What coronavirus will cost NCAA, NBA and other US sports leagues
Sports executives prioritized the health and safety of their employees over inevitable financial losses
U.S. sports leagues came to a complete halt on Thursday as the world contends with the worsening coronavirus outbreak, placing billions of dollars in cumulative revenue at risk and forcing the cancellation of some of the year’s most high-profile events.
Officials took drastic action after Rudy Gobert of the NBA’s Utah Jazz tested positive for coronavirus on Wednesday, raising questions about the likelihood that further games could be held without posing a health risk to players and the public at large. The NBA, MLB, MLS and NHL all opted to suspend activities until further notice, while the NCAA took the unprecedented action of canceling March Madness basketball tournaments.
Sports executives prioritized the health and safety of their employees over inevitable financial losses. For leagues in the midst of their seasons, such as the NBA, those losses are expected to be steep.
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FOX Business breaks down what we know about the coronavirus outbreak’s financial impact on U.S. sports below.
By canceling the NCAA men’s and women’s basketball tournaments for the first time on record, the collegiate sports organization forfeited its most lucrative event.
The NCAA’s Division I men’s basketball tournament generates $867.5 million annually from television and marketing rights, according to the institution’s website. The event constitutes a significant portion of the NCAA’s yearly revenue. In 2019, the NCAA earned an estimated $933 million when factoring in media rights, ticket sales and sponsorships.
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NCAA President Mark Emmert told the New York Times he expects to lose tens of millions of dollars in missed ticket revenue alone.
The NBA’s sudden suspension of play following Gobert’s diagnosis placed further financial strain on a league still recovering from a high-profile spat last fall with Chinese sponsors that cost up to $200 million in revenue. Even before the season was put on hold, NBA stakeholders were projecting “hundreds of millions” in lost revenue due to coronavirus-related complications, according to ESPN.
Revenue from ticket sales and national television advertisements will fall to zero during the stoppage. NBA Commissioner Adam Silver indicated Thursday night that teams should plan to be away for “at least 30 days.”
Since the NBA’s salary cap is determined by basketball-related income, a prolonged revenue shortfall would lead to a reduced cap for the 2020-21 season. Players stand to lose a portion of their salaries due to a clause in the NBA’s collective bargaining agreement that allows teams to claw back some pay in the event of epidemics or other unavoidable circumstances.
Some teams, such as the Dallas Mavericks and Cleveland Cavaliers, are putting together programs to aid hourly workers, such as concession stand attendants, who are effectively unemployed during the stoppage.
MLB officials suspended all spring training activities and delayed the start of the 2020 season by at least two weeks. Since the league has yet to officially cancel any of its 162 games, it’s difficult to gauge how much revenue will ultimately be lost. Media rights fees are more valuable to MLB than ticket sales, but it’s unclear how a prolonged stoppage due to coronavirus will affect those deals.
Ballpark employees and MLB players stand to lose out on pay. When MLB played a strike-shortened season in 1995, players lost about 11 percent of their salaries, according to ESPN.
The NHL suspended its season shortly after the NBA made its decision, citing Gobert’s diagnosis with coronavirus as a key motivating factor. At present, few estimates are available on what a prolonged stoppage would cost the league.
Dallas Stars president Brad Alberts warned that a long-term suspension of play would be a financial challenge for some NHL teams.
"If we come back in a month or so after a short pause, the teams will be OK," Alberts said, according to NHL.com. "If you lose the entire season, that's a different story, and that will need to be analyzed and we can talk about that if that becomes a possibility. Hopefully, that's not the case."
Since the NFL is in its offseason, the coronavirus outbreak has had a minimal financial impact to date. The league canceled its upcoming annual meeting, which was scheduled to run from March 29 to April 1 in Florida. A growing list of NFL teams have shuttered facilities and canceled scouting trips this week.
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NFL officials will soon have to make decisions that will have a financial impact. Free agency is set to begin on March 18 alongside the start of the 2020 NFL league year. Top stars that could hit the market include quarterbacks Tom Brady, Phillip Rivers and Drew Brees. At present, the NFL has no plans to delay the start of its league year.
Coronavirus could also jeopardize the 2020 NFL Draft, a star-studded weekend of festivities in Las Vegas that will air nationally on ESPN and NFL Network. The outbreak is unfolding as NFL players vote on whether to approve a new collective bargaining agreement that will reshape league economics for the next decade. Voting concludes on Saturday night.
Despite suspending its inaugural season, the upstart football league said it would continue to pay players their salary and maintain benefits in the coming weeks. Ticket holders will be issued refunds or given credits for future games.
The ticket refunds are a key setback for the XFL, which is not yet earning money from media rights deals. The loss of gate receipts robs the league of one of its main revenue streams.
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