What does the future of American sports look like? Okay, okay—we know this is out of our wheelhouse. But this week, we’re examining how the global pandemic has affected one very specific corner of the economy: professional sports leagues. Expert Andrew Brandt lays out the scale of losses due to cancellations in an industry that generates $80 billion a year just in direct revenue for North American leagues—plus several hundreds of billions more in indirect revenue for ancillary businesses (like the folks who staff the arenas).
Andrew Brandt is Professor of Practice and Executive Director of the Moorad Center for the Study of Sports Law at Villanova Law School. A contributor to ESPN and Sports Illustrated, he is also the host of the ‘Business of Sports’ podcast.
Twitter: @AndrewBrandt
Clips from CBS Evening News, NBC Sports, and ABC News.
Further reading:
The Coronavirus’s Economic Effect On Sports Could Be Staggering: https://fivethirtyeight.com/features/the-coronaviruss-economic-effect-on-sports-could-be-staggering/
Nearly 75% of Americans Wouldn’t Attend Games If No COVID-19 Vaccine Is Developed, Poll Says: https://www.si.com/sports-illustrated/2020/04/09/poll-sports-coronavirus-return
Website: https://pitchforkeconomics.com/
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
Speaker 1:
Now to the unprecedented shutdown of virtually all professional and college sports in this country.
Speaker 2:
The NFL needs to be planning for every possible scenario, up to and including not being able to play at all in 2020.
Speaker 1:
The virus had already scared many fans away from arenas and stadiums before the leagues and players’ associations pulled the plug.
Speaker 3:
Coronavirus is the opponent no team prepared for this season.
Speaker 4:
From the offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer, a conversation about how capitalism actually works.
Nick Hanauer:
I’m Nick Hanauer, founder of Civic Ventures.
David Goldstein:
I’m David Goldstein, senior fellow at Civic Ventures.
David Goldstein:
Nick, I have a confession to make.
Nick Hanauer:
Another?
David Goldstein:
Yeah. Something I don’t know that you know about me that maybe runs counter to my character is that I’m a sports fan.
Nick Hanauer:
No, I knew that. I knew that. You don’t even have to confess that.
David Goldstein:
Yeah, a big sports fan. I grew up, we had season tickets to the Philadelphia Eagles growing up.
Nick Hanauer:
What league is that? Is that basketball?
David Goldstein:
Yes, and that’s your confession, that you couldn’t care less about sports.
Nick Hanauer:
Correct.
David Goldstein:
But it turns out, Nick, that a lot more Americans are like me than they are like you. And you know what, I just want to take an aside here to defend sports fanship. That is, if you think about sports coverage and political coverage, they are almost exactly the same, except rooting for a sports team instead of a political party has no consequences.
Nick Hanauer:
Correct.
David Goldstein:
Right. All of this partisanship that comes with sports, that’s safe. The partisanship that comes with politics, well, in this pandemic, it’s proving to be deadly.
Nick Hanauer:
Yes, exactly.
David Goldstein:
But back on track, one of the things that Americans have had to give up, ironically, at a time when they need more diversion than ever, is watching professional sports. The NBA shut down. The NHL shut down. There was no March Madness. There’s no college sports. There’s no professional sports. Your brother-
Nick Hanauer:
Yes. The one sport I do follow is my brother’s soccer team.
David Goldstein:
Right, which is not like a little league soccer team. They’re world champions.
Nick Hanauer:
Well, national champions.
David Goldstein:
North American champions. Right.
Nick Hanauer:
My younger brother Adrian runs and owns the majority share of the Seattle-based MLS franchise.
David Goldstein:
Yeah, the Seattle Sounders, and they shut-
Nick Hanauer:
They shut down, yeah.
David Goldstein:
They shut down.
Nick Hanauer:
I talk to Adrian almost every day, and it’s not pretty, to say the least.
David Goldstein:
Right. For somebody like him, it’s a business, whereas for fans, it’s a passion. It’s a passion for him, too, obviously.
Nick Hanauer:
It is indeed.
