I recently saw an interview with the (always) excellent brand strategist and professor, Scott Galloway, who described the economic effects of Covid-19 as an “accelerant.” Of all the designations I have heard since this began, this one has really stuck with me. For example: the collapse of major retailers like Neiman Marcus was not brought on by the pandemic, but put into hyperdrive by its effects.
I’ve been thinking a lot about what will change in the sports industry going forward. Some likely changes will be wholly brought on by a new reality. I agree with my friend, professor Tommy Hunt, who thinks we’ll see a rise in participation in individual sports, like tennis and golf. Socially distanced live events and a reimagining of the stadium experience, are of course a direct result of the pandemic (although many elements, like the cash-free experience, are not new, but accelerating). But I’m particularly curious about what will be accelerated in the US sports industry, what small fires might turn full on scorched-earth, much sooner than we had previously anticipated. Here are a few, roughly ranked in order of likelihood, from the inevitable to the plausible.
1.Broadcasting, both televised and digital. No surprise here, as organizations have spent the better part of the last decade trying keep up with consumer tastes and technology. Everything is on the table: augmented/virtual reality, digital watch parties and “tailgating,” deeper access to players and coaches (thanks XFL!), greater social media integration, and so on. Questions remain on how organizations will monetize these efforts and I expect there to be room for disruption from firms exploring this space. I enjoyed a recent interview with the CEOS of two of these firms, LiveLike and Sceenic. The discussion gets a bit technical, but is worth a watch for folks working in this space. Here it is:
AMA With Miheer Walavalkar and Paul Bojarski, from the Sports Innovation Lab
2. Gambling. Again, no major surprise, and certainly connected to #1. Again, the XFL might be remembered as a leader in this space, as the major leagues slowly begin to embrace the role of sports betting, instead of pretending it doesn’t exist. The key accelerant here will be the rate at which more states approve and move forward on legal betting. We’re approaching the two year anniversary of the Supreme Court striking down the Professional and Amateur Sports Protection Act (PASPA) act of 1992, effectively legalizing betting at the federal level; Colorado became the 18th state to legalize sportsbooks on May 1st. I think of Texas (where I live), without a state income tax and a rough outlook for sales tax revenues, considering new sources of income. The specifics of state plans are critical here and I expect we’ll see the embrace of mobile betting, lest states want to make the same mistake as New York, who lost some $6 million in tax revenues last year to residents placing mobile bets in New Jersey. As with broadcasting, I see a lot of opportunity for firms in this space.
3. The NCAA and College Sports. With college sports, we move into more uncertain territory. The historical process of change in the NCAA has been to wait until the pressure mounts and then provide incremental changes that ultimately keep most power with the governing body and universities (see transfer rules and athlete stipends, for example). One of the very first SportsThink posts suggested that athlete Name-Image-Likeness rights would be in the post-pandemic spotlight, and that has proven true. A few months ago, it looked as if the matter would take a few years to unfold, but now that process has been accelerated, with changes looming within the year. Much legal and policy wrangling lies ahead, but with the additional pressure of a more aggressive NBA G-League and general uncertainty abounding, it seems as though we are on the cusp of a very different college sports landscape in terms of athlete rights and opportunities. The challenge with predicting the future of the NCAA is amplified by the sheer amount of variables at play. To name a few, in no particular order:
- Lost revenues (actual and expected) are further challenging and destabilizing athletic departments across all NCAA divisions; DIII schools, where the chance to keep playing (without a scholarship) can be significant admissions driver, seem particularly vulnerable.
- Ongoing, such as the one involving Zion Williamson.
- The question of having school sports if students aren’t back on campus.
- The quasi market, “non-profit” nature of the segment, which has driven bloat in athletic department and coaching staffing and salaries.
- The equity challenges of Title IX compliance.
- Interdependency amongst institutions in leagues and conferences, especially when these institutions cross state lines.
- Zooming out, the future of post-pandemic higher education in general. (a major discussion for another day)
For the big-time programs, the billion dollar question is the viability of a 2020 football season, whether it comes in the fall, spring, or at all. Is this the end of college sports as we know it? Not yet, at least I don’t think so. But will things be markedly different, sooner than most of us would have expected? I think so.
4. Youth sports. This was another topic I speculated upon in the early stages of the US lockdown. The data in recent years has been pretty damning: youth sports participation is down down down, especially for kids on the lower end of the socioeconomic spectrum (who likely stand to benefit more from the experience than their better-off peers). While it is easy to blame video games, social media, or generational laziness, the reality is that cost is the number one reason for the decline. In some sports parents can expect to spend tens of thousands of dollars annually for high level club competition. With youth sports organizations now asking for government bailouts, it seems that we are on the cusp of implosion. Given the bleak economic indicators, I expect that some families will no longer be able to afford the discretionary income required to participate and that many of the parents whose volunteer hours drive programs (yes, even the pricey elite ones) may no longer have the job flexibility to keep up with the work. There’s also the possibility that some families will emerge from the pandemic with a shift in their values: do we really need to spend the weekend driving all over the state to play games? My hope: a return to something resembling sanity. Community based programs based on accessibility, inclusion, fun, and physical activity. Elite, competitive leagues would still continue, but perhaps with tighter geographic footprints and less pressure to go year-round. My fear: a further polarization, with costs only going up and even fewer families being able to afford organized sports. For now, I’m just trying to wrap my head around the fact that some California parents are considering buying property in Arizona to ensure that their children can play high school sports next year. (This is paywalled and I’m simply reeling at the headline, not sure of the scale of what’s going on. Nevertheless, are we surprised by this prospect, given the history of parents holding kids back a year to increase their chances of sports success?)
5. Politicization and partisan divide. This one will be interesting. For most of the history of modern sports, the games we play and watch were—in principle—apolitical. Yes, sports have always been used for political purposes, but, generally speaking sports were the rare domain where left and right could agree, a unifying force. When politicians entered the fray, they did so in the name of preserving the values of sport, not for partisan purposes. For example: the congressional hearings on steroids in baseball. But then came Trump. If you had told me that a Republican president could attack football, I would have laughed. If you had told me that he could attack football and energize his football loving base in the process, I would have called you crazy. But of course, this is precisely what happened when Trump went after Colin Kaepernick and the NFL. As we’ve begun our attempt at “reopening,” a predictable partisan divide has emerged, a murky and anxious tension between liberty and caution, democracy for me or democracy for we. I know that sports organizations will position themselves above this divide: as they long have, sports will signal our return to normalcy, our coming together, and our general sense of unity. But how will politicians react? With leagues spread across states with starkly different reopening plans and public health policies, the door that Trump wedged his foot in a few years ago could swing wide open, at least in terms of political rhetoric. Those who stand in the way of sports broad return, like California Governor Gavin Newsome, are sure to be blasted for being un-American. And how will fans, desperate for the pleasures of the stadium and arena react to increasingly invasive screening and social distancing measures? We’ve already seen the right to not wear masks conflated as some sort of constitutional issue, so this has the potential to end very poorly. Whether or not the politicians and pundits fan the flames, the challenge and risk will be devolved to teams and leagues, who are looking at one hell of a tight rope: keep everyone safe, get revenue going again, and maintain the veneer of being apolitical. I don’t envy them.