With daily stories of more sports events suspended or cancelled there is a growing concern that a global industry worth billions of dollars and which employs millions of people directly and indirectly will collapse.
Last Thursday the start of the F1 season was pushed back to the Grand Prix in Baku in June, while the entire PRO14 Rugby season was suspended indefinitely.
The International Olympic Committee (IOC) held urgent meetings last week about the future of the Olympic Games, scheduled to start in Tokyo on 24 July and run until 9 August. IOC president Thomas Bach told the New York Times that cancellation of the Olympics had not been discussed.
“The cancellation is not on the agenda. We are committed to the success of these Games,” Bach said. An IOC task force, which included the World Health Organisation, determined it was too early to make a decision.
“We don’t know what the situation will be,” Bach said.
In England, the Rugby Football Union (RFU) cancelled the Premiership season last Friday, reportedly asking for players to consider a 25% pay cut across the board to help alleviate some of the costs.
In South Africa, all sports are on the precipice of collapse if the situation deteriorates further and suspensions of events and seasons become cancellations. Like other sectors of the society and the economy, local professional sports might not be robust enough to weather the situation and come out the same as before. There is likely to be much collateral damage and a new sporting landscape when the coronavirus has passed and the cost of its destruction is tallied up.
Pro sports reliant on massive broadcast funds to operate
SuperSport, the pay channel broadcaster that holds the rights to almost all local and many international sporting events, is a key player in the coming months.
Its funding, through substantial broadcast right payments, is vital to the sustainability of rugby and soccer in particular. Cricket, the third of the “big three” sports, is less exposed to SuperSport’s position than the others.
In football, clubs each receive millions annually from the PSL, which is derived almost exclusively from their SuperSport deal. Cricket South Africa (CSA) also pays distributions to the provincial franchises although its money is heavily weighted on international broadcast deals.
“The main indicator for us as Cricket South Africa is how long the crisis lasts,” CSA acting chief executive Jacques Faul told Daily Maverick. “If it lasts 60 days then it will have almost no impact because we have just gone into our off-season anyway.
“But if it lasts for nine months, then the picture is completely different. In that case, rights will become affected because we haven’t delivered a product.
“In our case, the domestic rights we are paid from SuperSport are much lower than our international rights because it’s paid in rands and there are not a lot of competitions.
“For example, we won’t even get a rebate for the three Momentum One-Day Cup matches that weren’t played because we had to suspend the season, which is really not a big deal.
“But if we don’t play three matches against India in August [as scheduled] then we will lose R150-million in international broadcast fees. That is serious.
“So, in our world, SuperSport, who we are thankful is a sponsor, is minor money compared to our international broadcast rights, especially when it involves India.
“In my mind, we have to deal with the coronavirus in two to four months for cricket not to suffer. If it goes to six months and longer then we will be in a difficult position.”
Football and rugby could be the big losers
Rugby and football earn hundreds of millions of rand annually through rights sold to SuperSport for domestic and international competitions that South African teams are involved in. The Premier Soccer League (PSL) is currently in a five-year R2-billion deal with SuperSport. There couldn’t be a worse time for lack of content.
Technically, rugby and soccer are in breach of their contracts because they are not producing content for the pay channel to broadcast. Super Rugby, the premier southern hemisphere provincial competition, has been suspended “for the foreseeable future” while all PSL matches and African club competitions have suffered the same fate in recent days.
The situation led to a farcical and dangerous situation last week when the PSL appeared to influence Sports Minister Nathi Mthethwa to allow matches to continue behind closed doors. The minister made the announcement last Tuesday, only for South African Football Association (Safa) president Danny Jordaan to pull the plug on that idea 24 hours later.
Safa is the umbrella body controlling football in South Africa, and the PSL falls under its control. Jordaan pulled rank over the PSL and its chairman and long-time football rival Irvin Khoza, which was within his mandate to do. The fact that Jordaan then overruled the sports minister and did what Mthethwa should have done with South Africa locked down in a State of National Disaster due to coronavirus, underlined the power politics at play.
Jordaan made the decision quickly following medical advice from Dr Nasief van der Schyff, head of the department of medicine at Victoria Hospital.
“We have seen the terrible situation in Italy and other places so while we still have the chance to mitigate the consequences of coronavirus, we have to try,” Jordaan told Daily Maverick. “That’s why we [Safa] were very clear that matches being played behind closed doors simply does not work.
“There was too much concern about money rather than other issues. If one player contracts coronavirus and dies, what would happen to the club he represents? The reputational damage for the league would be too much as well.
“The other thing is that there is no evidence to suggest that playing behind closed doors has stopped infections from occurring. Every league where games were initially played behind closed doors has seen subsequent positive cases emerging.”
What shook Jordaan most was the seemingly cavalier attitude of the PSL for games to go ahead. Van der Schyff’s letter was the final evidence he needed to shut down the league regardless of the possible financial implications.
“The reasons that PSL football games should be suspended is multifactorial,” Dr Van der Schyff wrote. “The biggest reason relates to the issue of ‘social distancing’.