David Goldstein:
But it’s also a business, and it turns out it’s a really big business. When you look at the entire industry, by some estimates, professional sports generates $80 billion a year in the North American market, as much as $1.3 trillion globally. Obviously, employs a lot of people. That’s just direct revenue. It also generates uncounted hundreds of millions, billions of dollars through the people that work at arenas, the concessionaires, the bars and restaurants around the arenas, all of the marketing that goes on around it. Many athletes make more money from endorsement contracts than they do from their multimillion-dollar salaries.
David Goldstein:
This week, we’re going to zoom in on one industry, the business of sports, which in many ways is both a great example of what’s happening in the economy at the moment, it’s gone, and in the economy at large, a winner-take-all industry in which the folks at the top are going to do just fine, whereas the people way down the line who rely on this for their everyday living are the ones who are going to suffer the most. Major industry, major economic impact, and in some ways, that we don’t think about every day.
Nick Hanauer:
Yeah. It is most certainly big business, and me not withstanding, it’s an important part of the culture.
David Goldstein:
Yeah. Since this is a topic that’s somewhat, certainly, outside of your wheelhouse, somewhat outside of mine, we sought out an expert to give us an update on what’s going on with professional and college sports, and what the impact is and what the prospects look like. Andrew Brandt is the host of the Business of Sports podcast, a contributor to ESPN and Sports Illustrated. He’s also an attorney and the director of the Moorad Center of Sports Law at Villanova University.
Nick Hanauer:
Yeah, it should be a really interesting conversation.
Andrew Brandt:
I am Andrew Brandt, executive director of the Moorad Center for Sports Law at Villanova University Law School. I write a weekly column for Sports Illustrated on the business of sports. I host a podcast called the Business of Sports. I also am an executive vice president of a sports agency run by someone you may know named GaryVee.
David Goldstein:
Obviously, during this pandemic, millions of Americans are at home watching a lot more television, but one thing they’re not watching is professional or college sports. If you could start by, I guess, explaining how big an industry this is and giving us an update on how the leagues are handling this crisis.
Andrew Brandt:
Yeah. The COVID-19 has brought the whole world to its knees, but in my world it’s sports, and it’s certainly a shutdown. I look at March 11th; that evening is the tipping point, maybe for beyond sports, because at that moment when the player for the Utah Jazz named Rudy Gobert tested positive for the virus, it seemed to be that moment like, “Oh my God, there’s something bigger here.” Adam Silver, the commissioner of the NBA, shut the league down at that moment. The game was scheduled to tip off after that, but it had a referee who had refereed a game where Gobert was a player, so they shut that game down.
Andrew Brandt:
The next day, the National Hockey League shut down. Soon after, Major League Baseball stopped its spring training in midstream. And of course, March Madness, scheduled to begin a week later, completely shut down after saying it was going to do it without fans. We are in a standstill. Lesser leagues like Major League Soccer, the XFL, and others also, of course, shut down. We all await what will happen with the NFL, which has continued its business on the business side, with free agency continuing, of course, Tom Brady moving to a new team, and the draft scheduled to begin April 23rd is all proceeding. The bigger questions lay down the road about what will happen to the season.
Andrew Brandt:
In terms of revenues on a normal year, we start with the biggest. The NFL is a $15-billion-a-year business, and that $15 billion a year is obviously in jeopardy, depending on what happens. Major League Baseball, the NBA are in the $8 to $10 billion range, hockey in the $4 to $6 billion range, and so on. We’re talking about, on the major four sports leagues alone, roughly $30 billion in gross revenues. That is, of course, at risk.
David Goldstein:
That’s just their direct revenue. Of course, there’s a lot of spillover. Certainly, they tell us that every time they want taxpayers to help fund an arena or a stadium. There’s a lot of dollars at stake both for folks who work at these arenas, the concessionaires, the bars and restaurants surrounding the arenas. I’ve seen numbers that say it’s $80 billion in the U.S., as much as $1.3 trillion globally. The major leagues are major business.
