COVID-19: Its economic impact on sport in South Africa

By Prof Dr Steve Cornelius, Head of the Department of Private Law, University of Pretoria and Visiting Professor in Law, University of Cagliari

The third decade of this millennium dawned with the prospect of an exciting sports calendar. Apart from the regular events on the annual sports calendar, there was the anticipation of the Summer Olympic Games and Paralympic Games in Tokyo, the Euro 2020 football championship, as well as world championships or world cup events for women’s and men’s T20 cricket, rowing, cycling and swimming. No-one could have anticipated that a relative of the common cold, the Coronavirus, known as COVID-19, would make an uninvited appearance and cause such havoc in the world. Like all other industries, sport has also suffered the brunt of measures aimed at controlling the spread of the disease.

As in in every other country, COVID-19 has also wreaked havoc in the South African sports industry and the economic impact will certainly not be fully known for years to come. The immediate impact varies from one sport to the next, as some sports were at the beginning, others were in the middle and others towards the end of their competitive seasons.

The Super Rugby tournament, which involves teams from South Africa, Australia, New Zealand, Argentina and Japan, felt the early effect as two games of the Japanese Sunwolves team had to be moved to Australia to avoid the spread of the Coronavirus in Japan. The tournament was exactly at the halfway point of its 14-week round-robin programme, when international travel restrictions and national government actions prompted the governing body, SANZAAR, to suspend the season indefinitely. If the Super Rugby tournament cannot be completed and if the SANZAAR Rugby Championship, involving the national teams from South Africa, Australia, New Zealand, Argentina and Japan, cannot take place in 2020, SANZAAR stands to lose US $500 million, which could be crippling for some of the member federations.

The South African men’s cricket team was on tour in India in March and special arrangements had to be made for the team to return to South Africa on an urgent basis. Cricket was in a better position than rugby, with domestic leagues entering the semi-final stages before cricket would go into its off season. The Members’ Council resolved that the teams topping the logs in the various formats, would be the winners of the respective domestic leagues. However, with a planned inbound tour from the Indian national team, scheduled for August 2020, Cricket South Africa could lose US $10 to 15 million if that tour cannot take place. Also, if the International Cricket Council (ICC) Men’s T20 World Cup cannot take place, as scheduled in October, that could have a further negative impact on disbursements from the ICC.

Another sport that could be very hard hit if the postponed season cannot continue, is association football (soocer). The Professional Soccer League could lose more than US $10 million if they are unable to hold any further domestic matches in 2020. This will inevitably have a knock-on effect on the South African Football Association.

When the President of South Africa declared a disaster and ordered a national lockdown, the track and field athletics and road running seasons were just about to enter their showcase grand prix series and national championships. All these events had to be postponed. In addition, the famous Comrades Marathon ultra-distance endurance event, as well as other road races, also had to be postponed. If these cannot be rescheduled, Athletics South Africa stands to lose more than US $1 million.

While these numbers reflect real or potential losses as a direct result of cancellations due to COVID-19, the longer-term effect is more uncertain. Sport relies heavily on corporate sponsors and the sale of broadcasting rights, which, in turn, depends on the ability of broadcasters to attract corporate advertising. The global economic impact of COVID-19 will undoubtedly mean that corporate sponsors and advertisers will have less free cash to spend on sports marketing and sponsorships. As a result, sports federations can expect that some sponsorships and broadcasting deals will have to be renegotiated, while there may be fewer lucrative sponsorship deals on offer and broadcasters may cut back on the amounts on offer for broadcasting rights.

Questions also remain about future events that are usually seen as big money earners, not only for the sports federations concerned, but also for the South African economy in general. For instance, in rugby union, the tour of the British and Irish Lions to South Africa and the clashes with the world champion Springbok team, is expected to be a big earner for SA Rugby, while the British rugby fans, that usually accompany the team, usually bring a big foreign cash injection into the South African economy. If the tour is impacted in any way, that could have serious economic consequences for SA Rugby and South Africa itself. Similarly, future events, such as the 2023 Netball World Cup, was dependent on government support. With the losses in tax revenues, the costs of stimulus packages for the country’s economy and the costs of medical treatment and research, there are concerns that the government may have to revise its financial commitment to these sporting events.

One thing, however, is certain: the effects of COVID-19 will be felt for many years to come!

Prof Dr Steve Cornelius may be contacted by e-mail at ‘steve.cornelius@up.ac.za’