A lot is changing about the business of professional sports due to COVID-19, and many of these changes could become lasting. They are being driven by today’s table stakes -- having an integrated plan for fan attendance that encompasses the required health and safety protocols and is enhanced by technology. KPMG recently hosted a virtual gathering of eight CFOs from professional sports teams across football, baseball, basketball, hockey and soccer to share leading practices and discuss what’s top of mind as they lead their teams into 2021.
Here are eight areas of focus for executives as they work through the impact of COVID-19:
1. Cashless is king. COVID-19 is accelerating the transition to a fully cashless environment. While there may be some initial pushback from fans, the changes that are necessary in the short term due to the pandemic will become the norm.
2. “Reverse ATMs” - a way to generate revenue? “Reverse ATMs” or similar machines that convert cash to gift cards are another element in the conversion to a cashless environment. In the long term, these machines and team gift cards represent another asset that can generate incremental sponsorship revenue. Adoption has been limited thus far, though teams have yet to extensively promote them.
3. Mobile ordering not ready to go just yet. While mobile ordering has been available in some venues for years, the executives in our discussion believe there remains a broad lack of comfort and familiarity with mobile ordering, though the solution offers long-term convenience for fans and adoption should scale as mobile ordering outside of sports becomes more commonplace.
4. Sponsors and the missing fan. The “second screen experience” via social media, led by a local social media influencer, is a way to secure value for digital sponsors. Virtual or additional in-stadium signage and onsite LED boards have typically been the primary platforms for branding assets to reach broadcast audiences. With the reduction in the types of assets that could attract sponsorships or fulfill existing commitments due to a reduced in-game fan presence, teams have had to get creative.
5. Seeing the business future. Given the potential for ongoing developments in the pandemic and changes to local government mandates, any forecasting model should be as dynamic as possible and consider as many variables as possible.
6. 20% capacity does not mean 20% operating costs. There is still a need to staff a game at 75% to 80% in order to create a safe environment for the limited number of fans. In fact, these types of expenses can be even higher due to increased testing for employees and players, extra sanitization measures, and other necessary protocols.
7. Leave no stone unturned. Teams must take a closer look at non-essential costs. At this juncture, what might have been considered “insignificant” costs are no longer treated as such, as teams deal with reduced revenue sources for a prolonged period.
8. Make the most of the opportunity. Sports teams, like all businesses, have been forced to transform quicker than planned due to the pandemic. While this is an extremely challenging time for the sports industry, team executives agreed that this period of change represents an opportunity to rethink their business models and reimagine elements of the game-day fan experience.
While it’s no surprise that cashless environments, fan engagement, and operational costs are a few of the areas top of mind for sports franchise CFOs, their views illustrate the challenges ahead.
To arrange an interview with KPMG’s Shawn Quill on sports, fans and the impact of COVID-19, please contact Mike Alva. You can read more KPMG insights on the sports industry here.