Andrew Brandt:
Yeah. I’m kind of the poster child. Sports is business, and business is sports. We’ve long passed the Rubicon about sports being on the comics page and on the funnies part of the newspaper. It is now big business, and it resonates in all aspects.
Andrew Brandt:
We’ve seen the consolidation of media and sports in the past few years. We’ve seen digital media, which is dominating the world, get involved in sports, whether deals by Amazon, Facebook, Google, Yahoo, YouTube, etc., so it’s all merging. We can talk about entertainment, we can talk about sports, music; it’s all kind of the same. It’s leisure dollars, and for whatever reason, Americans spend an inordinate amount of leisure dollars on sports.
Nick Hanauer:
Yeah, I guess there’s a big impact, too, on colleges and universities, right? There’s a follow-on impact. NCAA reportedly earns a billion a year in revenue, mostly from college football and basketball.
Andrew Brandt:
Well, we just talked about… I just mentioned briefly the shutdown of, for lack of a better word, March Madness as people know it. It’s really the men’s NCAA national basketball championship tournament, which has 64 teams and brings in extraordinary revenues to teams that do well, and their conferences, not just them, and that was shut down. Now, that has an extraordinary impact on college sports, because as much as we criticize college sports has taken advantage of these athletes and they have all the money in the world and they pay these coaches millions of dollars, the fact is the revenue received from March Madness and football, which we’ll talk about in a minute, pays for all the other sports.
Andrew Brandt:
I’m a part of Villanova University. We have 23 sports. One makes money, men’s basketball. I think that’s the norm in major sports and major college athletics. People don’t realize how much the dependency is on men’s college football and men’s college basketball to the exclusion of 20-something sports per school that depend on that revenue.
David Goldstein:
There’s a lot of kids getting athletic scholarships in these non-revenue sports, and I guess the money that funds that is at risk now.
Andrew Brandt:
It is. Again, to Villanova, we don’t have big-time college football. We have subdivision football, which is, again, not low-level football, but kind of mid-level. We don’t have a 25,000-seat stadium. But we have 70 scholarships at, whatever, 60,000 a year. That’s four and a half million dollars. And football doesn’t make any money. So you just start right there with having to cover $4 million from somewhere, and then you think about the drastic changes in revenues that come out of this.
Andrew Brandt:
I think the at-risk of college sports, to stay with that, is men’s non-revenue sports, because the hierarchy has been football, basketball, women’s sports, and then under that is men’s non-revenue sports. And we already are seeing it. Old Dominion University in Virginia just cut men’s wrestling. There’s your first casualty, and there will be more.
Nick Hanauer:
Do you think that there was an alternative way that this could have been handled?
Andrew Brandt:
The shutdown?
Nick Hanauer:
Yeah.
Andrew Brandt:
I wish I knew. It’s all the things being considered now, guys. This is it. Every day at the offices of NBA and NHL and Major League Baseball are figuring out how we can do this. Everyone is talking about sequestration and the idea of bringing together the teams-
Nick Hanauer:
You used the term of sequestration. What-
Andrew Brandt:
Sequestration.
Nick Hanauer:
Yeah, explain that.
Andrew Brandt:
Bringing together these teams in a remote location, only these teams and their staff, and sequestering them, just like a jury, for a period of time while they play their games, and not infecting fans and not infecting those who mingle with the teams. That’s what everyone is thinking about, talking about, once there’s some kind of positivity in the news. There’s no time frame right now. I think Adam Silver, the commissioner of the NBA, said, “I’m not going to announce anything until May.” So that’s what we’re thinking about. That’s what I’m hearing.
Nick Hanauer:
Within the context of tests for COVID, a blood test for COVID that gives you a positive or a negative within 15 minutes, you can obviously begin to do some of these things really easily. You can test all the players on a team and bring them together. Well, you could put them in any stadium and have them play against one another, and that should be harmless, right?
Andrew Brandt:
Yeah, we’ve heard the baseball example. Baseball is in a unique position because they haven’t started their season, unlike these other sports. You’ve heard things in the news about bringing everyone to Phoenix area, where all these spring training stadiums are, albeit small, but also the Arizona Diamondbacks stadium, where they would play triple-headers, three games a day, and it would only be players, and then the testing. But when you talk about the testing, then you talk about the social impact, where, assuming there are not unlimited tests, you’re allocating these tests towards high-paid athletes?
