Pro sports teams look ahead with optimism amid evolving guidelines

Though the return to sports has been exciting, the COVID-19 pandemic still presents operating challenges as health and safety guidelines evolve. Executives from several professional sports teams across multiple sports gathered virtually to provide insight into how they are navigating the 2021–2022 season.

“We’re optimistic, but we’re cautious too,” one CFO explained. “For the most part, all CFOs have been planning for a return to normal in the 2022 season, but are remaining vigilant and making decisions more intentionally now.”

As fans return to live sporting events, fluctuating health and safety policies, new technology, and a labor shortage have presented many challenges. CFOs discussed the operational impact COVID-19 has had on this year and beyond:

COVID-19 vaccination and test policies for fans and employees depend on state and local requirements. This can vary even for individual facilities in the same city based on ownership and funding structure, which adds another layer of complexity.
Labor shortages and the overall job market continue to be a major issue, not only with game-day and seasonal staff, but also with full-time employees.
Cashless transactions are here to stay.

Prioritizing fan safety

Most leagues have been deferring to local government guidance, rules and regulations to determine requirements for fans. Teams aim to prioritize health and safety without negatively impacting the fan experience. To help enforce COVID-19 vaccination and test policies, teams have been exploring partnerships with third parties that develop health-check apps.

Adopting new technology

Many teams quickly adopted mobile ticketing for admissions and cashless transactions for merchandise and concessions. One team introduced an entirely frictionless store within its arena: Fans have been able to shop and walk out of the store with merchandise, paying through their mobile wallet. These innovations haven’t netted revenue increases or operational savings yet, and it’s too early to determine the long-term financial impact. At the very least, such stores create new sponsorship opportunities for teams.

For some, the COVID-19 pandemic spurred new collaboration tools and changes that increased productivity and operational efficiencies. One team has moved to virtual youth camps, clinics and academies, which have been “more successful than the team anticipated.” It is too soon to know if going virtual is here to stay, and if they will be leveraged as a new revenue stream or simply a new avenue to drive fan and community engagement in the future.

Staffing a return

Teams continue to struggle with temporary, part-time and full-time staffing. Several executives mentioned that their teams have not only been raising wages, but also increasing perks for accepting and staying in positions. All acknowledged that they have to be creative in their recruitment efforts. One example was a team offering a sweepstakes-type promotion: Every shift worked by an employee grants an additional entry into a lottery to win a cash bonus.

Adapting financially

Executives agreed that there has been a change in the mix of savings, expenses and revenue. Reduced office and travel expenses, along with salary reductions from staff attrition, have been offset by the cost of implementing health and safety measures. The largest alternate revenue source developed during the COVID-19 pandemic was virtual signage: Virtual ads on the field and in the stands have been incorporated into local and national broadcasts. “It was a savior during the pandemic for us,” one CFO reflected. Virtual signage not only satisfied sponsors in a time without fans, but have also facilitated potential partnerships and revenue streams in the future.

Looking ahead

While the outlook moving forward was generally positive, executives noted that returning to and exceeding pre-pandemic revenue levels will depend heavily on season ticket renewals, corporate sales and partnership renewals, and upcoming media and broadcast negotiations.

Reflecting on 2020 and 2021, the CFOs shared that seeing how their organizations worked to become more efficient and remain relevant during the pandemic highlighted their resilience. These efforts included helping their community through outreach events and donations and assisting their employees by limiting layoffs, running employee engagement events, and offering mental and physical wellness benefits. As one CFO commented, “We’ve all been in finance, and it’s all bottom-line, but to have that kind of removed and to just focus on the employees and their wellness was a positive takeaway.”

To arrange an interview with KPMG’s Shawn Quill, please contact Mike Alva. You can read more KPMG insights into the sports industry here.