“This is defined as an effort for people to be separated from each other for at least two metres. The best way to attain this is to prevent people gathering together in any context, including a competitive PSL match.
“This principle underlines the proactive decisions taken by the South African president on Sunday evening [15 March]. The reason it is particularly relevant in the South African context is due to the community spread of Covid-19 that has already occurred in our country.
“The concept of playing competitive football behind closed doors in the context of Covid-19 has not been shown to be effective, despite other preventative measures being implemented such as hand washing and a no handshake policy. There are several examples from European football that highlight this point. Some of these include several professional teams in Italy that required entire teams to be quarantined for two weeks after playing behind closed doors.
“As a medical professional, the concern I have is that we have a unique patient profile in South Africa, have significant socioeconomic and spatial challenges and our hospitals are already overburdened. The impact of Covid-19 in our context has the potential to be much worse than our international counterparts.
“I know that these decisions are very hard and have huge financial and league implications. We have a short window of opportunity in South Africa to work together to ‘flatten the curve’ and minimise the impact of Covid-19 in South Africa.”
Jordaan understands that the PSL could lose hundreds of millions in revenue by suspending or cancelling its season, but there simply is no choice in the matter.
“This situation is not unique to South Africa,” Jordaan said. “The European ruling body Uefa might have to cancel the Champions League, which is a $2-billion income earner for them. So many other sports around the world have been postponed or cancelled, from the NBA to the Masters in golf.
“Broadcasters around the world are facing a similar problem, which is the lack of content. We have suspended our PSL league here until 4 April and we will review closer to the time to see whether it continues.
“The PSL derives its major income from the sale of rights to SuperSport but Safa’s main source of income is international competitions. The World Cup, which is a $6-billion earner for Fifa [the Federation of International Football Associations], is the main one.
“But as Safa, we have five teams in international competitions. The under-17 women are one match away from qualifying for the World Cup, the under-18 women are two matches away from doing the same. Then, of course, we have Bafana Bafana (the national men’s team), Banyana Banyana (the national women’s team) and the Under-23s, who have qualified for the Olympics.
“Obviously the situation has created uncertainty for all football federations as well as the various global broadcast partners. At this stage in Europe, I am not aware of any broadcaster that has gone to seek legal advice for breach of contracts.
“But the reality is that losses are going to be massive for everyone. Uefa has already said that it estimates losses of $20-billion. It is unprecedented.”
As it stands now, there is no sport being played almost anywhere in the world, and therefore no live matches for SuperSport to broadcast to its paying audience and they are technically in breach to their advertisers. Subscribers, who might only have a monthly DTSV subscription because they are sports watchers, could suspend or cancel their accounts because they are receiving no live sport. It’s potentially a downward spiral.
If tournaments can’t resume, organisations such as SA Rugby and the PSL are in breach of their contracts with SuperSport and with sponsors such as Vodacom, as is the case of rugby. Further down the line, SA Rugby has to pay over R300-million annually in distributions to its 14 provincial unions, which is money that sustains those organisations from collapsing. If the mother body can’t meet those commitments the knock-on effects are obvious and catastrophic.
SA Rugby’s last published financial statements show that it earned R714-million in broadcast rights in 2018. That is more than double its sponsorship money, which totalled R338-million. It also earned R100-million in gate revenues for Springbok Tests. Clearly the potential loss of broadcast rights due to the suspension and possible cancellation of competitions and Tests will have a huge impact on the ability to run professional rugby.
“At the moment we’re trying to revive or preserve the key competitions – such as Vodacom Super Rugby and Springboks tests – to limit the damage to the schedule and any potential knock-on effect that may have on our budgeting,” SA Rugby chief executive Jurie Roux told Daily Maverick.
“If we were not to play any more Super Rugby this season then the potential loss in income to SA Rugby and the franchises collectively would be considerable. But we are planning to avoid that scenario as it has implications for the broader health of the game.
“We are fortunate that we have long-established and very supportive partners at SuperSport and Vodacom and we are all in the same boat – everyone is feeling the pain – and we are working towards solutions that are least damaging for all concerned.
“But there is no doubt – this will have an impact on our bottom line.”
Of course, these are unprecedented circumstances and SuperSport is not playing hardball yet because everyone is still finding their feet and trying to manage a fluid situation. They are not near the stage of sending out lawyers’ letters to SA Rugby and the PSL citing breach of contract.
SuperSport would only offer Daily Maverick the following statement when approached for comment: “SuperSport has strong and long-standing partnerships with relevant sports rights holders. We don’t discuss our commercial arrangements with partners in the media.”
A high placed source in rugby confirmed that the feedback was positive at this stage and that there was no immediate danger of SuperSport pulling the plug.
The words used were that the “broadcasters were calm”. That is good news for all sports reliant on SuperSport’s money, but as each day passes the pandemic worsens and as a result, in a sporting context, many more cancellations will come.
At some, as yet undefined, time in the future, the “calm” approach will give way to economic realities. How calm things will be then, will go a long way to defining the future of some of South Africa’s most loved sports. DM
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