David Goldstein:
They weren’t already? That was one of the stories when the NBA first shut down. Why was it so easy for these NBA players to get tested when nobody else could get a test?
Andrew Brandt:
Well, I don’t know the answer to that, but I think that would come up again, obviously.
Nick Hanauer:
Yeah. I think if it comes up next week, it comes up. I think that we cannot be that far away from scalable testing. We’re weeks or months, not years, away from scalable testing.
Andrew Brandt:
Yeah, and there’s so many ramifications of even what I suggested in an outline sketch, like what about players, and a couple have reached out to me because I have a bit of a voice on Twitter, and said, “What if they say it’s a go, but I don’t want to? My wife won’t let me. My mother won’t let me. I want to see my mother, and then I can’t.” What about that? Are they going to pay guys that opt out? It’s just all these ramifications about, well, what if I’m asymptomatic?
Nick Hanauer:
That applies to people working for grocery stores too. Let’s be clear. They don’t make $5 million a year, so-
Andrew Brandt:
Well, I think that that division is going to be apparent, too, whatever mode this comes out in, because I think the lower-paid players are like, “I’m in. Where do I sign?” and maybe the players that have a lot of money in the bank will be more cautious.
David Goldstein:
Right. Well, that raises another question. We’ve been talking about the major leagues. There’s more players in the minor leagues, certainly in baseball and sports like hockey, and certainly if you count the NCAA as the minor league for football. The owners of these teams are not nearly as deep-pocketed as the owners of the major league teams, and the players are not making nearly the same money. Yet the future major leaguers down there, their future careers depend on these leagues surviving. What does it look like at the minor league level? Are we going to see a major loss of teams?
Andrew Brandt:
Yeah, before all this, Major League Baseball Commissioner Rob Manfred was talking about, openly, contraction of minor leagues, and 40 minor league franchises would be contracted, the theory being “Let’s allocate those resources towards other minor league franchises rather than these low-level franchises that aren’t making money and are in dilapidated stadiums, whatever it may be.” There was a lot of pushback on the political side because one of the potentially shuttered teams was in Burlington, Vermont, the home of one Bernie Sanders. He got involved there, and I don’t know where that ended up.
Andrew Brandt:
The point is there that Minor League Baseball is not a moneymaker, and I don’t even know if people out there know how little these players make. It could be anywhere from $800 to $1,500 a month, which doesn’t do a lot for your bank account. There was an announcement they would be paid through May, and it’s open after that in terms of Minor League Baseball.
Andrew Brandt:
Beyond baseball, there’s the XFL. They have already shuttered for the year. Now they just close operations, period, which is an upstart football league that started this spring. Then a league called the National Lacrosse League has shuttered, and we’ll wait to see what Major League Soccer, happens there.
David Goldstein:
Have you heard from your brother? Have you talked to your brother about this, Nick, what the prospects look like for Major League Soccer?
Nick Hanauer:
I should say I have talked to him, but I haven’t talked to him definitively about it. I think that everybody in the sports business and in the entertainment business is biding their time and wondering if things open back up early, mid-summer. If they do, the seasons will proceed. Obviously, they’ll be shortened or compressed, and there’ll be different kinds of protocols that will be necessary in the stands.
Nick Hanauer:
Andrew, I have a question for you. What would it be like if the NFL was broadcast all year, but with no fans? Does sports work without fans?
Andrew Brandt:
There’s two questions here. Does it work, and will people watch? I think-
Nick Hanauer:
What do you think?
Andrew Brandt:
Yes. And the latter, to me, is absolutely.
Nick Hanauer:
Yes. I agree.
Andrew Brandt:
In terms of the ambiance, it’ll be different, it’ll not be as good, especially basketball, where you’ll be hearing the squeak of the sneakers like you’re in a high school gym practice, but these TV people are able to do some incredible things, in other words. The only time you really have to see the fans in football is on a punt or a field goal, and-
David Goldstein:
But you hear them.
