How Covid-19 impacted the Sports Industry
Introduction
The novel coronavirus, which birthed a global pandemic, has seen all facets of life from economic operation to modes of consumption to modes of industrial development extensively affected, but how has an industry that grows faster than global GDP been faring?
The sports industry has been altered in inconceivable ways until now, with specific sectors affected more than others and various questions looming over the prospects of one of the largest industries in the world. (“The sports market,” n.d.) Its significant contribution to the growth and fulfilment of social, cultural, and economic objectives make it a crucial component of the global economy that ought to be studied in light of the current scenario. (Wang & Zeng, 2020)
The Economic Impact
A variety of national and international level studies have confirmed the prominent role of sports in economic development. Research data published by the European Commission on the macroeconomic importance of sport in the European Union (EU) demonstrated that sport-related GDP in 2012 amounted to 2.12% of the total GDP in the EU - an estimated 4.46 million employees. (European Commission, 2012) This indicates that sport is an investment that has a high employment multiplier. As a matter of fact, a 1% increase in GDP through investments in sports results in a 1.35% increase in employment. To put this into perspective, an “average” sector in the economy would only observe a 1% increase in employment for every 1% increase in GDP. (Kokolakakis, Edmondson, Kung, & Storey, 2020) These numbers are practical as the sports industry is heavily reliant on human activity and cooperation and, subsequently, would imply drastic consequences for the economy due to the pandemic. Covid-19 has indeed been accompanied by different complications in finances and social returns on sports investment. The suspension of professional leagues and the closure of sports clubs, stores, and gyms have induced direct and indirect negative financial repercussions for sport-related businesses. These corporations have lost revenue in the form of tickets, memberships, sponsorships, tourism, and media broadcasts, in addition to facing hardships in paying wages and other cash flow issues.
Furthermore, athletes, coaches, and other employees in the sports labor market have experienced the loss of skills, income, and job security. Even unpaid workers cannot participate in sporting events because of the persistent prohibitions on mobility in many regions, which has adversely affected volunteering. Across Europe, for instance, a loss of almost 60 billion euros and more than one million employees was observed. (“Economic impact of Covid-19 on the UK”, 2020) Germany in specific was expected to lose around 23 billion euros in sport-related GDP in 2020 - the most significant decline in the world - which amounted to 40% of the EU total. One of the critical sub-sectors in sports economies that were affected by the imposition of stringent measures was the healthcare sector. The indirect savings on national health spending provided by sport have declined since Covid-19. (Kokolakakis, Edmondson, Kung, & Storey, 2020) Although conventional economic analyses do not consider the former, it does take into account sports-related expenses such as injuries and supplement protection. Still, physical activity lessens the frequency of various diseases and indirectly helps stimulate a more prominent component in savings in a nation’s health budget. Investments in sport are expected to generate almost double the revenue in social and health benefits and are crucial to economies battling the Covid-19 recession.
The Development Impact
Besides the economic complications, COVID-19 has immensely impacted the development aspects of the field. Sport is considered to be an effective instrument to bridge gaps between different generations and foster new relationships. However, the cancellation of sports events has affected the collective enthusiasm of fans, decreased their identification with sports professionals, and overall damaged the social bonds that previously existed. (Nauright, Zipp, & Kim, 2020) As a medium for life-changing opportunities, sport gives individuals the chance to be immersed in society’s social transformation and growth, which is fundamental to developing marginalized communities and divided social groups.
Nevertheless, the pandemic’s disproportionate impacts have magnified inequalities persisting in the economy, particularly amongst women, the mentally and physically disabled, and impoverished communities. According to the International Working Group (IWG) on Women and Sport - the world’s largest organization committed to promoting gender equity and equality in sports - the novel coronavirus is hazardous to women’s empowerment in sport. Along with similar networks such as Women in Sport and the Women Win foundation, they urged world authorities to dedicate resources to ensure equal opportunity for girls and women as struggling sports institutions are inclined to support men who typically generate more revenue. Moreover, various investigations by the Women Win foundation into the influence of Covid-19 on the lives of young women in low and middle-income nations revealed that post-pandemic, there will be a rise in violence against and long-term repercussions for adolescent girls who are not fortunate to attend school. The closing of education institutions directly impacted sports education. There were considerable losses in opportunities for aspiring athletes as practices were suddenly halted and competitive tournaments were canceled. While some families shifted to private coaching due to these circumstances, many parents were unable to support such aspirations of their children due to the financial difficulties they were experiencing caused by the pandemic. (Sanderson & Brown, 2020) In addition, many students cannot access virtual workouts provided by schools and colleges due to inadequate equipment or technical difficulties. Even if they could, its effectiveness remains ambiguous. Overall, the athletic performances and development of players lacking these opportunities will be hampered, and more detrimentally, separate class groups might be created in youth sports.
