a minimum of $11.4 billion of revenue in 2019 based off affiliate fees and high interest rates from advertisers and streaming, which then makes ESPN one of Disney’s biggest business contributors. ESPN+, launched in 2018 and has a $4.99 subscription fee. It surpassed 7.6 million subscribers in February 2020 resulting in over $460 million per annum. 

The National Football League (NFL) mainly generates their revenue from television contracts. They do so by selling broadcasting rights to major media companies such as ESPN. They also profit from ticket revenue, merchandise sales, sponsors and board side advertising, revenue per game, stadium rentals and transfers. 

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The cancellation of the Nation Basketball Association (NBA) and March Madness college basketball tournament contributes to the drop in ratings on ESPN. With the absence of the NBA, ESPN could lose approximately $481 million in ad revenue.

According to Forbes each NBA franchise generated at least $1 billion last year. Each of the MLB participating teams generates over $300 million in profit and the attendance of games brings in a large amount of money as ticket prices rise year on year. Without this, ESPN is expected to lose out on millions of dollars. 

The NFL draft was the first live sporting event broadcasted since the coronavirus outbreak which took place April 23. Drafting takes place every year where players are recruited at a player selection meeting. The draft was set to be held in Las Vegas but circumstances opted for a virtual event. 

The NFL Network teamed up with ESPN for a combined production of the NFL drafting. They broke records with 15.6 million viewers tuning in the first night of the drafting, overtaking the previous record from six years ago of 12.4 million viewers. The virtual drafting captured the players reactions when their names were called, allowing fans to be a part of the experience. 

ESPN’s ratings broke records once more as of May 20, as they premiered a 10-part docuseries titled, The Last Dance, which is based on former NBA player, Michael Jordan and the Chicago Bulls. The average amount of views across all 10 episodes are close to 13 million views at the time of this article being published.

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The premiered episodes are the most viewed original content on ESPN since 2004. It is also the most viewed television broadcast of the year, surpassing the College Football Playoff (CFP) National Championship Game. The last two episodes of the docuseries, The Last Dance, brought in an average of 5.6 million viewers on ESPN and ESPN2. 

The virus puts a strain on the American sports industry with drastic revenue loss across sporting codes. There is a decline in team merchandise sales, sponsors and board side advertising, and with athletes unable to compete there is revenue loss for teams per game and transfer value loss.

Sport broadcasting networks are airing repeats and highlights of past games which is leading to a loss in television rights value and the decrease of public support. Ratings are dropping with the lack of original and live broadcasts but ESPN, among other networks, have adapted to the change.

ESPN has broken two records during the global pandemic by teaming up with the NFL Network to produce a combined production of the NFL drafting and releasing an original docuseries surrounding Michael Jordan’s basketball career and the Chicago Bulls. The American sports industry is highly impacted by Covid-19 but continues to create content despite huge revenue loss. 

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