Andrew Brandt:
… the first couple days-
David Goldstein:
You hear them, Andrew.
Andrew Brandt:
I know, but-
Nick Hanauer:
Perhaps the silence would be interesting.
David Goldstein:
No. No, no, no.
Nick Hanauer:
Perhaps the silence would be interesting. You’d hear what was actually happening on the field. I don’t know.
David Goldstein:
No, what you’re going to hear are the announcers. I’ll give you an example of this. Again, I’m an Eagles fan. When I get to watch a game, it’s almost always a national broadcast with announcers who I hate, ex-Cowboys and stuff like that, so I learned by accident that I could turn off the center channel speaker when I’m watching in surround, and on these broadcasts, the announcers are only on the center channel, so I don’t hear them, but I get all the crowd noise. I get all the background noise. It is glorious to watch a football game just with the crowd noise and no Troy Aikman.
Andrew Brandt:
Well, you won’t have that.
David Goldstein:
You’re telling me it’s going to be the opposite. I’m going to get just Troy Aikman and no crowd noise, and I’m so depressed.
Andrew Brandt:
Well, you can tune in to your local broadcast somehow. I’m sure they’ll allow that. But you bring up the challenges.
Andrew Brandt:
I think we’re all on hold for football. I know it’s 50,000 people, and that sounds just monstrous for where we are right now. But NFL has had such a luxury right now compared to other leagues because they can watch and wait.
Andrew Brandt:
Maybe NBA and even NHL start without fans in May. Well, let’s say June, July. And by the playoffs in August, you’ve got fans back, and then the coast is clear for the NFL in September.
Andrew Brandt:
A lot of this is just going to be with who’s going to be the test cases here. I don’t see any reason why the NBA could not go until Labor Day, and that would allow a drop-dead date of July 1 for a start date. We’ll see where the world is in a month or so.
David Goldstein:
You think they’ll just skip the end of the regular season and go straight to the playoffs?
Andrew Brandt:
Ideally, they’d play five or 10 games before it, but it’s going to be dependent on timing.
David Goldstein:
Yeah, and I heard you mentioning there’s a problem with the Milwaukee Bucks. I know they moved the Democratic convention, but they’ve postponed it to August now, so that would still run into-
Andrew Brandt:
Well, there was a problem if they were going to be the team and the host in the finals and it was going to run into July. Then they moved the DNC to August. But maybe they move NBA back, and you still have that problem. Yeah, I talked to my friends in Milwaukee, and they’re like, “This is our year. This is our year, and don’t make it happen during the DNC.” It’s like all their hopes and dreams coming together.
David Goldstein:
Do you see this changing professional and college sports going forward?
Andrew Brandt:
That’s a great question. I can only compare it to, on the health side, concussions, because in my day running the Packers for 10 years, guys got hit in the head, but it was a ding. They got their bell rung, they took smelling salts, they’re back in. Then we had this revelation about the dangers of brain trauma and the causal link to future dementia issues in 2010 through 2015, and things changed, where now players are held out. There’s concussion protocols. You’re not allowed even near a practice field. It’s not handled by the coach or GM. It’s handled by the medical.
Andrew Brandt:
I’m trying to say what could come out of the COVID situation in a similar way. I just think this gathering and showering and all that somehow I think is going to change. I don’t know how. But this constant rubbing against, I’m not trying to be crude here, bodies against bodies in crowded locker rooms and crowded showers, somehow that’s got to change, too, I would think, going forward.
Nick Hanauer:
Well, at least for the next year or two. That’s for sure.
Andrew Brandt:
It’s all about testing and treatment. If testing becomes incredibly scalable, and then it becomes almost like we talk about with concussion, like you’re out for a week, like you’re out for two weeks, quarantine period. I think that’s where we’re going.
Nick Hanauer:
Yeah. Super interesting.
