By Dr Alexander Wild, Falkenstein Law Firm, Stuttgart, Germany
The mutation of the COVID-19 has caused a worldwide alert with the emergence of SARS (severe acute respiratory syndrome), with its many and complex implications that have yet to be thoroughly assessed.
In Germany too, the measures taken against the Coronavirus outbreak define the present economic and social life. In fact, the German economy officially entered into recession last week.
Nowhere is this so true than in the field of sport: sport plays such a crucial role not only in relation to leisure activities, but also as far as high value-added activities, employment and consumption are concerned.
The shutdown has led to a nationwide closure of sporting facilities.
Since 17 March, there is – with the latest exception of elite sport (only under very strict conditions) – no opportunity to use sporting facilities. Training in the old way is still not possible. Sports events are currently strictly forbidden.
The shutdown could have major longer-term consequences for sport itself and its stakeholders.
The latest evaluations of the sports’ “pre-Coronavirus” economy, conducted by the Federal Ministry for Economic Affairs and Energy of Germany, show as follows:
- Sport contributes a good € 70 billion to the overall economic gross domestic product. This corresponds to a share of around 2.3 percent.
- In total, sports-related goods and services are produced with a value of almost € 120 billion.
- Private households spend almost € 70 billion on sports-related consumption, of which more than 80 percent is spent on active sports and the rest on sports interest.
- In addition to the high level of voluntary commitment, around 1.3 million employees are also active in sport.
- The total expenditure for the construction and operation of sports facilities is around € 24.5 billion.
- Around € 4.5 billion will be spent on sponsorship, media rights and advertising in the field of sport.
Nonetheless, the data does not yet show the current picture. However, it explains the true scale of what is at stake. With the beginning of the shutdown, things have changed tremendously.
20 percent of Bavarian amateur football clubs see their existence threatened by the pandemic. This was the result of a representative survey commissioned by the Bavarian Football Association (Bayerischer Fußball-Verband). This result seems to apply not only to football.
According to a recent publication of the Bavarian State Sports Association (Bayerischer Landes-Sportverband), 20 percent of the sports clubs have reported losses amounting to € 200 million.
For a not insignificant number of amateur clubs, the income from a tournament weekend is the largest and most important item in their budget. If this money is missing, it can have considerable impacts, for example, on youth work.
Another problem is that not for profit associations have not been allowed to build up significant reserves for tax reasons, whereas professional football clubs – most of them are legal entities – who could have built up reserves – € 4.02 billion was the revenue generated by the 18 Bundesliga clubs in the 2018-2019 season – failed to do so, due to the inherent dynamics of the market. There is no solidarity fund or insurance that could cover financial losses.
13 of the 36 Bundesliga und Bundesliga 2 clubs are feeling the breath of an existential threat. A disastrous sign not only for football enthusiasts. In the 2018-2019 season, the 36 professional clubs paid € 1.4 billion to the financial authorities and social security institutions; and 56,081 people were employed – either directly or indirectly – in the Bundesliga or Bundesliga 2.
The shutdown is affecting the whole of professional sport in Germany.
In March 2020, the German Ice Hockey League (DEL) decided for an early end. Gernot Tripcke, managing director of the DEL, expects high revenue losses of up to € 20 million. Ticket sales account for a good 60 per cent of revenues. Insiders reckon that the existence of nine of the 14 DEL-clubs will be endangered if the new season cannot start with spectators in September as planned. To make matters worse, the DEL is currently facing an extremely difficult process on searching for a new main league sponsor.
In professional handball, too, revenues from ticketing account for the lion’s share of sales at around 50 percent.
The German Basketball League could lose up to € 25 million in case of an early end. Some clubs have already created facts and terminated contracts with many of their US professionals.
The Volleyball Bundesliga, that voted for an early end, is currently struggling with the voluntary withdrawal of several, even veteran, teams. It is currently questionable, whether the league will be able to provide an acceptable number of clubs for the upcoming season.
Not a very nice economic landscape for the sports’ sector in Germany, even though the authorities are beginning to loosen restrictions and have just allowed the opening of smaller shops, having declared that the Coronavirus outbreak is “under control”!
Dr Alexander Wild may be contacted by e-mail at ‘firstname.lastname@example.org’