The Psychological Impact
The mental health implications of the pandemic can be observed by everyone involved in the sports realm, including fans, athletes, and coaches. Notably, the suspension of youth sports has left a void that is arduous to cope within families where sport is a lifestyle. (Sanderson & Brown, 2020) Parents have invested time and money into their child’s athletic potential, and some even prioritize their entire family calendar around sports events. This largely stems from parents pursuing gratification and a sense of identity from their child’s athletic performances.
However, substituting these hectic schedules that previously existed for empty ones has left many households struggling to navigate this uncertain period. On the other hand, as a commitment involving a heavy financial burden, many families are suffering the economic consequences of the pandemic. They cannot afford these investments for their children, which develops guilt in parents. Children, too, may experience agony asking their parents to support their ambitions while they financially struggle. Situations such as these are mentally and psychologically tough to endure, primarily when others in the community can provide or receive the same care. Covid-19 has also resulted in many aspiring athletes losing sports scholarships and a potential career, primarily with various tournaments canceled and the college sports recruitment cycle disturbed. Sport is a crucial activity that dictates the lives of this majority, and its absence could result in anxiety and depression.
Furthermore, the pervasive culture of mental toughness in sport prevents athletes suffering from poor mental health from expressing their difficulties to coaches, teammates, and the media alike. (Uroh & Adewunmi, 2021) Studies have shown that these challenges are mainly felt by athletes participating in individual events though they lack peer support compared to team sports. In short, suspended sporting events and periods of home confinement have impacted individuals’ mental health and athletic identity, regardless of age, gender, caliber, achievements, or sport category
Is recovery possible?
In its efforts to persist and establish a new normal, the sports industry must devise appropriate policies and measures that aid its resource contribution in response to Covid. (Kokolakakis, Edmondson, Kung, & Storey, 2020) There are several suitable medium to long term recommendations that could build economic growth, social development, and strong mental health:
Public and Private Investment: Investments by the state into sports infrastructure will result in the expansion of sport and construction services and, thus, generate employment in the industry. Governments could also organize alliances with private entities to have a low risk of financing and guaranteed social returns for these employment-intensive sports projects. This increases the incentive for private operators to invest and contribute to economic recovery.
Long-term sustainability: High debts are prevalent in developing countries due to substantial public borrowing, increasing interest rates, and decreasing purchasing power. Authorities must establish a model where usual borrowing creates lower interest rates, such as the long-term bond market. This would satisfy the financial requirements of nations and their economic components in the long run.
Taxation: Tax breaks could be offered to sports businesses that promote philanthropic projects in accordance with government objectives. For instance, the Community Amateur Sports Club, a scheme introduced by the UK government, granted tax advantages to organizations that pursue charitable activities and support grassroots sports. Additionally, tax revenues could be increased indirectly by awarding tax breaks during sporting events and attracting tourists.
Funding: Loans with beneficial conditions such as low interest should be easily accessible to sports organizations aiming to recoup from the aftermath of Covid-19. Planning levies could also be imposed on firms that intend to construct new buildings or estates. As a result, they will be required to pay for community sports programs. Grassroots funding must be focused on, with a proportional allocation of funds distributed from top-tier leagues towards less elite ones to promote participation in the sports industry.
Operational planning: Education is one of the vital sub-sectors of sports economies. Those who desire to work in the field should be provided with sufficient training for the productive development of the industry. Moreover, in a restoration period, the critical feedback of athletes, stakeholders, and their sports businesses is valuable and should be contemplated. If a particular investment accelerates participation in sports, the resulting revenue for governments could offset the expenditure cost. Hence, operational issues like future sustenance expenses should be deliberated along with the circumstances of supply and demand for investment, such as the availability of training to be economically efficient.
Research: There is insufficient research studying the psychological impacts of a global disaster such as Covid-19, which is a prognosis to a great extent. Therefore, more thorough investigations are required to understand the mental health implications of a pandemic and strengthen the healthcare system.
Apart from the listed propositions, the recovery rate could also be determined by the resurgence of other sectors of the economy, such as tourism and healthcare.
Conclusion
A plethora of economic, developmental, and psychological consequences of Covid-19 have been identified that cast doubt on the future of the sports industry. Although the three factors were investigated independently to gain a comprehensive view of the pandemic’s impact, there is a correlation between them, and its mutual benefit should be considered when implementing strategic measures. (Sanderson & Brown, 2020) Sport is an activity that is crucial for a nation’s health and productive economic functioning, and the pandemic has unquestionably made it more vulnerable in comparison to other industries in the economy. While we may not return to normalcy in the near future, the revival of employment, health, and socioeconomic indicators could be observed if countries employ the suggested schemes and invest in sport.
The novel coronavirus, which birthed a global pandemic, has seen all facets of life from economic operation to modes of consumption to modes of industrial development extensively affected, but how has an industry that grows faster than global GDP been faring?
The sports industry has been altered in inconceivable ways until now, with specific sectors affected more than others and various questions looming over the prospects of one of the largest industries in the world. (“The sports market,” n.d.) Its significant contribution to the growth and fulfillment of social, cultural, and economic objectives make it a crucial component of the global economy that ought to be studied in light of the current scenario. (Wang & Zeng, 2020)