David Goldstein:
Well, I don’t think America gets back to normal until professional and college sports gets back to normal. I know that for our non-sports fans listening, that may sound weird, but you’re the weird ones. Most people are sports fans.
Andrew Brandt:
Do you guys think we have any or all of these leagues in 2020?
Nick Hanauer:
You mean do they play?
Andrew Brandt:
Yes.
David Goldstein:
Man, there’s so much money at stake. You tell me. I just cannot imagine the NFL canceling the season. I can imagine the NCAA canceling athletics until there’s a vaccine or until this pathogen is gone. There’s so much-
Andrew Brandt:
I agree with you that that’s-
David Goldstein:
… liability.
Andrew Brandt:
… a more likely scenario, and that is a huge hit for, as I said when we started, a huge hit for college athletics, because they support the other sports. Yeah.
David Goldstein:
As an agent, my God, what does it do for your clients, the kids who would be coming out next year who won’t have a season to prove themselves in?
Andrew Brandt:
Well, it’s affected the kids coming out now that are going to be drafted next week. They haven’t had pro days, a lot of them. They haven’t had visits to teams. This all shut down March 10th, and mid-March, late March, early April are the key times where teams bring in prospects they think of drafting. So it’s had some impact already, and this draft is going to be more blind than any draft ever in the NFL, I would think, in recent modern history.
Nick Hanauer:
The whole thing is very interesting just as a… I am not a huge sports fan. But as a window into the way in which the pandemic is shaping our culture and our economy, I think it’s very, very interesting, and obviously super dire and sad and difficult for lots of people for lots of reasons.
David Goldstein:
Andrew, if there’s some point you think we haven’t touched upon that we’re missing here, any final wisdom?
Andrew Brandt:
Yeah, I think the wisdom of these sports leagues is the balance, and how do you balance risk versus reward? What do you identify as risk? Risk is health. Public health would be fans. Okay, they can control that, not allow fans. But then it’s player health. Can they control that with testing, with isolation? Will there be enough tests? Will there be enough quarantine facilities, etc.? Then the reward is kind of a psychological reward, a return to normalcy for sports fans everywhere, and then the economic reward. Everybody wants that.
Andrew Brandt:
So there’s the balance, and they’re fighting uphill against doctors and scientists that say, “Keep on quarantining. Keep on. Keep on.” But we saw the world 30 days ago, and it could look a lot different 30 days from now.
Nick Hanauer:
Yeah. Eventually, there will be football games again.
Andrew Brandt:
Oh yeah. This too shall pass.
David Goldstein:
Eventually, yeah.
Nick Hanauer:
Well, thank you so much for spending the time chatting with us. You are the first sports expert we’ve ever had on our podcast. Thanks for-
Andrew Brandt:
Happy to be that. Happy to be that person.
David Goldstein:
Great. Thank you.
Nick Hanauer:
Thank you so much.
David Goldstein:
Bye-bye.
David Goldstein:
Nick, if there’s any lesson I learned from this conversation, it’s that the sports industry is an industry like any other industry, and its dramatic shutdown is just like the rest of the economy. It’s devastating, but it wasn’t inevitable or necessary.
Nick Hanauer:
Yeah. I guess I’d never really thought of it before until this crisis hit, but the sports industry, in particular, is predicated on social gathering, not social distancing. And as a consequence, it’s been remarkably hard hit by the necessity of social distancing around the country, around the world.
Nick Hanauer:
It makes yet another great way to understand how, as we’ve said before, pathogens are inevitable, but pandemics are not. They’re a consequence of wishful thinking, governing incompetence, and a lack of preparation. There’s this fascinating analysis in the New York Times that analyzes the effect of social distance on deaths and destruction in time. If we had gone two weeks earlier, we might’ve avoided 90% of the fatalities, and with it, a lot of the other problems. Having had the courage to move quicker, having leaders in place that made science-based, math-based decisions, having the federal capacity to deal with this. What you could never plan for was having a president as incapable as Donald Trump, and as divisive and-
David Goldstein:
Incapable and unwilling. Had we a competent administration that took this seriously, that had not fired our national pandemic task force years ago, that was prepared for this, that had the testing in place that we were able to do contract tracing, maybe we wouldn’t even have had to shut down the entire economy because we would have known that the virus was here weeks before the first people started getting sick, started showing symptoms and dying.
