Q&A | Professional Sports In A Pandemic
September 16, 2020
Professional sports are big business: The global industry is estimated to be worth between $480 billion and $620 billion. Sports are an important part of peoples’ lives around the world and, for avid fans, they can influence many aspects of our lives — even what we eat.
So, when sports, like other businesses, shuttered this year in an effort to control the spread of the novel coronavirus (COVID-19), their absence was one more sign of the enormity of the crisis confronting us. Now, sports around the world are coming back, but their return has not been easy.
“Sports and business leaders are facing similar challenges,” says Madeline Serpico, chief client officer and chief executive officer, U.S. multinational clients at Aon. “We’re navigating fluid pandemic conditions, complex regulations across countries, and balancing health and safety with staying viable — and we all feel the world is watching.”
In recent interviews, Kelly Hyne, chief sales officer with the Ladies Professional Golf Association (LPGA) and Robert DuPuy, former chief operating officer and president of Major League Baseball (MLB) and currently a partner at Foley & Lardner LLP, discussed the challenges — and the significance — of getting sports back on the field.
Q: When did you first realize COVID-19 would have an impact on your sport, and what were your immediate priorities?
Hyne: I was in a COVID-19 meeting the second week in January — we had a golf tournament scheduled in February in Asia. Colleagues there gave us a look early on about how serious this was.
Communication has been key throughout — with our players and our tournament partners. Throughout, the health and safety of all involved was the guiding principle. Every decision we made was with that at the forefront. We want to present opportunities for all of these athletes to compete at the highest level, but we must do so in a way that’s safe for all of these communities.
We knew in March when we shut down that we couldn’t predict things more than a week ahead of time. That’s one of the big takeaways of COVID-19: The sense of time was reset. You have to plan for all scenarios and be open and honest with partners — you’re working through this together.
Having a great leader in times of crisis certainly helps. Mike Whan, our commissioner, is the best. We had honest conversations early on about what we knew and about what we didn’t know. That was critical to being open with our partners — everything we knew today, understanding that it would change tomorrow.
It’s a challenge to get comfortable with that uncomfortable nature. But you need transparency. We listened to our partners and their challenges.
Q: How do sports cope with the business impact of the pandemic: the shutdowns, the empty stadiums?
DuPuy: Baseball has an advantage because of how it has shifted its revenue model. Thirty years ago, 60 to 65 percent of teams’ revenue was stadium-based: ticket sales, parking, concessions or in-stadium signage. Now it’s flipped: About 60 percent of the revenue is broadcast rights. Particularly in baseball, the local broadcast rights are significant for teams. Then there’s internet revenue and the money that comes from MLB Network and national sponsorships.
So, while it will be significant and the losses will be dramatic, at least there will be the broadcast money that will hopefully carry the sport until we get back to a sense of normalcy.
Hyne: We’re taking a long-term view. We’re in this with our partners for 20 years, not one year. You need to have consistent touch points and recognize that you don’t have all the answers.
We’ve used this as an opportunity to focus on our community, and especially to allow fans to get to know our players better. Players have been extremely active on social media, taking over our accounts and sharing more about themselves and their experiences. So when we do get back to play, and fans see the athletes back on TV, they feel more of a connection.
Q: How do leagues, tours and teams keep players and fans safe as they get back in the games?
DuPuy: Like many industries it has been extremely complicated and difficult, particularly given the fluidity of situations and ever-evolving regulations and mandates. Each sport has its own complications and some advantages. For example, baseball, like golf, has a little bit less contact than (American) football and basketball, so the health and safety concerns are not quite as great.
Basketball and hockey, for example, are finishing their seasons in a bubble so they only have to deal with the one or two locations and those government mandates. But with baseball and football, you have to worry about travel and hotels. In the case of baseball, you’ve got two countries, 18 states and 28 different cities, each of which has regulations.
It’s been very complicated, but it’s complicated for everybody. You have to think about everything you do now instead of doing it instinctively.
Q: During the downtime, how did you support the wellbeing of your athletes, who are used to so much travel and activity?
Hyne: We’ve kept a focus on health and wellness. We rolled out a program last year that included resources like a nutritionist, team medical doctors and partners like Headspace from a mental health standpoint. We very quickly relied on them, even more, to help us navigate this time and put us on the right path to get back to playing.
We sought a lot of input from players and player directors to ensure we were fulfilling players’ needs. As a global organization, our players all over the world have needs unique to their countries. We started a financial assistance program for those who needed it.
We also have things like our Smucker’s Child Development Center to support all of our new moms on tour, so we’re making sure all those things are in place to take care of the children when we get back to touring.
Q: What are we learning businesswise with sports coming back?
DuPuy: There have been a number of sponsors that have cut down on their media buys, given that their businesses have scaled back.
In baseball you have the opportunity, for example, of in-stadium sponsorships, which I think will increase. I think some teams will be clever with their rotating signage and their interactive signage in the various ballparks. And I also think radio will be an important part of baseball’s broadcasting exposure over the next year or so, as will more promotional activities and sponsored activities where a sponsor will hook up with a team. Creative people will come up with ways to be better able to get their message out. And what better way to do it — the country was starved for sports.
This is having a devastating impact on minor league baseball, though. Minor league baseball makes its revenue from attendance — [the teams] don’t have broadcast revenue to speak of and they don’t have as much sponsorship revenue. They’re not having a season, and that’s 40 million devoted fans who see it as family entertainment and are missing out on that this year.
Q: Where do you see sports going from here as businesses address the impacts of the pandemic?
DuPuy: I think sports are leading the way in trying to get back in a safe and somewhat normal fashion, albeit without fans in the stands.
It does take a little bit of getting used to with regard to the empty ballparks. But golf has managed fairly well. I think, to present their product. They’ve had a pretty good experience with their tournaments so far.
Hyne: We did a lot of planning during the downtime. Being connected by video helped us maintain relationships. We were looking for a “new better” — what have we learned that we can carry forth? We reimagined what the tour would look like, wanting to provide a comfortable environment for players to return to while giving our athletes a stage to perform on.
It may be a slow start for sports, and we understand we need to reset expectations. But we’re ready to learn from each other and adjust as we need to.
For more on how the sports industry is navigating the pandemic, explore the virtual 2020 Aon Insights Series, where leaders from Manchester United will share learnings from the franchise.