Donald Dell: Sports Must Meet Health and Economic Challenges to Bring Fans Back
Donald Dell is group president of media, events and tennis for SportFive.
With this difficult and challenging year coming to an end, what does the sports landscape look like for 2021 and beyond? The promising vaccines don’t mean COVID-19 will disappear overnight, and sports will continue to operate in a different environment for quite some time. But once sports are ready to welcome back fans, how many will actually return to the stadiums they once considered a second home?
There is optimism for a return to normal in 2021, based on the vaccines and what most everyone believes is a pent-up demand. But the return of in-person sports attendance depends on many factors, especially these two: money and safety.
While the stock market has done surprisingly well this past year, the economy faces huge obstacles going forward, and it’s unclear how much disposable income non-wealthy fans will have to spend on sports coming out of the pandemic. Millions of jobs have been lost, and in some sectors such as restaurants and education, many of them may be gone forever. Other workers have experienced furloughs or wage cuts that may leave them living more frugally for the foreseeable future.
Even in higher income brackets, there are issues that could affect the ticket market. Consider the impact of the pandemic on commercial real estate. Companies have realized they don’t need all the office space they were renting before COVID-19 hit. Demand across the sector has plummeted, and the effects of all those vacancies and lost revenue could ripple throughout the economy. Depending on those ripple effects, a significant number of people and corporations who reliably purchased expensive lower-level box seats and arena suites may not have the money to renew.
Sports have seen economic crises before. A little over a decade ago, the 2008-09 Great Recession had a tremendous financial impact, including on the very wealthy, and sporting-event bottom lines were greatly affected by it. But this crisis is different. Back then, there was no health crisis in conjunction with the economic calamity. People weren’t at risk of dying by attending games.
And that brings me to safety. Leagues and teams will confront psychological hurdles in attracting people back to the arena. I recently lost two good friends, former South African tennis player Gordon Forbes as well as Grand Slam Champion and my former Davis Cup captain Dennis Ralston, to the disease. There is real fear now about gathering in public, and it will take time for it to dissipate even after the vaccine is widely available. Event organizers will need a major push—and will need to spend real money—to demonstrate their facilities are healthy spaces.
Leagues and teams will need to adjust to these realities to regenerate demand for seats. Owners must determine how best to help the average fan afford to attend a game. Whether that means scaling back prices across the board, offering a limited number of discounted bundles that include tickets, parking and food vouchers, or designating “value dates” where select tickets are deeply discounted, ownership will need to find creative ways to make tickets attainable for all fans. There are plenty of templates. In 2008-09 at the height of the Recession, Washington Wizards owner Ted Leonsis offered free guest tickets (two for one) to longtime season ticket holders. Such programs can be extended to all income levels.
It may also mean doing things in stages. I can foresee teams trying to target younger fans with discounted tickets to fill limited seating capacity as sports reopen. Understandably, it will take time and consistent positive data to convince older fans to attend games.
Beyond that, teams will need to offer fans more than just the game experience for the price of a ticket. Some already are. The Wizards, for which I’m a season ticket holder, encouraged fans to join Bradley Beal on a conference call ahead of the season. Expect American sports to gravitate more toward a European model, where fans are literally members of the clubs they support and get perks beyond tickets in return.
In addressing the safety issue, teams, especially in indoor sports, may look for ways to attract fans outside the arenas—even literally outside, perhaps in outdoor viewing areas where they can watch games on giant screens for a discounted price while still feeling like they are part of the communal sports experience. We have already seen this done; the Toronto Raptors’ outdoor viewing parties during their 2019 championship run were hugely successful, and carried over into drive-in viewing parties during the pandemic.
Why does this matter? What about all the revenue from TV and streaming and sponsorships? It’s true that while the NFL can survive for a good while without fans in seats, for much of the sports world, that’s not nearly enough. Take the U.S. Open tennis tournament. The USTA took the bold initiative to host the first international event in the United States without fans to support the industry and its players, but TV and limited sponsorship revenue is just not sustainable for more than one year. Events like the U.S. Open and prestigious non-Grand Slam tournaments like Indian Wells need their blue-chip business partners and affluent fanbase back at their respective venues activating, hosting hospitality programs and spending money.
Sports properties have enjoyed a large profit margin for a significant period of time, but this year almost all of them incurred substantial losses. This margin will most likely need to be limited going forward to offset programs for fans, whether it means cutting front office payroll or working with their respective player associations to see how they can contribute to helping get fans back in the stands. These will not be popular or inexpensive solutions, but at the end of the day, sports are a business. They need to identify ways to reduce overhead while making fans feel safe, which will most likely significantly limit their profits in the short to middle term.
However, sports are an American passion. They have comforted and provided much distraction during the most challenging times in our nation’s history, including the Recession and 9/11. Sports are all about resiliency, and while the task will not be easy, I am confident our industry will work together, share best practices and reimagine a dynamic new experience that will welcome back our fans as well as attract new ones.
Dell, an attorney, is founder of ProServe, former vice chairman of the International Tennis Hall of Fame, a former professional tennis player and professor of Professional Sports and the Law at the University of Virginia. As a sports attorney and agent, Dell has managed the careers of many professional athletes, including Arthur Ashe, Stan Smith and Michael Jordan, and negotiated nearly $1 billion in sponsorships and endorsements.
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