With the WHO declaring the COVID19 outbreak a pandemic and cases mounting daily (as of writing there were close to half a million cases globally and more than 10000 deaths) worldwide, one high profile casualty of the tightening measures from authorities to restrict movement and try and contain the spread of the coronavirus has been the sports industry. Cancellations of events, suspension of leagues, and even sportspersons being diagnosed with COVID19, the virus has the industry hit hard regardless of the sport or geographical location. With the world currently fighting a war against an unseen enemy, it’s hard to see sporting action resuming soon across major leagues. That also means a thriving marketing and commerce arena has come to a grinding halt. So, is there a way out of this quagmire, not just for sports organizers but also for brands involved with sporting events?
Sports for centuries has been the way-out for economies to tackle the most challenging situations, be it a global pandemic or a war situation. Sports has been a tool for all global leaders to bring back the normalcy, peace, harmony & sense of pride in their respective regions. From Pearl Harbour where the famous “Green Light” Letter of President Franklin Roosevelt’s in January 1942, just a month after the Pearl Harbor attack, when baseball owners weren’t sure whether the season should continue (Stone, 2020), to Kargil War and the India v Pakistan match at the ICC Cricket World Cup in 1999 at Old Trafford, just after India launched a major assault on the Pakistani army at Kargil on June 6 (Mukherjee A, 2020). We have been through a similar kind of outbreak & a global pandemic in 1918, when the ramifications of Spanish Flu touched all parts of society, including sports (Duffley, 2020).
Sport has been there, done it !!!
Sports has been crucial for economies and ITW Core’s recent write-up, Sponsorship: A million ways to tell your brand story talks about sponsorship being a major ingredient in the success-recipe of our leagues & International gatherings. As of this moment, all sporting events in every corner of the world are under tremendous pressure with a huge list of questions. The global sporting fraternity is looking for answer to these questions like “finding a needle in a haystack”. Because, sports events were the tools for economies to try & get back to normalcy, and now sport itself is stuck in the dilemma of finding effective solutions, fast.
What is at stake is quite big. The Olympics (the Tokyo 2020 games’ fate hangs in the balance as a historic postponement looks most likely) was to bring together 72 local companies for all three-tier sponsorship arrangements totalling more than $3.1 Bn, excluding the IOC’s partnership agreements with Toyota, Bridgestone, Panasonic, Airbnb, etc. ("Cancelling Olympics will have global impact", 2020) and Tokyo itself is officially spending $12.6 Bn, hence the final estimates as per the experts is expected to be ¥7 trillion ($66 Bn) or 1.4% of Japan’s GDP or more (Kihara, 2020). All of that now is surrounded by a cloud of uncertainty. With the cancellation of multiple Grand Prix, FIA - Formula 1’s governing body could be looking at a revenue loss of more than $600 Mn including the amount paid by individual nations for hosting the 2020 Season races.
Cricket was able to attract 833 Mn viewers in 2019. But with its biggest franchise extravaganza - the IPL - and other International matches postponed until further notice, a huge blow has been dealt for BCCI, the respective sponsors, state associations, players & fans. If the IPL were to be cancelled this year, it will cost ₹3,869.5 CR (₹3,269.5 CR of broadcast & streaming revenue, ₹200 CR & ₹400 CR of central and title sponsorship revenues, respectively) ("Cancellation of IPL 2020 could cost BCCI ₹3,869.5 CR: Report", 2020)
Aside of the straight forward possibility of revenue losses, the situation has brought in an unprecedented complexity in terms of logistic, financial issues, and legal issues too. Postponing/cancellation comes at a huge cost - a quick glance at how much major European football leagues are losing gives you an idea. There are also issues centered around contracts that need sorting out - whether it is player contracts and wages or sponsor contracts and provisions therein of what happens if an event gets curtailed, postponed and cancelled. Will the pandemic be treated as force majeure? Will it be treated as a hardship? Those issues will make a difference in how these contractual challenges get resolved.
Football getting affected due to Coronavirus
Crafting a way out:
Taking Rocky Balboa’s advice: “One step at a time, one punch at a time, one round at a time.”
Naturally, the mood and the outlook currently is glum. Considering the variety of sports followers & avid fans around the world, the commercial loss is huge for each & every stakeholder involved in development, administration, management & branding of the properties. They are concerned about the projections for the next year, and so on. But this situation has given our community a very interesting opportunity. This so-called “downtime” is where brands can re-work on their existing plans while shedding some light on their past. Sport is an escape everyone craves, a community that has gotten stronger over the years, and when things begin to get back to normal the yearning for that community will not only remain, it will probably grow stronger because of the current scarcity.
It also is an opportunity to explore avenues such as eSports and other technology that’s changing the fan experience by shifting things to the virtual arena. The point is that brands have to stay invested (not just financially but also in terms of their commitment to use sports as a marketing/customer outreach platform). As the Havas Media Chief Information Officer Jason Kanefsky pointed out to his network in an email recently, brands cannot simply afford to go dark on marketing at this time. Brands will need to invest in marketing “focused on building and maintaining a meaningful relationship with consumers” rather than target short term sales goals. Because, when the pandemic threat blows over (and it will), they will be walking back into a world that re-embraces sport more enthusiastically than ever before. In fact, it’s likely that the price tag for becoming associated with major events will actually rise. A commitment now could help lock an opportunity in the future at good value and keep the connection alive. To quote the famous Vince Lombardi,
“It is not about whether you get knocked down, it is whether you get back up.”
Sports will get back up for sure and for those who stuck with it through the crisis, it will be the dawn of a brave new (and stronger) era.
This article will be attributed to Hitesh Mangtani and Tareque Laskar, Research and Analytics team-ITW consulting pvt ltd.
Hitesh Mangtani and Tareque Laskar, ITW CORE - ITW Consulting