David Goldstein:
The other irony, of course, is that even if we had to shut down everything, including the professional sports leagues, had we done it two, three weeks sooner, we’d be out of it sooner, too, because there would have been less spread and it would take less long to come out of the peak. Every day we waited not only cost lives, but cost jobs and cost billions of dollars.
Nick Hanauer:
Absolutely.
David Goldstein:
Nick, they may have these contingency plans to restart their seasons without fans. Personally, I don’t think it’s going to work. And if it doesn’t work, then it’s not just the fans who are going to be disappointed, but the tens, maybe hundreds of thousands of people around the country whose livelihood depend on professional sports, either directly or indirectly
Nick Hanauer:
Yeah. Look, here’s the thing. I don’t know what you mean by the word work. It’s not binary. Will a football game without fans be as good as a football game with fans? Almost certainly not. If the NFL were to start broadcasting games without fans, I would bet you any amount of money that you would like to put up that huge numbers of Americans would tune in and advertisers would advertise. So would it be as good? No. But would people be incredibly grateful for the entertainment? Hell yes.
David Goldstein:
But you know who wouldn’t benefit from that, nick? The people selling concessions, the vendors at the stadiums, the security, the cleaners, the ticket people, the ticket scalpers, the bars and restaurants surrounding-
Nick Hanauer:
You are absolutely right.
David Goldstein:
… these arenas. All of that business is going to be gone, all of that livelihood, all of that income. There’s going to be businesses thrown into bankruptcy if we don’t get back to a normal season, and it looks like it’s going to be very difficult to get back to a normal season with crowds in the stands anytime in the next year, maybe year and a half.
Nick Hanauer:
No, that’s true. It’s true. It is most certainly going to be a rough year, year and a half for a lot of people, there’s no doubt. But in the same way that doing takeout as a restaurant doesn’t replace all of the revenue that you were getting as a normal restaurant, it beats nothing. Having sports broadcast in the absence of fans in the near term is certainly not ideal, but it may be better than nothing. It’ll certainly, in any case, be a very interesting social experiment. It would be really interesting to see how people respond to that.
David Goldstein:
Nick, one of the fascinating takeaways from this is that, in some ways, professional sports is the classic example of a winner-take-all industry, where only the folks at the very, very top make any money, and they make an amazing amount of money, and nobody else makes a dime. You’re drafted or you’re not, for the most part. Actually, when you look deeper, yes, it’s winner-take-all when it comes to the athletes, but there’s so many other people that go into supporting these leagues and these businesses. It is such a huge industry. I hate to say it. Whenever they ask for taxpayer money to subsidize a stadium, this is their argument.
Nick Hanauer:
No, it’s 100% the argument. “Think of the little restaurants and the…” blah, blah, blah, blah. Yeah.
David Goldstein:
Right. You can argue whether, when it comes to taxpayer subsidies for a stadium, whether that’s a good investment for taxpayers or not, but they’re already there, and there’s already people relying on these leagues. It’s just going to be devastating. When we look at any industry, sports is a really good example, yeah, you can look at the… It’s easy to look at the direct impacts of this closure on the leagues, on the players, on the owners, but it’s all the indirect impacts cascading through the economy that are going to have-
Nick Hanauer:
That’s where the real damage is going to get done, because to be honest, my brother and Robert Kraft and the rest of the titans of the NFL and so on and so forth, those folks are going to be okay. They just are. But the people who serve the pizza in the stadiums, not so much, and that’s where our interest and attention should go.
David Goldstein:
Right. I think if we looked more closely at other industries, we’d find much the same thing.
Nick Hanauer:
Yeah, exactly.
Speaker 8:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate, and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer; follow our writing on Medium at Civic Skunk Works; and peek behind the podcast scenes on Instagram at Pitchfork Economics. As always, from our team at Civic Ventures, thanks for listening. See you next week.