29th May 2020

Covid-19 threatens the dominant sports business model

The Covid-19 pandemic threatens the business model that places television and sponsorship at the centre of sport, heard delegates tuning in to an ‘Impact of Covid-19 on Sports Governance’ webinar organised by Ronnie Collins Global yesterday. As companies that have received government bailouts will be unable to invest taxpayer money into sport, some governing bodies will go bust, heard delegates. However, this presents a unique opportunity for athletes to take back control, and restructure sport on their terms.

“Companies that are too big to fail have received bailout money from governments”, said Jens Seger-Andersen, Founder of PlayTheGame. “They will not be able to spend that money on sports sponsorship, even if they wanted to. Taxpayers will not accept it. This is a crisis for the sports business model that has been built up since the 1970s.”

Football was financially failing before Covid-19, pointed out Ramon Vega, a former footballer turned financial advisor. “Two pounds were being spent for every £1 that came in”, he said. Vega pointed out that football isn’t just a business, it is a “social institution”, arguing that Covid-19 provided a chance to rethink and reform how the game is governed. 

“The pyramid has to change”, he said, pointing out that smaller clubs vital to football’s development can only survive for about two months without revenue, and need support. “In the next ten to 20 years, we will benefit from this crisis”, he argued. 

African journalist Francis Gaitho pointed out that most, but not all, sports were guilty of a “lack of vision and foresight” in preparing for Covid-19. Gaitho pointed out that the Lawn Tennis Association (LTA), which runs the Wimbledon Championships, is due to receive a £114 million payout after insuring itself against tournament cancellations due to health pandemics following the SARS epidemic in 2013. He said that other sporting bodies should have followed its example.

It was agreed by the panellists that smaller sporting organisations – especially those involved with sports development – will suffer most. Lisa Murawsky of GNW has been working with the Naandi Foundation in India to develop women’s football and said that due to Covid-19, the focus in developing countries has turned towards survival. Sport has effectively stopped. She argued that in her view, the pandemic has highlighted how sport’s focus needs to change, so that sporting development projects are not underpinned by activists, but are sustainable.

The idea that sport has stopped in many countries was underlined by Sunday Dare of the Nigerian Ministry of Youth and Sports, who questioned how domestic sport associations would be able to continue to deliver the sporting product that fans had been accustomed to. He also said that many sporting federations had moved their meetings online, warning that this required transparency in order to avoid allegations of corruption.

The risk that Covid-19 could increase corruption in sport was also highlighted by Andy Brown, Editor of The Sports Integrity Initiative. He highlighted that as the governments and media of the world focus on the pandemic, there is an increased risk that corruption occurs undetected. 

He pointed out that there has been an increased match-fixing risk in individual sport whilst team sport was suspended, as well as opportunities for fixers to create ‘ghost games’. He also warned that athletes who refused doping tests due to Covid-19 without a good reason risked a charge of tampering with the doping control process, risking a four year ban.

Delegates agreed that in some cases, Covid-19 could prove to be a blessing by freeing sport from corrupt administrators. However, they also warned that there is a danger that corrupt States could seek to take control over sport due to the collapse of credible sporting associations due to the pandemic. They agreed that athletes need to rethink the sports governance model to guard against threats to the integrity of sport posed by the Covid-19 pandemic.

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