Los Angeles County’s decision to allow sports to resume without fans is good news for teams and television viewers, but not so much for the local cities and universities that support the venues.
These partners will see little to no economic benefit from the return of sports because most only receive cuts of ticket sales, concession purchases and parking fees, none of which they’ll get if there isn’t a roaring crowd in the stands.
Take the new $5 billion NFL stadium in Inglewood, for example. The City of Champions, and many of its local businesses, have eagerly waited for years for the stadium’s opening. They expected a cut of the venue’s business, plus a surge in hotel stays and local dining, to pay back dividends.
Football begins in earnest in September and there’s still hope the coronavirus restrictions will lessen by then. Inglewood gets a sizable cut from property taxes no matter what, but if the stadium stays empty all year — what Mayor James T. Butts Jr describes as the worst-case scenario — the losses from tickets, parking and food sales will have a “significant impact” on the city’s anticipated revenues, Butts said.
Could lose $20 million
“We anticipate a loss of $16 million to $20 million in forecast General Fund revenues,” Butts said in an email. “We will look at the budget quarter by quarter. We have sufficient reserves to wait this out.”
Inglewood and others, like the Rose Bowl in Pasadena, essentially get hit twice. Without fans, they lose out on an overall bump in sales taxes from tourists visiting and a cut of revenues from direct spending at the venues.
Television rights make up the lion’s share of a team’s revenues at both the national and collegiate levels, according to Christopher Thornberg, a founding partner at Beacon Economics. Those revenues usually are negotiated at the league level, however, and rarely trickle down to the public agencies supporting the venues.
“If you think of who is paying Lebron James’ salary, it isn’t the people buying a beer and a hot dog at Staples Center, it’s EPSN and whoever is carrying their games now,” Thornberg said.
That’s not to say the various leagues aren’t hurting, too. A survey conducted by LEAD1, an association of athletic directors from 130 major college football schools, found 63 percent of the directors expect their revenues to decrease by at least 20 percent during the 2020-21 school year, according to Fortune.
NCAA to plug financial gap
The NCAA announced in May that it would distribute $225 million to Division 1 members, rather than the $600 million it originally expected. ESPN estimated college athletic departments have lost hundreds of millions so far due to the coronavirus and many have started cutting programs. And if their 2020 football season is canceled, the leagues could lose $4 billion, with at least $1.3 billion coming from lost ticket revenue, according to an ESPN report in May.
Thornberg sees the reopening in Los Angeles County as good news for the teams’ bottom lines, even if they’ll still lose out on some revenues. The majority of fans will watch sports on television, not in person, he added.
“It’s only a function of time before stuff gets back to some semblance of normality. It’s not a matter of if, it’s just a matter of when,” Thornberg said.
Public agencies across the country already are reeling from the loss of sales tax and other revenues during the economic shutdown. Sports fans sitting out for entire seasons could make matters worse.
Galaxy affects Cal State revenues
The California State University system suffered a $300 million hit when it switched classes to online, according to EdSource.
The CSU Dominguez Hills campus in Carson is home to Dignity Health Sports Park, financed by the sports and event behemoth AEG. The sports park will lose one of its temporary tenants, the Los Angeles Chargers, to the new SoFi Stadium in Inglewood this year.
Its other major tenant, L.A. Galaxy, hasn’t released a schedule for its upcoming season yet. Last week, Major League Soccer announced it will restart its 2020 season with a tournament at Walt Disney World Resort in Florida beginning July 8. The regular season will continue in home markets with a “revised schedule” after that, according to the L.A. Galaxy website.
Jerry Groomes, interim executive director of the CSUDH Foundation, which handles the university’s revenues from the sports park, said the school could receive as low as $250,000 this year, down from about $1.3 million in a typical year, he said. It receives about 2% of every ticket sold and a cut of parking, he said.
While the university is affected by the loss of ticket sales, AEG takes the brunt of the financial hit, Groomes said.
“Everybody is hurting,” he said. “We lose 2%, but they lose 98%.”
CSUDH’s campus is closed until January and Groomes is uncertain if the Galaxy will play again before then.
“My hope is that everybody maintains their safety. I’m personally not in a rush to get things open and get people sick,” he said.
Grim outlook for Rose Bowl
The majority of the funding streams for the historic Rose Bowl in Pasadena have also ground to a halt, according to Darryl Dunn, the general manager of the Rose Bowl Operating Co. The venue’s three “pillars” of revenue — concerts, UCLA football and the annual Rose Bowl Game — all have been decimated by the pandemic. Other stadiums, such as the L.A. Memorial Coliseum at USC, can lean on television rights, which the Rose Bowl doesn’t get a cut of.
“Our main business is hosting large-scale, major events, and, right now, that’s not permitted,” Dunn said in an interview. “Fans bring that additional economic impact. There is nothing bigger than the Rose Bowl Game and the Rose Parade. If you don’t have fans, it’s a very significant impact, not just to us, but for the city and our region.”
Rose Bowl’s management is now asking the city for $11.5 million, a year’s worth of its debt service costs, to keep it afloat. Without help, the stadium will run into the red by November and end up about $5.3 million in the hole by February, officials said.
According to Rich Schammel, the operating company’s treasurer, UCLA football is “more likely than not” to return in the fall, but it’s still unknown whether even a limited number of fans would be allowed to attend games. The Rose Bowl makes money from premium seating, concessions, parking and sponsorships, according to Dunn. Sponsorships will come back for strictly televised games, but the rest won’t.
Not only does the stadium lose out, but so do hundreds of employees, from parking attendants to ushers to concession stand operators.
“We’re running multiple scenarios for everything from no fans, to a certain number of fans based upon social distancing, ” Dunn said. “We’re going to be appreciative for whatever happens, and we’ll be ready for it, but clearly, for people’s jobs, fans make the difference.”
There’s some small silver linings. The recently reopened Brookside Golf Course adjacent to the Rose Bowl is doing better than ever and the stadium is pursuing alternative events to try to cover some of its expenses, Dunn said.
Robert De Niro announced a new “Tribeca Drive-in” summer film screening program on “The Tonight Show” June 10 that’s expected to come to the Rose Bowl starting July 2, according to the Hollywood Reporter.
Health guidelines for venues
Los Angeles County released its protocol for reopening venues June 12.
Each facility will have to submit a specific plan to the Los Angeles County Department of Public Health at least two weeks prior to any event.
The five-page checklist covers policies and practices to protect employees, including assigning vulnerable employees to work from home; staggering schedules to maintain social distancing; disinfecting locker rooms, weight rooms and other common areas; and conducting symptom checks on employees and players before they enter the venue.
Face masks will be required and must be provided to employees at no cost. Players have to wear masks as well, except during physical activity, practices and games, according to the guidelines.
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Sports can resume, but without fans it won’t mean much for struggling public agencies - LA Daily News
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