Facing Financial Ruin, Australia Sports Teams Seek Quick Restart
Facing Financial Ruin, Australia Sports Teams Seek Quick Restart
(Bloomberg) --
Australia’s cash-strapped sports leagues are pushing to resume play in empty stadiums as early as next month, potentially providing a model for other countries that have suspended competition due to the coronavirus outbreak.
Australian Rugby League administrators have backed a proposal to resume on May 28, while the nation’s richest code -- the Australian Football League -- is considering radical plans to restart around a month later basing all 18 clubs at isolated camps and playing a rapid-fire season at a handful of empty stadiums.
The move to restart some sporting codes vies with some health experts warning that it may help facilitate a second wave of the disease as the southern hemisphere prepares for winter. While hardly ideal, the leagues are aware that in the age of broadcast-dominated revenues that getting their product quickly back on to sports-lovers’ screens is vital to their long-term survival.
According to Sports Australia, the sector normally employs about 220,000 people and contributes the equivalent of as much as 3% of gross domestic product, placing it on a par with agriculture.
While the homegrown game of AFL looks to have the financial strength for its top-level competition to survive relatively unscathed, with revenue last year rising 2% to A$794 million ($510 million), consolidation may be looming for other professional sports leagues. The National Rugby League is warning some teams may not survive after it had to suspend its season after two rounds, while in soccer, teams such as the Western Sydney Wanderers have had to release all their players without pay.
Changed Game
“There’s no doubt when the competitions resume it will be in a much weaker economy, where people’s spending power has been greatly reduced,” said Jeff Borland, a professor in economics specializing in labor markets and the sports industry at the University of Melbourne.
While it’s still early days in Australia’s fight against Covid-19, with just over 6,000 people infected and the daily growth of new cases falling to around 2%, there are encouraging signs that international arrival restrictions, social distancing enforcement and restaurant shutdowns may help it avoid the crippling number of infections that have plagued the U.S. and Britain.
“We’re looking at a scenario when fans won’t be able to attend for weeks or months,” James Johnson, the chief executive of soccer administrator Football Federation Australia, said in an interview last week, without giving a planned date for his competition’s relaunch. “That will, at least for a short time, change the whole business model that professional sports operate in.”
It also means competitions such as the National Basketball Association in the U.S., which won’t consider a restart date until next month, and soccer powerhouse the English Premier League, tentatively eyeing June for a relaunch, could be looking Down Under in coming weeks for clues on how to resume their own seasons, also expected to be initially spectator-free.
Distancing Hurdle
Health authorities keen not to compromise the effectiveness of social-distancing restrictions will be a hurdle. Australia’s Deputy Chief Medical Officer Paul Kelly said last week that while rugby league players were young and fit, the competition needed to take into account that older people around the teams, including coaches, may face risks if the competition is recommenced too quickly, adding: “Whether May is the time remains to be seen and definitely they will need to get some permission to do that.”
Sports Minister Richard Colbeck was circumspect about rugby league’s plans in an Australian Broadcasting Corp. interview on Monday, saying “Once the health authorities that are giving us advice give us the signal that we can start to relax some of those things then we start considering that, but not before.”
What’s more, while the leagues insist they will work with state governments to ensure their sports can safely restart, they also face a legal minefield in renegotiating contracts with broadcasters.
Media networks -- reeling from a collapse in advertising revenue as companies go into lockdown-enforced “hibernation” or close completely -- may be desperate for content as the majority of the population stays home, but they’re still aware the value of their product may be reduced by games played without the atmosphere of live crowds.
“We now find ourselves with a contract that is unfulfilled by the code,” Nine Entertainment Co., which holds the free-to-air broadcast rights for rugby league in Australia, said in a statement last week after the competition announced its May 28 reopening plan. “We hoped we could talk through a long-term plan.”
Prime Minister Scott Morrison, a keen rugby league fan, on Tuesday welcomed the competition’s “ambitious” plan to relaunch.
“But it will be subject to the health advice,” Morrison said in a television interview on Seven Network’s Sunrise program. “There will be no special set of arrangements, the health advice is paramount and I’m sure they’ll comply with it.”
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